?*;amj 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


CASES 


ON 


THE  LAW  OF  SURETYSHIP 


SELECTED  FROM  DECISIONS  OF 


ENGLISH  AND  AMERICAN  COURTS 


BY 

CRAWFORD  D.  HENING 

PROFESSOR  OP  LAW  IN  THE  UNIVERSITY  OF  PENNSYLVANIA 


AMERICAN  CASEBOOK  SERIES 
JAMES  BROWN  SCOTT 

GENERAL  EDITOR 


ST.  PAUL 

WEST  PUBLISHING  COMPANY 

1911 


OOPTKIQHT,    1911 
BY 

WEST  PUBLISHING  COMPANT 
(Hen.  Sub.) 

T 
19  j  I 


To 

CHARLES  BIDDLE 
of  the  Philadelphia  Bar 

My  Preceptor  in  the  Law 
(iii)* 


r>r»Hyo.*jrT, 


THE  AMERICAN  CASEBOOK  SERIES 


The  first  of  the  American  Casebook  Series,  Mikell's  Cases  on  Crim- 
inal Law,  issued  in  December,  1908,  contained  in  its  preface  an  able 
argument  by  Mr.  James  Brown  Scott,  the  General  Editor  of  the  Se- 
ries, in  favor  of  the  case  method  of  law  teaching.  Until  1915  this 
preface  appeared  in  each  of  the  volumes  published  in  the  series. 
But  the  teachers  of  law  have  moved  onward,  and  the  argument 
that  was  necessary  in  1908  has  now  become  needless.  That  such 
is  the  case  becomes  strikingly  manifest  to  one  examining  three  im- 
portant documents  that  fittingly  mark  the  progress  of  legal  education 
in  America.  In  1893  the  United  States  Bureau  of  Education  pub- 
lished a  report  on  Legal  Education  prepared  by  the  American  Bar  As- 
sociation's Committee  on  Legal  Education,  and  manifestly  the  work 
of  that  Committee's  accomplished  chairman,  William  G.  Hammond, 
in  which  the  three  methods  of  teaching  law  then  in  vogue — that  is,  by 
lectures,  by  text-book,  and  by  selected  cases — were  described  and  com- 
mented upon,  but  without  indication  of  preference.  The  next  report 
of  the  Bureau  of  Education  dealing  with  legal  education,  published 
in  1914,  contains  these  unequivocal  statements: 

"To-day  the  case  method  forms  the  principal,  if  not  the  exclusive, 
method  of  teaching  in  nearly  all  of  the  stronger  law  schools  of  the 
country.  Lectures  on  special  subjects  are  of  course  still  delivered  in 
all  law  schools,  and  this  doubtless  always  will  be  the  case.  But  for 
staple  instruction  in  the  important  branches  of  common  law  the  case 
has  proved  itself  as  the  best  available  material  for  use  practically  ev- 
erywhere. *  *  *  The  case  method  is  to-day  the  principal  method 
of  instruction  in  the  great  majority  of  the  schools  of  this  country." 

But  the  most  striking  evidence  of  the  present  stage  of  development 
of  legal  instruction  in  American  Law  Schools  is  to  be  found  in  the 
special  report,  made  by  Professor  Redlich  to  the  Carnegie  Foundation 
for  the  Advancement  of  Teaching,  on  "The  Case  Method  in  American 
Law  Schools."  Professor  Redlich,  of  the  Faculty  of  Law  in  the  Uni- 
versity of  Vienna,  was  brought  to  this  country  to  make  a  special  study 
of  methods  of  legal  instruction  in  the  United  States  from  the  stand- 
point of  one  free  from  those  prejudices  necessarily  engendered  in 
American  teachers  through  their  relation  to  the  struggle  for  supremacy 
so  long,  and  at  one  time  so  vehemently,  waged  among  the  rival  sys- 
tems. From  this  masterly  report,  so  replete  with  brilliant  analysis 
and  discriminating  comment,  the  following  brief  extracts  are  taken. 
Speaking  of  the  text-book  method  Professor  Redlich  says: 

"The  principles  are  laid  down  in  the  text-book  and  in  the  profes- 
sor's lectures,  ready  made  and  neatly  rounded,  the  predigested  essence 

(V) 


VI  .   PREFACE 

of  many  judicial  decisions.  The  pupil  has  simply  to  accept  them  and 
to  inscribe  them  so  far  as  possible  in  his  memory.  In  this  way  the 
scientific  element  of  instruction  ie  apparently  excluded  from  the  very 
first.  Even  though  the  representatives  of  this  instruction  certainly  do 
regard  law  as  a  science — that  is  to  say,  as  a  system  of  thought,  a  group- 
ing of  concepts  to  be  satisfactorily  explained  by  historical  research  and 
logical  deduction — they  are  not  willing  to  teach  this  science,  but  only 
its  results.  The  inevitable  danger  which  appears  to  accompany  this 
method  of  teaching  is  that  of  developing  a  mechanical,  superficial  in- 
struction in  abstract  maxims,  instead  of  a  genuine  intellectual  probing 
of  the  subject-matter  of  the  law,  fulfilling  the  requirements  of  a 
science." 

Turning  to  the  case  method  Professor  Redlich  comments  as  follows : 

"It  emphasizes  the  scientific  character  of  legal  thought;  it  goes  now 
a  step  further,  however,  and  demands  that  law,  just  because  it  is  a 
science,  must  also  be  taught  scientifically.  From  this  point  of  view  it 
ver)-  properly  rejects  the  elementary  school  type  of  existing  legal  edu- 
cation as  inadequate  to  develop  the  specific  legal  mode  of  thinking,  as 
inadequate  to  make  the  basis,  the  logical  foundation,  of  the  separate 
legal  principles  really  intelligible  to  the  students.  Consequently,  as  the 
method  was  developed,  it  laid  the  main  emphasis  upon  precisely  that 
aspect  of  the  training  which  the  older  text-book  school  entirely  neg- 
lected— the  training  of  the  student  in  intellectual  independence,  in  in- 
dividual thinking,  in  digging  out  the  principles  through  penetrating 
analyses  of  the  material  found  within  separate  cases;  material  which 
contains,  all  mixed  in  with  one  another,  botli  the  facts,  as  life  creates 
them,  which  generate  the  law,  and  at  the  same  time  rules  of  the  law 
itselfj  component  parts  of  the  general  system.  In  the  fact  that,  as  has 
been  said  before,  it  has  actually  accomplished  this  purpose,  lies  the 
great  success  of  the  case  method.  For  it  really  teaches  the  pupil  to 
think  in  the  way  that  any  practical  lawyer — whether  dealing  with  writ- 
ten or  with  unwritten  law — ought  to  and  has  to  think.  It  prepares  the 
student  in  precisely  tlie  way  which,  in  a  country  of  case  law,  leads  to 
full  powers  of  legal  understanding  and  legal  acumen;  that  is  to  say, 
by  making  the  law  pupil  familiar  with  the  law  through  incessant  prac- 
tice in  the  analysis  of  law  cases,  where  the  concepts,  principles,  and 
rules  of  Anglo-American  law  are  recorded,  not  as  dry  abstractions,  but 
as  cardinal  realities  in  the  inexhaustibly  rich,  ceaselessly  fluctuating, 
social  and  economic  life  of  man.  Thus  in  the  modern  American  law 
school  professional  practice  is  preceded  by  a  genuine  course  of  study, 
the  methods  of  which  are  perfectly  adapted  to  the  nature  of  the  com- 
mon law." 

The  general  purpose  and  scope  of  this  series  were  clearly  stated  in 
the  original  announcement: 

"The  General  Editor  takes  pleasure  in  announcing  a  series  of  schol- 
arly casebooks,  prepared  with  special  reference  to  the  needs  and  limi- 


PREFACE  Vii 

tatlons  of  the  classroom,  on  the  fundamental  subjects  of  legal  educa- 
tion, which,  through  a  judicious  rearrangement  of  emphasis,  shall  pro- 
vide adequate  training  combined  with  a  thorough  knowledge  of  the 
general  principles  of  the  subject.  The  collection  will  develop  the  law 
historically  and  scientifically;  English  cases  will  give  the  origin  and 
development  of  the  law  in  England ;  American  cases  will  trace  its  ex- 
pansion and  modification  in  America ;  notes  and  annotations  will  sug- 
gest phases  omitted  in  the  printed  case.  Cumulative  references  will  be 
avoided,  for  the  footnote  may  not  hope  to  rival  the  digest.  The  law 
will  thus  be  presented  as  an  organic  growth,  and  the  necessary  con- 
nection between  the  past  and  the  present  will  be  obvious. 

"The  importance  and  difficulty  of  the  subject  as  well  as  the  time  tliat 
can  properly  be  devoted  to  it  will  be  carefully  considered  so  that  each 
book  may  be  completed  within  the  time  allotted  to  the  particular  sub- 
ject. *  *  *  If  it  be  granted  that  ah,  or  nearly  all,  the  studies  re- 
quired for  admission  to  the  bar  should  be  studied  in  course  by  every 
student — and  the  soundness  of  this  contention  can  hardly  be  seriously 
doubted — it  follows  necessarily  that  the  preparation  and  publication  of 
collections  of  cases  exactly  adapted  to  the  purpose  would  be  a  genuine 
and  by  no  means  unimportant  service  to  the  cause  of  legal  education. 
And  this  result  can  best  be  obtained  by  the  preparation  of  a  systematic 
series  of  casebooks  constructed  upon  a  uniform  plan  under  the  super- 
vision of  an  editor  in  chief.     *     *     * 

"The  following  subjects  are  deemed  essential  in  that  a  knowledge  of 
them  (with  the  exception  of  International  Law  and  General  Juris- 
prudence) is  almost  universally  required  for  admission  to  the  bar; 

Administrative  Law.  Equity  Pleading. 

Agency.  Evidence. 

Bailments.  Insurance. 

Bills  and  Notes.  International  Law. 

Carriers.  Jurisprudence. 

Code  Pleading.  Legal  Ethics. 

Common-Law  Pleading.  Partnership, 

Conflict  of  Laws.  Personal  Property. 

Constitutional  Law.  Public  Corporations. 

Contracts.  ^  Quasi  Contracts. 

Corporations.  Real  Property. 

Criminal  Law.  Sales. 

Criminal  Procedure.  Suretyship. 

Damages.  Torts. 

Domestic  Relations.  Trusts. 

Equity.  '  Wills  and  Administration. 

"International  Law  is  included  in  the  list  of  essentials  from  its  in- 
trinsic importance  in  our  system  of  law.  As  its  principles  are  simple 
in  comparison  with  municipal  law,  as  their  application  is  less  technical. 


viil  PREFACB 

and  as  the  cases  are  cfcncrally  interesting,  it  is  thought  that  the  book 
may  be  larger  tlian  otherwise  would  be  the  case. 

"The  preparation  of  tlic  casebooks  has  been  intrusted  to  experienced 
and  well-known  teachers  of  the  various  subjects  included,  so  that  the 
experience  of  the  classroom  and  the  needs  of  the  students  will  furnish 
a  sound  basis  of  selection." 

Since  this  announcement  of  the  Series  was  first  made  there  have 
been  published  books  on  the  following  subjects: 

Admiiiistrathc  Laxv.  By  Ernst  Freund,  Professor  of  Law  in  the 
University  of  Chicago. 

Agency.  By  Edwin  C.  Goddard,  Professor  of  Law  in  the  University 
of  Michigan. 

Bills  and  Notes.  By  Howard  L.  Smith,  Professor  of  Law^  in  the  Uni- 
versity of  Wisconsin,  and  Underbill  Moore,  Professor  of  Law-  in 
Columbia  University. 

Carriers.  By  Frederick  Green,  Professor  of  Law  in  the  University  of 
Illinois. 

Conflict  of  Lazi's.  By  Ernest  G.  Lorenzen,  Professor  of  Law  in 
Yale  University. 

Constitutional  Laxv.  By  James  Parker  Hall,  Dean  of  the  Faculty  of 
Law  in  the  University  of  Chicago. 

Contracts.    By  Arthur  L.  Corbin,  Professor  of  Law  in  Yale  University. 

Corporations.  By  Harry  S.  Richards,  Dean  of  the  Faculty  of  Law  in 
the  University  of  Wisconsin. 

Criminal  Law.  By  William  E.  Mikell,  Dean  of  the  Faculty  of  Law  in 
the  University  of  Pennsylvania. 

Criminal  Procedure.  By  William  E.  Mikell,  Dean  of  the  Facult}'  of 
Law  in  the  University  of  Pennsylvania. 

Damages.  By  Floyd  R.  Mechem,  Professor  of  Law  in  the  University 
of  Chicago,  and  Barry  Gilbert,  of  the  Chicago  Bar. 

Equity.  By  George  H.  Boke,  Professor  of  Law  in  the  University'  of 
Oklahoma. 

Ei'idence.  By  Edward  W.  Hinton,  Professor  of  Law  in  the  Universi- 
ty of  Chicago. 

Insurance.  By  William  R.  Vance,  Professor  of  Law  in  Yale  Uni- 
versity. 

International  Lazv.  By  James  Brown  Scott,  Professor  of  International 
Law  in  Johns  Hopkins  University. 

Legal  Ethics,  Cases  and  Other  Authorities  on.  By  George  P.  Costigan, 
Jr.,  Professor  of  Law  in  Northwestern  University. 

Partnership.  By  Eugene  A.  Gihnore,  Professor  of  Law  in  the  Uni- 
versity of  Wisconsin. 


PREFACE  IX 

Persons  (including  Marriage  and  Divorce).     By  Albert  M.  Kales,  of 

the  Chicago  Bar,  and  Chester  G.  Vernier,  Professor  of  Law  in 

Stanford  University. 
Pleading  (Common  Law).     By  Clarke  B.  Whittier,  Professor  of  Law 

in  Stanford  University,  and  Edmund  AL  Morgan,  Professor  of 

Law  in  Yale  University. 
Property  (Titles  to  Real  Property).     By  Ralph  W.  Aigler,  Professor 

of  Law  in  the  University  of  Michigan. 
Property  {Personal).  By  Harry  A.  Bigelow,  Professor  of  Law  in  the 

University  of  Chicago. 
Property    (Rights  in  Land).     By  Harry  A.   Bigelow,   Professor  of 

Law  in  the  University  of  Chicago. 
Property  (Wills,  Descent,  and  Administration) .     By  George  P.  Costi- 

gan,  Jr.,  Professor  of  Law  in  Northwestern  University. 
Property  (^Future  Interests).     By  Albert  M.   Kales,  of   the   Chicago 

Bar. 
Quasi  Contracts.    By  Edward  S.  Thurston,  Professor  of  Law  in  Yale 

University. 
Sales.    By  Frederic  C.  Woodward,  Professor  of  Law  in  the  University 

of  Chicago. 
Suretyship.     By  Crawford  D.  Hening,   formerly   Professor  of  Law 

in  the  University  of  Pennsylvania. 
Torts.     By  Charles  M.  Hepburn,  Dean  of  the  Faculty  of  Law  in  the 

University  of  Indiana. 
Trusts.    By  Thaddeus  D.  Kenneson,  Professor  of  Law  in  the  Univer- 
sity of  New  York. 

It  is  earnestly  hoped  and  believed  that  the  books  thus  far  published 
in  this  series,  with  the  sincere  purpose  of  furthering  scientific  training 
in  the  law,  have  not  been  without  their  influence  in  bringing  about  a 
fuller  understanding  and  a  wider  use  of  the  case  method. 

William  R.  Vance, 

General  Editor. 
June,  1921. 


X  PREFACE. 

Albert  M.  Kales,  Professor  of  Law,  Northwestern  University.  Sub- 
ject, Persons. 

Edwin  C.  Goddard,  Professor  of  Law,  University  of  Michigan.  Sub- 
ject, Agency. 

Howard  L.  Smith,  Professor  of  Law,  University  of  Wisconsin.  Sub- 
ject, Bills  and  \^otes.    (Co-author  with  Wm.  Underhill  Moore.) 

W'm.  Underhill  Moore,  Professor  of  Law,  University  of  Wisconsin. 
Subject,  Bills  and  Notes.    (Co-author  with  Howard  L.  Smith.) 

Edward  S.  Thurston,  Professor  of  Law,  George  Washington  Univer- 
sity.   Subject,  Quasi  Contracts. 

Crawford  D.  Hening.  Professor  of  Law,  University  of  Pennsylvania. 
Subject,  Suretyship. 

Clarke  B.  Whittier,  Professor  of  Law,  University  of  Chicago.  Sub- 
ject, Pleading. 

Eugene  A.  Gilmore,  Professor  of  Law,  University  of  Wisconsin. 
Subject,  Partnership. 

Joshua  R.  Clark,  Jr.,  Assistant  Professor  of  Law,  George  Washington 
University.    Subject,  Mortgages. 

Ernst  Freund,  Professor  of  Law,  University  of  Chicago.  Subject, 
Administrative  Law. 

Frederick  Green,  Professor  of  Law,  University  of  Illinois.  Subject, 
Carriers. 

Ernest  G.  Lorenzen,  Professor  of  Law,  George  Washington  Univer- 
sity.   Subject,  Conflict  of  Latvs. 

William  C.  Dennis,  Professor  of  Law,  George  Washington  University. 
Subject,  Public  Corporations. 

James  Brown  Scott,  Professor  of  Law,  George  Washington  Univer- 
sity; formerly  Professor  of  Law,  Columbia  University,  New 
York  City.  Subjects,  International  Lazv;  General  Jurisprudence; 
Equity 

James  Brown  Scott, 
Washington,  D.  C.,  February,  1911.  General  Editor. 


Following  are  the  books  of  the  Series  now  published,  or  in  press: 

Administrative  Law  Partnership 

Bills  and  Notes  Persons 

Carriers  Pleading 

Conflict  of  Laws  Suretyship 

Criminal  Law  Trusts 

Criminal  Procedure  Wills  and  Administration 
Damages 


TABLE  OF  CONTENTS 


PART  I. 
Formation. 

CHAPTER  I. 

ggp^jQQ  Different  Fobms  of  Subettship.  Page 

1.  By    Specialty , i 

2.  Suretyship  in  the  Form  of  Simple  Contract 2 

3.  Suretyship  in  the  Form  of  Joint  Liability 5 

4.  Suretyship  in  the  Form  of  the  Contract  of  Indorsement  or  of  Any 

Contract  under  the  Law  Merchant , 9 

CHAFrER  II. 

-   ESSENTIAXS   TO    FOEMATION    OF    SURETYSHIP   BT   SIMPLE   CONTRACT. 

1.  Suretyship  in  the  Form  of  a  Simple  Contract  and  the  Doctrine  of 

Consideration    12 

2.  Offer  and  Acceptance 18 

CHAPTER  III. 

GENEBAii  Essentials  to  the  Formation  of  All  Contracts  of  Suretyship. 

1.  Capacitj'^ — Personal  Incapacity  of  Principal 60 

2.  The  Effect  of  Fraud 67 

3.  Legality— Effect  of  Illegality 86 

4.  The  Effect  of  Duress 100 

5.  Conditions    Precedent. 105 

CHAPTER  IV. 

Distinction  Between  Suketyship  and  Other  Forms  of  Contractual 

Liability. 

1.  Distinction  between  Suretyship  and  Other  Forms  of  Contractual  Un- 

dertaking, Chiefly  with  Respect  to. _ the  Statute  of  Frauds  112 

I.     Promises  Made  by  the  Defendant  to  the  Debtor.. 112 

II.    Promises  Made  by  the  Defendant  to  the  Creditor 113 

(A)  At  the  Time  the  Credit  is  Given  or  Debt  Created,  etc.  113 

(B)  After  the  Original  Credit  is  Given  or  Debt  Created, 

etc 131 

III.  Promises  aiade  upon  the  Extinction  of  the  Original  Debt — 

Novations    162 

IV.  Assignment  of  the  Original  Debt  by  Promisee  or  Creditor. .  167 
V.    Debts  Created  for  Benefit  of  a  Third  Party 177 

VI.    Actions  for  False  Representations  as  to  Credit  of  Another. .  188 
VII.     Special  Promise  to  Answer  for  the  Miscarriage  of  Another 

Person    191 

2.  Distinction  between  Suretyship  ^nd  Guaranty 193 

Hen.  Sub.  (xi) 


Xil  TABLE  OF  CONTENTS. 

PART    II. 

Page 

TiiK  ToT'iTAr.T.n  A>m  Legal  Rights  oi?  the  Surety. 

CHAPTER  L 
The  Surety's  Equity  of  ExoxNEbatton 200 

'CHAPTER  II. 
The  Surety's  Equity  of  Reimbuhsement 218 

CHAPTER  III. 
The  Surety's  Equity  of  Subuogation 270 

CHAPTER  IV. 
The  Surety's  Equity  of  Contribution 325 

PART  III. 
Defuxses  of  the  Surety  against  the  Creditor  or  Promisee. 

CHAPTER  I. 

Defkxses    Based   on   the   Joint    Nature   of   the    Contract— The 
Death  of  the  Subeiy 3G2 

CHAPTER  II. 
Impossibility  of  Performance— The  Death  of  the  Surety 369 

CHAPTER  III. 
Impossibility  of  Pebformance— The  Death  or  the  Principal 391 

CHAPTER  IV. 
Payment  ob  Pebfobmance  by  Principal 402 

CHAPTER  V. 
Release  of  Phincipal 408 

CHAPTER  VI. 
Set-Off  ob  Counterclaim  of  Pbincipal 412 


TABLE  OF  CONTENTS.  XIU 


CHAPTER  VII. 
Section  Page 

Duty  of  Ckeditoe  oe  Promisee  to  Pursue  Principai,  before  Suing 
Surety  ob   Guarantor 425 


CHAPTER  VIII. 

Transactions  of  Creditor  or  Promisee  with  Principal,  Giving 
Rise  to  Equitable  Rights  of  Surety  Subsequently  Recognized 
BY  Courts  of  Law. 

1.  Extension  of  Time  to  Principal 426 

2.  Surrender   of   Collateral 471 

3.  Variation  by  Creditor  (or  Promisee)  and  Principal  of  Original  Agree- 

ment as  to  AVhich  Surety  Contracted ." 516 

4.  Effect  of  Connivance  at  Breacties  of  Principal's  Duty,  Not  Amounting 

to    Dishonesty 536 

5.  Neglect  of  Creditor  to  Utilize  IMeans  of  Payment 538 


CHAPTER  IX. 

Transactions  of  the  Creditor  (or  Promisee)  with  Surety. 

1.  Reques-u  of  Surety  to  Creditor  (or  Promisee)  to  Sue  Principal 543 

2.  Notice  of  Creditor  (or  Promisee)  to  Surety  that  Creditor  (or  Prom- 

isee) will  Look  Only  to  the  Principal  for  Performance 554 

3.  Misinformation  Given  to  Surety  by  Creditor  as  to  State  of  Transac- 

tions between  Principal  and  Creditor  (or  Promisee) 556 

CHAPTER  X. 

Effect  op  Absence  of  Notice  to  Surety  or  Guarantor  of  Default 
OF    THE   Principal 560 

CHAPTER  XL 

Change  in  Personality  of  the  Partnership— Principal 565 

CHAPTER  XIL 
The  Statute  of   Limitations , 571 

CHAPTER  XIIL 
Discharge  in  Bankruptcy.. 5S5 

CHAPTER  XIV 
Effect  of  Judgments  Pleaded  in  Bar 587 

*. 


TABLE  OF  CASES 


[cases  cited  in  footnotes  ake  indicated  by  italics,    where  smaix  capitals 

ARE  used,  the  case  IS  REFERRED  TO  IN  THE  TEXT] 


Page 

Acers  v.   Curtis 332 

Adams  v.  Jones 56 

Alcock   V.    Hill 500 

Alford    V.    Eglisfleld 115 

Ambrose  v.  Rowe 116 

Angrove  v.  Tippett 232 

Antrobus  v.   Davidson 217 

Apgar's  Adrn'rs  v.  Hiler 233 

Armstrong  v.   Warner 419 

Ascherson  v.  Tredegar  Dry  Dock 

&   Wharf  Co 205 

Austen  v.  Baker 117 

Babcock,    In    re 202 

Bailey  v.  Marshall 157 

Balfour  v.  Crace 372 

Baucrofte  v.   Willet 402 

Bank  of  Washington  v.  Barring- 
ton   39S 

Banks  v.   Pike 418 

Barker   v.   BucJdin 112 

Batard  v.  Eaives 357 

Baxter  v.   Jackson 134 

Beardmore  v.  Cruttenden 201 

Bechervaise  v.  Leiois 424 

Berry  v.  Doremus 186 

Bethune    v.   Dozier 524 

Billington  v.  Wagoner 439 

Bingham  v.   Mears 474 

Board  of  Com'rs  of  Morgan  Coun- 
ty   V.    Branham 491 

Boatmen's  Sav.   Bank  v.  Johnson  467 

Bonser  v.   Cox 105 

Boultbee  v.   Stubbs 429 

Bourke  v.  Buxton  &  De  Villiers..  25 

Brandon  v.    Brandon 271 

Brown   v.   Garbrey 4 

Brown    v.   Kidd 230 

Buckley  v.  Turner 134 

Bnckmyr  v.  Darnall 119 

Buckner  v.   Morris 239 

Butcher  v.  Andrews 124 

Butler  V.  United   States 107 


Cahill   V.  Bigelow 

Calvert  v.  Gordon . .  . . 
Campbell  v.  Rothwell. 
Chaffee  v.  Jones 

Hen.Sur. 


258 

381 
504 
360 


Cheney  v.  Thompson  Hiles  Co. . . . 
Chipman  v.   Morrill  &  Webster.. 

Cilley   V.    Colby 

City  of  Philadelphia  v.  Reeves.. 

Colby  V.  Farwell 

Coles    V.    Strick 

Collins  V.  Griffith 

Compton    V.    Jones 

Cooke   V.   

Cooper    V.    Gibbons 

Coins  V.  Middleton 

Cornwall   v.    Gould 

Crace.  In  re 

Craighead  v.   Swartz 

Crears  v.    Hunter 

Croft   V.    Moore 

Cross  V.  Allen 

Croughton  v.   Duval 

Crum    V.    Wilson 


Davidson   v.   Taylor..... 

Davis  V.  Board  of  Com'i-s  of 
Stokes    County 

Davis  V.  Wells,  Fargo  &  Co 

Davis  Sewing  Mach.  Co.  v.  Rich- 
ards      

Deaton  v.  Deatcn 

De  Barry  v.  Withers  &  Peterson 

Decker  v.   Pope 

De  Lecton  v.  De  Suttona 

Denison  v.  Gibson 

Devers    v.    Ross 

Director  of  Pablic  Works  v.  Lewis 

Dixon  V.  Steel 

Dodd  V.   Whelan 

Dodgson   V.    Henderson 

Douglass   V.    Rowland 

Do  uy lass  v.  Reynolds 

Dover  Stamping  Co.  v.  Koijcs.... 

Downing    v.    Robinson 

Durbin  v.  Kuney  &  Sayers 

Dutchman   v.  Tooth 

Dutt  V.  Administrator-General  of 
Bengal    


Eastwood  V.   Kenyon 

Eddowes   v.    Niell 

Ellesmere  Brewery  Co.  v.  Cooper 

(XV) 


Page 

11 

334 

585 

6 

197 

90 
362 
170 
326 
130 
319 
221 
372 
227 

36 
288 
578 
543 
587 

392 

242 
55 

52 

581 

171 

220 

218 

86 

447 

406 

279 

369 

464 

588 

56 

50 

2.^ 

338 

56 

66 

112 

39 

110 


ivi 


TABLE   OF  CASES. 


Paga 

Evans  v.  ilcCormlck 50 

Everly  v.  lUce 483 

Fanning  v.  Murphy 437 

Farley  v.  CIevelun<l 178 

FoRley  V.  McDonald 538 

Fi'hr  BrcwIiiR  Co.  v.  Mullican...  556 

Fennel  v.   Mulcahy 137 

First  Nat.  Hank  v.  Davis 300 

First  Nut.  Itank  v.  Wood 550 

Foster   v.    Ilalllnian IIG 

Frank  Fehr  Brewing  Co.  v.  Mul- 
lican      5."i6 

French  v.  French 15 

Garpan  v.  School  Dist.  No.  15 394 

Gaunt  V.  Hill 18 

Gay   V,   Ward 3S3 

Gtoseke  V.  Johnson 240 

Glltlnan  v.    Stron? 590 

Glcndiiuilng,  Ex  parte 4i)S 

Glossup    V.    Harrison 219 

Godfrey  v.  Ill*  e 245 

Goodell  V.  Bates 60 

Graff  V,   Kahn 414 

Gross  V.  Davis 348 

(lulld  &  Co.  V.  Conrad 159 

Gwyn  V.  Patterson 109 

Hall  V.  Capital  Bank  of  Macon..  459 

flnmilton  v.    Watson 73 

Harburp  India  Rubber  Comb  Co. 

V.   Martin 140 

Harsraves  v.  Parsons 174 

Harley  v.  Stapleton's  Adm'r 250 

Harper  r.  National  Life  Ins.  Co. 

of    Montpolier,    Vt 526 

Harris   v.    Brooks 554 

Harrison  v.  Field 3G5 

Harrison  v.  I^ine 343 

Hatchett  v.  Peirram 257 

Hawkins  v.  Parker 131 

Haydenvllle    Sav.    Bank    v.    Par- 
sons       463 

nays   V.    Ward 425 

Hazard  v.   Irtcin SO 

Mwht  V.  Weaver 380 

I  lenry  v.  Daley 79 

Henry    v.    Ileldmaler 600 

Hill  V.  Kelly 307 

Hillll)oe   V.    Warner 533 

Hoffman  v.  Fleming 07 

Hofhelnier  v.  Ivosen lOO 

Holcouibe   V.    Fetter 212 

Hole  V.  Harrison 325 

Holland   v.   .Tohnson 471 

Hook    V.    White 97 

Hooks  &  Wright  v.  Branch  Bank 

at    Mobile r>74 

Houldltch  V.  Milne 1.37 

Hughes  V.   Lawson 138 


Pago 
Hughes-Hallett    v.    Indian    Mam- 
moth Gold  Minos  Co 214 

Huscombe  v.  Standing 100 

Hutchinson  v.  Wright 470 

Ingalls  V.   Dennett 221 

lona  Sav.  Bank  v.  Boynton 129 

Israel  y.  Douglas 107 

Jackson   v.   Cooper 535 

Jarvis  v.   Wllkins 22 

Johnson  v.  Mills 404 

Jones   V.    Dnvids 306 

Jones  V.  Ward 410 

Jordan  v.  Tompkins 122 

Jordan's    Case 12 

Kearnes  v.  Montgomery 193 

Keate    v.    Temple 125 

Kellogg  V.  Olmsted 435 

Kemp  V.    Finden 328 

Kent  V.  Canter's  Ex'r 309 

Kin^  V.   Baldwin 209,  549 

King  V.   Wilson 135 

Kirby  &  Eecles'  Case 2 

Kirkham   v.    Marter 191 

Kuotts  V.  Butler 376 

Labbe  v.  Bernard 339 

Ladd    V.    Board    of    Trustees    of 

Tovra  41   N.,   R.   14 81 

Lakcman  v.  Mountstephen 122 

Lamkin   v.    Palmer 155 

Lamm  &  Co.  v.  Colcord 565 

Lasher  v.  Williamson 417 

Lawrence  v.  McCalawnt 57 

Lawson  v.  Wright 341 

Laxton   v.   Peat 444 

Lee    V.    Griffin 274 

Lee  V.  Ptook 200 

Legate  v.   Marr 393 

Lennox  v.  Murphy 47 

Lent  V.  Padelford 42 

Liddell  v.   Wiswell 357 

Liquidators  of  Overend,  Gurney  & 
Co.   V.    Liquidators  of  Oriental 

Financial    Corp 449 

Livingston   v.    Tremper 114 

Lumpkin   v.   Mills 309 

Lynn,  etc.,  Co.  v.  Andreas 55 

Macey.  Henderson  &  Co.  v.  Heger    78 

McGovern  v.    Rectanus 571 

Mackreth  v.   Walmesley 351 

McLemore   v.   Powell 432 

Map  V.    Sidney 16 

Marchman  v.  Robertson,  Taylor  & 

Co 67 

Marshall  v.  Hudson 255 

Mason  v.   Hall 183 

Mason  v.  Kiloourse 583 

Matson  v.    Wharam 122 


TABLE   OF  CASES. 


rsii 


Page 

Mayhew  v.  Crickett 496 

Meriden  Britannia  Co.  v.  Zingsen  1(J3 

Merrimack  Bank  v.  Parker 402 

Merritt  v.  Haas 508 

Mersman  v.   Werges 51G 

Michael  v.  Allbright 300 

Mines  v.  Sculthorpe 127 

Monroe  v.  De  Forest 476 

Morrison  &  Co.  v.  Hogue 177 

Morten  v.   Marshall 110 

Mound   V.   Barker 99 

Mt.  Sterling  Imp.  Co.  v.  Cockrell  513 

Moussa  V.  Loterijman  &  Co 425 

Musgrave  v.  Dickson. 272 

National  Exch.  Bank  of  Lansing- 
burgh  V.   Silliman 2S3 

National  Lead  Co.  v.   Montpelier 

Hardware    Co 482 

Nelson  v.  Anderson 391 

Nelson  v.  First  Nat.   Bank 573 

North  Ave.  Sav.  Bank  v.  Hayes..  479 

Norton   v.    Hall 261 

O'Carroll,    Case   of 218 

Odliu  V.   Greeuleaf 251 

Offord  V.  Davies 58 

Oldershaw  v.  King 29 

Orme   v.   Young 560 

Orvis  V.  Newell 275 

Overend,  Gurney  &  Co.  v.  Liqui- 
dators of  Oriental  Financial 
Corp 449 

Page  V.  Krekey 82 

Pain  V.   Packard 549 

Paisley  v.  Freeman 190 

Parsons  &  Cole  v.  Briddock 270 

Payne    &    Wood    v.    Ives,    Sargon 

&    Mann 50 

Peirce  v.   Garrett 298 

Philips  V.  Astling 561 

Polk  Printing  Co.  v.  Smedley 23 

Pownal  V.  Ferrand 224 

Primrose  v.  Bromley 364 

Rainey  v.  Tarborough 326 

Rawstone  v.  Parr 303 

Rees  V.  Berrington 426 

Remington    Sewing  Mach.    Co.    v. 

Kezertee     71 

Reuton,  In  re 408 

Richardson  v.   Ilorton 394 

Riddle  v.   Bowman 236 

Riley  V.  .Tarvis 5 

R.  L.  Polk  Printing  Co.  v.  Smed- 
ley         23 

Bobbins  v.   Robinson 63 

Robinson's  Ex'rs  v.  Kenon's  Ex'rs  .339 

Roe  V.  Haugh 162 

Royal  Ins.  Co.  v.  Davies 378 

Rozer  v.  Rozer 117 

Hen.  Sue.— b 


Page 

Ruble  v,  Norman 405 

Ruggles  V.  Bernstein 599 

Saline  County  v.  Sappington 3 

Sanderson  v.   Aston 536 

Saunders  v.  Churchill  &  Smith...  200 

Savage  v.  First  Nat.  Bank •  21 

Savmond  v.    Gent 369 

Scanland  v.  Settle 209 

Shinn  v.  Budd 302 

Sir  Daniel  O'Carroll.  Case  of 218 

Skip  v.  Huey,  Wilcox  &  Edwards  485 
Skip  V.  Huey,  ^Vilcox  &  Edicards  429 

Sloo  V.  Pool 330 

Smith  V.  Schneider 268 

Smith  V.    Shelden 445 

Smith  V.  Wheeler 265 

Smith  Bros.  &  Co.  v.  Miller 128 

Somersall   v.  Barnehy 55 

Springer  v.  Toothaker 511 

Stephenson   v.   Taverners 213 

Stewart's  Adm'r  v.  Parker 461 

Stone  V.  Compton 68 

Stonehouse  v.  Bodvil 116 

Swan    V.   Nesmith 131 

Swift  V.  Beers 98 

Symmons  v.    Want 14 

Tanner  v.  Gude 9 

Tarleton  v.   Tarleton 252 

Tavlor  v.  Farmers'  Bank 321 

Taylor  v.  Heriot 209 

Taylor  v.   Scott 533 

Thayer  v.  Daniels 266 

Thompson  v.  Bowne , . . . .  549 

Tinsley  v.  Oliver's  Adm'r 219 

Toles  V.  Adee 100 

Townsend  v.  Riddle 545 

Towusend  v.  Whitney 292 

Trent  Nav.  Co.  v.  Harlcy 435 

Upton  V.  Vail 188 

Voss    V.    German-American    Bank 
of    Chicago 541 

Wakefield  Bank  v.  Truesdell 437 

Walther  v.  Merrcll 140 

Ward    v.    Coggin 115 

Ware,  Ex  parte 320 

Warren  v.   Crabtree 94 

Waterman   v.   Clarlt 412 

Watkins  v.  Perkins 118 

Westhead  v.  Sproson  &  Piper....  IS 

Whelan,   In  re 369' 

Whitcomb   v.    Whiting 576 

White  V.  Riutoul 149 

Whiting   V.    Clark 575 

Williams  v.  Leper 135 

Wilmington.    C.    &   A.    R.    Co.    v. 

Ling     7.3 

Winn  V.  Sanford 61 


XVI 11 


TABI-E   OF   CASES. 


Page 

Wlnslow  V.   rarkiirst's   Iloirs StJS' 

Wood  V.   raruier "* 

Woodcock  V.  Oxford  &  W.  R.  Co.  531 

WriKlit  V.   Smith 1S<! 

WultT  &  Billini:  v.  Juy 487 

Wyuue  V.  Huylies 34 

Year  Book,  33  Edw.  1 1 


Page 
Year  Book,  9  Hen.  V,  Fol.  14.  PI. 

23  113 

Year  Book,  12  Hen.  VIII,  Fol.  11, 

PI.    3 113 

Young  V.   Cleveland 515 

Zeigler  v.  Hallahan 519 

Zimmerman   v.   Judah 530 


BIBLIOGRAPHY  OF  SURETY- 
SHIP 


Albert  B.  Weimer's  Monograph  on  "Suretyship*'  in  24  Am.  &  Eng.  Ency.  of 
Law,  pp.   714r-SM. 

The  Law  of  Suretyship  and  Guaranty.  By  George  W.  Brandt  (3d  Ed.). 
Chicago,  111.,  1905. 

A  Practical  Treatise  on  the  Law  of  Principal  and  Surety  (Particularly  with 
Relation  to  Mercantile  Guaranties).  By  William  Theobald,  Esq.,  of  the 
Inner  Temple.     London,  1832. 

Handbook  of  the  Law  of  Suretyship  and  Guaranty.  By  Frank  Hall 
Childs,   LL.  B.     St.  Paul,  Minn.,  1907. 

Commentaries  on  the  Law  of  Suretyship.  By  William  Burge,  of  the  Inner 
Temple.     London,   1S47. 

A  Treatise  on  the  Law  of  Mercantile  Guaranties  and  of  Principal  and  Sure- 
ty in  General  by  Walter  William  Fell,  of  the  Middle  Temple  (3d  American 
Edition,   from  the  2d  and  Last  English  Edition).     Albany,  N.  T.,  1872. 

A  Treatise  on  the  Law  of  Guaranties  and  of  Principal  and  Surety  by  Henry 

Auselm  de  Collyer,  of  the  Middle  Temple,  Esq.,   Barrister  at  Law  (from 

the  2d  English  Edition).     Philadelphia,  Pa.,  1887. 
A  Selection   of  Cases  on   the   Law  of   Suretyship.     By  James  Barr  Ames. 

Cambridge,   1901. 
Annotated  Cases   on   the   Law   of   Suretyship.     Selected   and   Annotated   by 

Arthur  Adelbert  Stearns,  LL.  D.     Cincinnati,  1907. 

Title  "Subrogation"  in  27  Am.  &  Eng.  Ency.  of  Law  (2d  Ed.).  By  Charles 
H.  Street. 

Smith's  Mercantile  Law  (11th  Ed.).     By  De  Hart,  vol.  2,  pp.  Gil  et  seq. 

Cyclopedia  of  Law  and  Procedure,  vol.  20,  Title  "Guaranty."  By  William 
P.  Rogers,  Dean  of  Law  Department,  University  of  Cincinnati. 

A  Treatise  on  the  Validity  of  Verbal  Agreements,  as  Affected  by  the  Leg- 
islative Enactments  in  England  and  the  United  States,  Commonly  Called 
the  Statute  of  Frauds.     By  Montgomery  H.  Throop.     Albany,  1870. 

Rights,  Remedies  and  Liabilities  of  Sureties  and  Guarantors,  etc.  By  Ed- 
win Baylies.     New  York,   1881. 

A  Treatise  on  the  Law  of  Principal  and  Surety.  By  Edward  Dix  Pitman, 
Esq.,  A.  M.,  Barrister  at  Law.     Philadelphia,  1843. 

A  Treatise  on  the  Law  of  Suretyship  and  Guaranty.  By  Darius  H.  Pin- 
grey,  LL.  D.     Albany,  1901. 

The  Law  of  Subrogation.    By  Henry  N.  Sheldon.     Boston,  1893. 

Title  "Suretyship"  in  "Brief  Makers'  Guide:  An  Index  to  the  Notes  in  the 
American  and  English  Annotated  Cases."  Edward  Thompson  Company. 
Northport,  1910. 

Hen.Sur.  (xix) 


2  FORMATION.  (Part  1 

Passeley.'  If  you  ought  not  to  answer,  and  afterwards  the  deed 
be  found  null,  whereupon  he  would  be  condemned  in  the  debt,  and  if 
he  were  not  able  to  pay,  by  reason  whereof  we  should  sue  you,  you 
woultl  again  show  that  deed,  wherefore,  etc. 

Ilerle  said:   No,  because  they  were  not  party  to  the  deed. 

Hencham.*  We  must  inquire  about  this  order  to  pay;  for  if  it  be 
good,  you  are  all  quit;  if  otherwise,  you  are  all  bound  to  the  debt  by 
the  obligation ;  wherefore  we  must  first  know  if  the  obligation  is  your 
deed,  etc. 

Herle  admitted  the  obligation. 

Hencham.  Then  stay  until  the,  order  to  pay  be- tried.  Note,  by 
Warr,  that,  if  the  deed  be  found  null,  as  not  being  the  deed  of  the 
testator,  they  will  all,  without  any  other  answer,  be  condemned  in  the 
debt.* 


SECTION  2.— SURETYSHIP  IN  THE  FORM  OF  SIMPLE 

CONTRACT 


KIRBY  &  ECCLES  CASE. 

(Cf'urt  of  King's  Bench,  Trinity  Term,  loSO.    1  Leonard,  186,  part  1.) 

In  an  action  upon  the  case  the  plaintiff  declared.  Quod  cum  quaedam 
communlcatio  fuisset  betwijct  the  plaintiff  and  one  Cowper,  that 
Cowper  should  mast  certain  hogs  for  the  plaintiff,  the  defendant  did 
promise^  that  in  consideration,  that  the  plaintiff  promised  give~Tmto 
the  defendant  three  shillings  and  four  pence  for  the  fatting  of  every 
hog,  that  the  said  hogs  should  be  redelivered  to  him  well  fatted;  to 
whicll_prQmise  and  warranty,  the  plaintiff'  giving  faith,  ~3envered  To 
the  said  Cowper  one  hundred  and  fifty  hogs  to  be  masted;  and^hat 
one  hundred  of  them  were  delivered  back,  but  the  residue  were  not. 

»A  Serjeant  at  law,  attorney  for  the  plaintiff.    See  Foss'  Lives,  p.  502. 

8  Ralph  de  Hengham,  Chief  Justice  of  the  Common  Pleas,  1273-74  to  1290, 
1?.00  to  1309.     Foss'  Lives,  33S. 

♦  "The  common  law  protected  men  against  improvident  contracts.  If  they 
bound  themselves  by  deed,  it  was  considered  that  they  must  have  determined 
upon  what  they  were  about  to  do  before  they  made  so  solemn  an  engagement; 
and  therefore  it  was  not  necessary  to  the  validity  of  the  instrument  that  any 
consideration  should  appear  on  it"  Best,  C.  J.,  in  Morley  v.  Boothby,  3  Bing- 
ham.  '"-  ''^-J.-.). 

'J'  forms  of  suretyship  by  specialty  were  joint  contracts,  as  m 

•''f  ' -ise.    Suretyship  by  specialty  has,  however,  not  infrequently  been 

ill  of  a  several  contract-     Douglass  v.  Howland.  24  Wend.  (N.  Y.)  35 
>t.  p.  5S8;  .Tohhson  v.  Baker.  4  B.  &  Aid.  440  (1S21) :  Elliott  v.  May- 
iir  .1.  4  Ala.  417  (1.'542):  In  re  Silvester.  1  L.  R.  (Chancerv)  573  (I8t>5). 
.o-l"  J^r'<''ison  V.  Brandt.  53  Minn.  10.  55  N.  W.  62  (1S9.3),  the  court  said: 
•The  defeudants  Betersou  and  Bergstrom  raise  the  objection  in  limine  that 


Ch.  1)  DIFFERENT  FORMS  OF  SURETYSHIP.  3 

It  was  moved  That  here  is  not  any  consideration  for  which  the  de-  -^^'"^ 
fendant  should  be  charged  with  any  promise:     but  it  was  argued  onvrm-.ofM-./'P^  f- 
the  other  side.  That  the  promise  was  the  cause  of  the  contract,  and 
being  made  at  the  time  of  the  Communication  and  contract,  ihould 
charge  the  defendant ;    but  if  the  promise  were  at  another  time,   it 
should  be  otherwise.    There  was  a  case  lately  betwixt  Smith  and  Ed- 
munds.    Two  merchants,  being  reciprocally  endebted  the  one  to  the 
other,  agreed  betwixt  themselves  to  deliver  all  their  Bills  and  Bonds 
into  the  hands  of  one  Smith  who  promised  that  he  would  not  deliver 
them  to  the  parties  until  all  accounts  were  ended  betwixt  them;    and 
yet  he  did  deliver  them,  and  for  that  an  Action  brought  against  him  y 
was  adjudged  maintainable :  yet  there  was  not  any  considerationVlinor 
was  it  material,  for  the  action  Is  grouri3e3"upon  the  Deceit,  and  so^s 
it  here,  upon  "fKe"  warranty :    and  of  that  opinion  were  Clench  and 
Wray.  Justices;    but  (Jawdy  was  of  a  contrary  opinion. 


SALINE  COUNTY  v.  SAPPINGTON  et  al.      ^>t^-''^ 
(Supreme  Court  of  Missouri,  1S76.     64  Mo.  72.)         ibMZJL*.  ■»*** 

Error  to  Saline  Circuit  Court. 

Sherwood,  Judge,  delivered  the  opinion  oi  the  court. 

Action  on  an  instrument  executed  by  Sappington  as  treasurer  of 
Saline  county,  and  by  the  other  defendants..a&_hls.  sureties.  "THe  in- 
strument was  not  a  bond  in  consequence  of  lacking  the  word  "seals" 
in  the  body  thereof. 

Breaches  were  set  out,  reformation  of  the  instrument  so  as  to  make 
it  a  specialty,  and  judgment  for  the  penalty  and  execution,  etc.,  were^  ^ 
askedTTon'  The  dei£ndants~siicces.siuJly  demurred.  There  was  noi"^"^'V 
insuf0LekrLCjLill.,-the..petitien.  A  mere  prayer  for  relief  is  not  demur- 
rable. The  insinim£iit_.sued- on- w^s- well  enough  without  a  seal;  was 
good__as._.a^^common-law  contract,  made  on  adequate  consideration 
(Henoch  v.  Chaney,  61  Mo.  129),  therefore  no  necessity  existed  for 
reformation,  and  the  prayer  therefor  may  be  rejected  as  surplusage. 

the  bond  of  indemnity  shows  on  its  face  that  it  was  executed  after  the  con- 
tract  was  made,  and  Is  without  consideration  to  support  it.  It  is  a  sufficient 
answer  to  this  that  the  instrument  is  a  covenant  by  which  they  have  bound 
themselves  uicler  seal,  which  conclusively  imports  a  consideration." 

See  the  opinion  of  Hare,  J.,  in  Shackamaxon  Bank  v.  Yard,  143  Pa.  129, 
22  Atl.  908,  24  Am.  St.  Rep.  521  (1S91). 

In  Fallowes  v.  Taylor,  7  Term  R.  475  (179S),  Lord  Kenyon,  C  J.,  said:  "The 
want  of  a  consideration  to  a  bond  affords  no  .si'ound  of  obiection  ;  and  if  there 
were  anything  illegal  In  this  consideration  the  defendant  should  have  plead- 
ed it." 

The  ontiro  ooninwn  law  as  to  specialties  having  been  changed  in  some 
American  iurisdictions  by  statute,  a  surety  cannot  become  bounff  by  specialty 
within..such  jurisdictions  without  consideration.  Bullen  v.  Morrison,  98  111. 
App.  669  (1901). 

6  In  the  sense  of  positive  advantage  to  the  defendant. 


4  FORMATION.  (Part  1 

Tlic  mere  prayer  for  relief  does  not  constitute  a  distinct  cause  of 
action,  but  only  seeks  a  particular  remedy.     McClurg  v.  Phillips,  49 
Mo.  315. 
Judgment  reversed,  and  cause  remanded;  the  other  judges  concur.* 


BROWN  V.  GARBREY. 

(Court  of  Common  Pleas,  Trinity  Term,  15SS.    Gouldsb.  94.) 

Brown  recovered  against^^arbre)^  jn_an  Assumpsit,  and  thereupon 

♦    f      .  Garbrey  brought  a  Writ  of  Error,  and  assigned  for  error,  that~thqre 

}  ^^f^^'r^  •         was  no  Consideration ;    for  the  Declaration  was,  that  whereas  there 

i^ftuU^v"^"  was  a   communication  between    Brown  and~~3~~\voman,    for   mariage 

between  them,  that  the  Father  of  Brown  had  promised  to  the  Wife, 

that  if  she  would  marry  his  Son,  he  would  make  a  Feoffment  of  his 

land  to  the  use  of  himself  for  life,  and  after  to  the  use  of  them  two 

in  tayl,  the  remainder,  &c.  and  that  Garbrey  assured  to  the  Wife  in 

consideratione  praemissorum,  that  if  the  Father  did  not  doe  so,  then 

he  would  give  the  Wife  a  hundred  pound ;  ac  licet,  the  Father  did  not 

give  to  them  in  tayl,  secund.  agreament.  praedict.  yet  Garbrey  refused, 

&c. 

And  Cook  moved  that  this  should  be  no  Consideration ;  for  the  com- 
munication of  Mariage  was  not  by  him,  but  between  strangers  to  him ; 
but  if  tlie  father  had  assumed  in  consideration  of  Mariage,  then  that 
should  have  been  good  against  the  Father;  but  against  Garbrey  it  is 
no  otherwise  than  as  if  one  promise  to  you  to  Enfeoff  you,  and  I 
say  that  if  he  doe  not  so,  then  I  will  give  you  a  hundred  pound,  this  is 
j^  without  consideration,  and  so  here.  But  the  Justices  held  the  contrary, 
/and  that  the  consideration  is  good;  for  in  consideratione  praemissorUm, 
is  nTcoHsiclc'rafion^'orilT^r Mariage,  as  well  as  of  the  refusall  of'^^'ie 
Father;  and  allso  it  was. alleged,  that  Garbrey  was  Cosen  German  to 
Brown,  and  therefore,  &c. 

Anderson.  If  a  communication  between  two,  and  a  Father  promise 
to  make  a  Joynture,  and  a  stranger  say  that  if  the  Father  will  not, 
then  he  will  doe  it,  this  is  a  good  consideration ;  and  there  is  no 
necessity  to  be  so  curious  in  the  consideration ;  for  that  is  not  travers- 
able. 

But  Cook   sayd,   that   if  it   be   Executory,   then   it   is   traversable. 

Another  error  Cook  assigned,  because  they  had  not  alleged  a  not  per- 

t'     ■:  LUce  in  the  Father;  for  the  promise  of  the  Father  was  to  make  a 

rco:inient  to  the  use,  Sec.  and  they  averre  that  allthough  that  he  did  not 

.  make  a  gift  in  tayl,  which  cannot  be  the  same  thing  which  the  Father 

6  llonoe  an  Instrument.  "In  form  a  bond  but  without  seals,  •  •  •  Is  a 
vnlld  contract  obligation  if  executed  upon  sufficient  consideration  and  deliv- 
ered to  take  effect  as  security."  Bank  v.  Briggs'  Assignees,  69  Vt  12.  37  Atl. 
2J1  (ISIM). 


-X 


Ch.  1)  DIFFERENT  FORMS  OF  SURETYSHIP.  5 

should  doe ;  for  an  estate  to  use  in  tayl,  and  a  gift  in  tayl  is  not  all  one. 
But  the  Tusdces  held  it  good,  for  by  the  Statute  of  27  H.  VIII  the 
use  is  executed,  and  so  the  estate  executed.  Also  the  Declaration  was 
that  he  had  not  made  a  gift  in  tayl  secundum  agreamentum  prsedictum. 
But  Cook  moved  that  it  should  not  be  good,  for  if  a  man  be  bound 
to  make  an  estate  to  another  in  the  per,  and  he  make  it  in  the  post,  this 
is  no  performance,  and  here  by  the  Statute  he  is  in,  in  the  post,  and 
the  not  performance  is  alleged  to  be,  because  he  did  not  in  the  per,  and 
saith,  that  he  which  is  in  by  the  Statute,  shall  not  vouch,  for  he  is  in, 
in  the  post,  and  he  cited  Winters  Case,  which  was  not  denyed;  but 
Peryam  said,  that  considerations  in  actions  upon  the  Case,  and  Con- 
ditions, are  not  all  one. 


SECTION  3.— SURETYSHIP  IN  THE  FORM  OF  JOINT  LIA- 
BILITY. 


RILEY  V.  JARVIS  et  al.      f^^^^^' 
(Supreme  Court  of  Appeals  of  West  Virginia,  1896.  43  W.  Va.  43,  26  S.  E.  366.) 

Error  to  Circuit  Court,  Taylor  County. 

Assumpsit  by  Oscar  F.  Riley  against  Claude  S.  Jarvis  and  another. 
There  was_a  judgment  for  plaintiff,  and  defendants  bring  error.  Re- 
versed. "  .    .   -  

Brannon,  Judge.  Oscar  F.  Riley  brought  assumpsit  in  the  Taylor 
county  circuit  court,  and,  judgment  having  been  rendered  against  the 
defendants,  Claude  S.  Jarvis  and  Granville  E.  Jarvis,  they  bring  the 
case  here. 

The,  defendants  demurred  to  the  declaration  and  each  count,  and 
the  court  sustamed'llTFlleTrrnxr^r  and  gave  judigment  upon  such  de- 
murrer  upon  all  the  counts  except  the  firsts  and  overruled  it  as  to 
thfit  count-.  The^rst  count  is  the  ordinary  indebitatus  aisumpsii  f6r 
goods,  wares,  and  merchandise  "sold  and  delivered.  The  second  is  a 
special  count,  alleging  that  defendants  and  plaintiff  made  a"wTiTten 
contract  whereby  Claude  S.  Jarvis  agreed  to  pay  individually,  out  of  his 
own  funds,  to  plaintiff,  $10  per  month,  so  long  as  they  should  continue 
in  business  together,  or  so  long  as  the  plaintiff  should  run  the  business 
in  a  businesslike  and  profitable  manner,  as  part  consideration  for  his 
time  and  labor  about  the  business;  thai_Granville  E.  Jarvis  executed 
the  writing  and  bound  himself  equally  with  Claude  S.  Jarvis,  as 
security  for  him ;  and  that  the  plaintiff,  under  the  writing,  carried  on 
the  business  for  a  certain  specified  time,  for  which  the  defendants 
became  bound  to  pay  him  $120,  but  they  refused  and  failed  to  do  so, 


^>v.,<^^^^ 


6  FORMATION.  (Part   1 

etc.  The  third  xount  was  indebitatus  assumpsit,  containing  a  clause 
for  goods  and  chattels  sold,  horses  sold,  work  done,  and  material 
therefor  provided,  and  other  common  clauses. 

-  Appellants'  counsel  contends  that  there  is  a  misjoinder_of__£Qiaiit6, 
and  "'{Ins  oTt^Ir-  idea  tliat  the  liability  stated  in  the  second  count  is 
against  Granville  E.  Jarvis  only  as  surety,  while  other  counts^chaTge 
both  Claude  S.  and  Granville  E.  Jarvis  with  joint  liability.  I^think 
tl\£re  js^jiqthing  in  this  contention.  Where  two  partie?,  by  \vntten 
(jblij^Mlion,  bind  themselves  to  pay  another  a  given  smn,  thoQgh  one 
sign  with  the  word  "surety"  annexed  to  his  name,  or  it  be  stated  in  the 
writing  that  he  is  surety,  or  binds  himself  as  surety,  both  are  equally 
bound  as  principals,  so  far  as  it  concerns  the  creditor's  right,  as  they 
both  promise  to  pay  him.  It  is  a  mere  memorandum  to  evidence  the 
fact  that  the  one  is  surety  as  between  the  parties  bound.  Hunt  v. 
Adams,  5  Mass.  358,  4  Am.  Dec.  G8 ;  Id.,  6  Mass.  519  ;  Humphreys 
v.  Crane,  5  Cal.  173;  opinion.  Harris  v.  Brooks,  21  Pick.  (Mass.)  195, 
32  Am.  Dec.  25-1;  Wil-son  v.  Campbell,  1  Scam.  (111.)  493.  Where 
the  surety  does  not  sign  the  note,  but  puts  a  memorandum  at  its  foot 
that  he  binds  himself  as  surety  for  the  payment  of  the  note,  it  is  the 
same.  The-JiUligation  is  joint  and  several.  Hunt  v.  Adams,  5  Mass. 
358,  4  Am.  Dec.  68 ;  Wilson  v.  Campbell,  1  Scam.  (111.)  493.  I  do  not 
think  the  declaration  need  have  noticed  the  suretyship  feature,  as  its 
omission  would  have  been  no  variance,  because  immaterial ;  and, 
being  in  the  declaration,  it  does  not  have  any  efifect,  the  count  charging 
a  joint  liability  notwithstanding  its  presence.     *     *     *7 


CITY  OF  PHILADELPHIA  v.  REEVE5  et  al. 

(District  Court  of  Philadelphia,  1S64.     5  Phila.  357.) 

SH.^RSW00D,  P.  J.  This  i.s  a  demurrer  to, .a.  plea,  nf  abatement  (?f 
nonjoinder  of  another  defendant.  The  instrument  sued  on,  and  which 
is  set  fortiron  oyer,  is  a  lease  in  which  Fort  Ihrie  was  tenant  and  de- 
fendants  his  sureties.  The  covenant  sued  upon,  however,  is  unqjcs- 
tionabJy  joint,  unless  the  insertion  of  the  word  "sureties,"  describing 
the  defendants,  renders  it  joint  and  several.  Indeed,  it  would  not  heTp 
the  plaintiff  to  construe  it  to  be  joint  anci  several,  as  he  has  sued  two 
of  the  contractors,  which  he  cannot  do  where  there  is  a  joint  and  - 
several  contract  by  them.  The  acute  and  ingenious  counsel  of  defend^ 
ant  contended,  however,  that  these  words  by  construction  of  law  made 
two  separate  covenants,  one  a  several  one  with  Fort  Ihrie  as  tenant 
and  principal,  and  another  accessory  joint  contract  with  the  defendants 
as  his  sureties.    He  produced  no  authority,  however,  in  support  of  this 

^Only  so  much  of  the  case  is  given  as  relates  to  the  question  of  Joint  obli- 
gation. 

Accord:    Clark,  Administratrix,  v.  Dane,  128  Ala.  122,  23  South.  9G0  (1900). 


Ch.  1)  DIFFERENT   FORMS   OF  SURETYSHIP.  7 

novel  position,  and  we  think  it  cannot  be  sustained  upon  any  principle 
of  construction. 

Judgment  for  defendants.' 


WOOD  V.  FARMER,     ^'^^-^-^t^ 
(Supreme  Judicial  Ck)urt  of  Massachusetts,  190S.    200  Mass.  209,  86  N.  E.  297.) 

Knowlton,  C.  ]Qy  The  defendant  filed  a  paper  which  is  entitled : 
"Motion  to  Dismiss  and  Demurrer."  It  begins  by  stating  that  six 
other^^ersons^  whose  names  are  given  are  necessary  parties  defehHant 
in  the  suit,  andl  avers  that  therefore  the  defendant  should  not  be  held  to 
answer,  and  the  writ  should  be  abated  and  the  action  dismissed.  This 
is^^anT  answer  in  abatement,  and  it  "properly  raises  the  first  question  in 
the  case.  Then  follows,  in  the  same  paper,  without  waiving  the  pre- 
ceding answer,  a  demurrer  setting  up  these  and  other  facts  as  grounds 
of  the  demurrer.  No  question  is  raised  by  either  party  on  the 
pleadings. 

The  question  as  to  nonjoinder  arises  under  the  third  clause  of  the 
contract  declared  on,  which  is  in  these  words :  "In  consideration  of  the 
premises  the  guarantors  jointly  guaranty  the  payment  of  said  twenty- 
five  thousand  dollars,  or  any  part  thereof,  pro  rata^  and  also  that  the 
Securfties  Company  will  fully  and  completely  perform  and  fulfill  the 
terms  of  the  agreement  with  the  parties  of  the  first  part."  The  de- 
fendant is  one  of  seven  guarantors  who  signed  the  contract.  Is~tlie 
undertakmg  contained  in  this  clause  joint  or  several?  The 'words  "pro 
rata*'  are  all  that  create  a  possibility  of  a  doubt  about  it.  Without  these 
words,  even  if  the  word  "jointly"  were  omitted,  it  wouloBe  un^ues- 
tionabl3r~a"  joint  undertaking.  Bartlett  v.  Robbins,  5  Mete.  18^; 
Donahue  v.  Emery,  9  Mete.  63. 

The  word  "jointly"  emphasizes  its  character  by  an  express  statement. 
Do  the  words  "pro  rata"  change  its  meaning  and  legal  effect?  We 
think  they  do  not.  See  Bartlett  v.  Robbins,  ubi  supra ;  Penniman  v. 
Stanley,  122  Mass.  310.  It  is  difficult  to  understand  their  exact  sig- 
nificance. As  here  used  they  are  not  proper  to  characterize  several 
action  as  distinguished  from  joint  action.  They  more  naturally  refer 
to  the  proportion  of  the  whole  amount  that  the  guarantors  are  to  pa}^ 
jointly,   if   payment   of   only   a   part    should   be    required    under    the 

8  in_jQaii3L-States.  joint  contracts  are  modified  by  statute  into  joint  and 
several  contracts.  See  post,  Part  III.  "Defenses  of  tlie  Suret^y-  against  fGe 
Creditor  or  Promisee,''  Chapter  I,  "Defenses  Based  on  tlie  .Joint  Nature  of 
the  Contract — The  Death  of  the  Surety."  See  Stimson's  American  Statute 
Law,  §  4113 ;  Code  Civ.  Proc.  Cal.  §§  414,  989 ;  Rev.  Laws  Minn.  1905,  §  4282. 

0  The  stiitement  of  facts  has  been  omitted,  a  sufficient  statement  bein;^ 
in  the  opinion. 

Tliose  portions  of  the  opinion  dealing  with  the  question  whether  the  plain- 
tiff has  a  right  of  action  as  assignee  and  the  further  question  whether  there 
was  any  illegality  in  the  transaction  have  been  omitted. 


8  FORMATION.  (Part   1 

guaranty.    The  first  thing  provided  for  is  a  guaranty  of  payment  of 
tlie  whole  sum  of  $25,000,  and  the  second  thing  provided  for  is  the 
payment  of  any  part  thereof,  pro  rata.    It  seems  to  us  to  be  an  inapt 
expression  used  to  indicate  a  payment  of  any  proportional  part  of  the 
whole  sum  in  the  same  manner  and  upon  the  same  terms  as  payment  of 
the  whole  would  be  made.    We  think  it  was  not  intended  tq_change  the 
whole  character  of  the  undertaking  from  what  Ts  expressly  said  tg  be 
a  jolhrguaranty  to  a  several  guaranty  by  each  person  of  only  a  frac- 
tional one-seventh  of  the  whole  sum  of  $25,000  or  any  part  thereof. 
/s,      Th[£  next  qiiestion  is  whether  the  letter  written  to  the  defendant  by 
Abbott  and  White,  after  the  contract  was  signed  and  before  its  delivery, 
changed  its  legal  fffcct.    We  think  it  plain  that  it  did  not.    The  letter 
did  not  suggest  a  change  in  the  contract,  much  less  did  it  purport  to 
make  a  change.    It  told  of  the  advice  of  counsel  that  each  of  the  guar- 
antors was  liable  for  only  one-seventh  of  the  whole  amount,  and  it  ex- 
pressed the  concurrence  of  the  writers  in   that  advice  and  opinion. 
There  is  nothing  to  indicate  that  the  Commonwealth  Securities  Com- 
pany, or  either  of  the  six  joint  guarantors  other  than  the  defendant, 
had  any  knowledge  of  the  letter.    It  was  a  mere  expression  of  opinion 
as  to  the  legal  effect  of  the  contract  in  writing.    This  opinion  and  the 
expression  of  it  to  one  of  the  seven  guarantors  did  not  change  the  con- 
^  tract,  or  affect  the  legal  rights  of  any  of  the  parties.    The  action  cannot 
^be  maintained  without  a  joinder  of  the  other  necessary  parties.   "The 
same  considerations  apply  alike  to  both  counts  of  the  declaration. 
['     T]jp  prp'^jHing  j^/^gp  ciT;^|;^jnpH  the  demurrer  and  ordered  judgment 
7  for  the  defenjjant.    The  grounds  of  his  decision  are  not^sFaTed  in  the 
^  report.     \''ery  likely  they  were  those  which   we  have  already  con- 
sidered.    *     *     * 

The  pleadings  and  the  form  of  the  report  leave  us  doubtful  in  regard 
to  the  order  that  should  be  entered.  The  case  was  heard  upon  issues 
of  law,  and  from  the  fact  that  the  judge  ordered  judgment  for  the  de- 
fendant after  sustaining  the  demurrer,  and  then  reported  the  case,  we 
infer  that  the  plaintiff  did  not  desire  to  amend  his  writ.  There  was 
no  formal  joinder  of  an  issue  of  law  upon  the  answer  in  abatement. 
On  a  decision  of  such  an  issue  against  the  plaintiff,  or  upon  a  similar 
decision  on  the  demurrer,  judgment  for  the  defendant  would  follow, 
unless  the  plaintiff  moved  to  amend  his  WTit.  The  entry  is  to  be  judg- 
ment for  the  defendant,  unless  within  15  days,  the^plaintiff  sHov\^S"catjse 
for  some  other  disposition  of  the  case  in  the  superior  court. 
So  ordered. 


Ch.  1)  DIFFERENT  FORMS  OF  SURETYSHIP. 


SECTION  4.— SURETYSHIP  IN  THE  FORM  OF  THE  CON- 
TRACT OF  INDORSEMENT  OR  OF  ANY  CONTRACT 
UNDER  THE  LAW  MERCHANT 


TANNER  V.  GUDE. 

(Supreme  Court  of  Georgia,  1897.    100  Ga.  157,  27  S.  E.  938.) 

Complaint  on  note.  Before  Judge  Reid,  City  Court  of  Atlanta. 
January  Term,  1896. 

Simmons^  Chief  Justice.  Upon  a  promissory  note  for  $1,369.13 
and,  interest,  due  August  29,  1895,  Gude,  on  December  10,  1895, 
brought  suit  against  Collins,  the  maker,  and  Tanner,  payee  and  in- 
dorser,  alleging  that  Tanner  had  indorsed  it  to  him  for  value.  Tanner  qJJ.^t:^  "fP^' 
filed  a  plea  alleging:  He  Mras  a  mere  surety  on  the  note,  which  fact  i^^^j^^yyTjrhr 
was  known  to  the  plaintiff.  On  September  16,  1895,  after  the.  note 
fell  diie,_the  plaintiff,  then  the  holder  and  indorsee,  agreed  with  Collins, 
the  maker,  that  if  he  would  pay  him  the  accrued  interest  on  the  tiote  to 
itsjTiaturity  and  future  interest  for  ninety  days  in  advance,  he  would 
extendi  the. note  to  December  1,  1895,  and  not  bring  suit  thereon  pre- 
vious to  that  date.  Collins  paid  said  sums  on  September  16,  1895, 
amounting  to  $247,  and  the  agreement  between  him  and  the  plaintiff 
was  fully  executed.  Defendant  had  no  knowledge  of  this  arrange- 
ment, and  it  was  consummated  without  his  consent.  Nor  did  plaintiff 
make  any  demand  of  defendant  to  pay  the  note  at  maturity.  At  the 
time  of  said  arrangement  Collins  was  solvent,  and  would  have  paid  the 
note  if  the  plaintiff  had  not  agreed  to  wait,  but  he  has  since  become 
insolvent.  By  reason  of  this  conduct  on  the  part  of  plaintiff,  defend- 
ant's risk  has  been  increased,  and  he  has  been  injured  and  exposed  to 
greater  liability,  and  by  reason  of  the  same  he  is  discharged  from  any 
liability  on  the  note.  The_court,  on  demurrer,  ordered  that  this  plea  ^'^^^  ^^^'^^ 
be  stricken, j^inless  the  defendant  would  amend  by  denying  the  allcga- 
tion^that  he  indorsed  the  note  for  value  to  the  plaintiff  after  its  date. 
This  was.- not  done,  and  the  plea  was  stricken.  To  this  ruling  Tanner 
excepted. 

\Ve  think  the  court  erred  in  striking  the  plea.  The  contention  of 
counsel  for  tEe  defendant  in  error  was,  that  ff  the  indorsement  was 
for  value,  the  indorser  was  not  a  surety,  and  therefore  was  not  dis- 
charged by  the  extension.  It  is  true  there  is  a  distinction  between  an 
ordinary  indorser  and  one  who  is  merely  a  surety ;  but  a  contract  of 
suretyship  is  necessarily  included  in  every  unqualified  indorsement  of  a 
negotiable  instrument  (2  Dan.  Neg.  Inst.  •§§  1303,  1305 ;  ;McCay777rin 
Freeman  V.  Cherry,  46   Ga.  16);    and  the  principle  which  protects 


10  FORMATION.  (Part  1 

sureties  from  any  act  of  the  creditor  tending  to  injure  the  surety^  or 
increase  his  risT^s  appli"cable~as'well  to  indorsers  for  value  as  tollio^e 
wITdse  indorsement  is  for  accommodation  merely.  The  rule  has  been 
stalccl'thus:. ''lithe  defendant  is  not  the  principal  and  absolute  debtor, 
but  is  a  party  collaterally  and  conting-ently  liable,  upon  the  principal 
debtor's  default,  as  is  the  *  *  *  indorser,  he  may  set  up  in  defense 
any  valid  ag-reement  between  the  holdler  of  the  security  and  the  princi- 
pal debtor,  founded  upon  an  adequate  consideration  and  made  without 
his  concurrence,  whereby  a  new  and  further  time  of  payment  is  given 
to  the  principal  debtor,"  2  Greenl.  Ev.  §  202.  See,  also.  Story,  Prom. 
Notes,  §§  -112^14;  2  Am.  &  Eng.  Enc.  of  Law,  p.  386;  1  Brandt, 
Suretyship,  §  2;  Id.  §§  127,  359.  In  the  case  of  Stallings  v.  Johnson, 
27  Ga.  564,  where  an  indorser  was  held  discharged  by  an  agreement 
between  the  maker  and  the  holder  of  a  note  for  an  extension  of  the 
time  of  payment,  the  indorser  was,  as  in  the  present  case,  the  payee  of 
the  note ;  and  the  contrary  not  appearing,  the  presumption  is  that  he 
was  an  indorser  for  value,  such  being  the  prima  facie  import  of  the 
indorsement.  Freeman  v.  Cherry,  supra.  We  think  the  decision  in 
Stallings  v.  Johnson  controls  the  present  case.  Such  an  agreement  as 
the  one  here  referred  to,  between  the  holder  of  a  note  and  the  maker, 
precludes  an  indorser  from  availing  himself  of  the  right  which  he 
would  otherwise  have  of  paying  the  debt  and  proceeding  at  once  to 
enforce  his  demand  against  the  maker;  and  it  would  be  manifestly  un- 
just to  allow  the  indorsee  to  thus  tie  the  hands  of  the  indorser  until 
after  the  insolvency  of  the  maker,  and  then  hold  the  indorser  liable; 
and  this  is  so  whether  the  indorser  has  received  a  consideration  for  his 
indorsement  or  not. 

Judgment  reversed.     All  the  Justices  concurring.^" 

h  ft.  ^L  f^..ir..f  10  Thus  the  acceptor  of  a  bill  of  exchange  may  be  in  fact  a  surety  and 

,  becoine~oiititTea  to  be  treated  as  such.     Daries  t.'  StalTibanfe,~6""De~tjT~Mr*& 

'   ,      (jrnrn-ds.'^r)). 

'    '  "TheiiJLQrjisliips  see  no  reason  to  doubt  that  the  liabilities  inter  se  of  the 

succ^sive  indorsers  of  a  bill  or  promissory  note  must,  in  the  absence  of  oTI 
evidence  to  the  contrary,  be  determined  according  to  the  ordinary  principles 
nf  the  law  merchant.  He  who  is  proved  or  admitted  to  have  made  a  prlbr 
indorsement  iuust,  according  to  these  principles,  indemnify  subsequent  indors- 
ers. But  it  Is  a  well-established  rule  of  law  that  the  whole  facts  and  cir- 
cumstances attendnnt  upon  the  making.  Issue,  and  transference  of  a  bill  or 
note  may  be  legitimately  referred  to  for  the  purpose  of  ascertaining  the  true 
relation  to  each  other  of  the  parties  who  put  their  signatures  uix>n  it,  eith'&r 
ii.s  makers  or  as  indorsers;  and  that  reasonable  inferences,  d"erT\-"ed  fiuju 
these  facts  and  circumstances,  are  admitted  to  the  effect  of  qualifying,  al- 
tering, or  even  Inverting  the  relative  liabilities  which  the  law  merchant  woulji 
otherwise  assign  to  them.  It  is  in  accordance  with  that  rule  that  the  drawer 
of  a  bill  is  made  liable  in  relief  to  the  acceptor,  when  the  facts  and  circum- 
stances connected  with  the  making  and  issue  of  the  bill  sustain  the  inference 
that  it  was  accepted  solely  for  the  accommodation  of  the  drawer.  Even 
where  the  liability  of  the  party,  according  to  the  law  merchant,  is  not  altered 
or-affected  by  reference  to  such  acts  and  circumstances,  he  may  still  obtain 
relief  by  showing  that  the  party  from  whom  he  claims  indemnity  agreed  to 
uive  it  him  :  but  in  that  ease  he  sets  up  an  independent  and  collateral  gijat- 
autee,.  which  he  can  only  prove  by  means  of  a  writing  which   will  satisfy 


Ch.  1)  DIFFERENT  FORMS  OF  SURETYSHIP.  11 

CHENEY  V.  THOMPSON  HILES  CO. 

(Supreme  Court  of  Georgia,  1897.     101  Ga.  370,  28  S.  E.  lOlT.) 

Complaint  on  note.  Before  Judge  Harris,  City  Court  of  Floyd 
County,  December  Term,  1895. 

Lumpkin,  P.  J.  TheJThompson  Hiles_Company^ brought  an  action 
against  Phil  Daniel  and  Abe  Jackson  as  makers,  and  A.  DV  CTiehey  as 
indorser,  of  a  promis'jory  note.  Subsequently  the  plaintiff  filed  an 
amendment  in  these  words :  "And  now  comes  Thompson  Hiles  "Com- 
pany anH'  strikes  the  name  of  A.  D.  Cheney  as  indorser,  and  sues  A. 
D.  Cheney  as  surety."  Thereupon  the  defendant  Cheney  filed  a  plea  in 
the  following  language :  "And  now  comes  the  defendant,  and  says  he 
was  indorser  on  the  note,  and  not  surety."  The  note  in  question  was 
signed  by  Phil  Daniel  and  Abe  Jackson,  and  was  payable'to  the 'Grder 
of  ATDTCheney,  jxlKL-ijidorsed  his  name  across  the  face  of  the_nole, 
and  thus  traiTsferred  it  to  the  plaintiff.  If  he  had  written  his  name 
across  the  back  of  the  note,  there  could  be  no  possible  question  that 
he  was  in  the  strictest  sense  an  indorser  of  the  paper.  That  instead  of 
so  doing  he  wrote  his  name  across  the  face  of  the  paper  makes  no  sub- 
stantial difference.  The_suit  was  therefore  properly  brought  in  the 
first  instance  against  Cheney  as  indorser,  and  the  change  made  in 'the 
pteiTitiff*S^te'adings  was  not  ordy-  uimecessary,  but  inappropriate. 

Inasmuch,  however,  as  the  record  discloses  that  there__was--rro"mer- 
itorious  defense  of  wdiich  the  defendant  Cheney,  in  either  relation  to 
the  paper  sued  on,  could  have  availed  himself,  the  judgment  against 
him  was  in  accord  with  the  substantial  justice  of  the  case.  Neverthe- 
les'sTTlTwas  his  strict  legal  right  to  be  sued  and'tonRave  a  judgment 
against  him  in  the  exact  capacity  in  which  he  actually  contracted. 
Direction  is  therefore  given  that  the  declaration  be  restored  to  its  origi- 
nal form  by  entering  an  order  striking  the  plaintiff's  amendment 
thereto.  A  precedent  for  this  course  is  to  be  found  in  the  case  of 
Ware  v.  City  Bank  of  Macon,  59  Ga.  840. 

Judgment  affirmed,  with  direction.    All  the  Justices  concurring. 

thft  stnfjTtg  of  frauds."  Macdonald  v.  Whitfield,  L.  R.  8  App.  Cases,  744 
(1883),  per  Cord'Watson. 

"Was  this  the  paymeut  of  a  valuable  consideration?  Battin  had. received 
Fairmau's  notes  in  exchange  for  his  own  notes  of  like  sums.  Every  one  of 
his  notes  in  Fairman's  hands  had  to  be  indorsed  by  Fairman,  and  was  held 
by  the  banks  and  others  on  the  credit  of  both  their  names.  Both  were  liable 
to  the  holders,  and  as  to  them  and  all  other  parties  Battin  stood  as  principal 
debtor,  and  Fairman  as  his  surety ;  but,  as  between  themselves,  Fairman  was 
the  principal  debtor,  and  Battin  the  surety.  A.  suretjy  may  consent  to  stand 
as  drawer  as  well  as  indorser,  and  whilst  the  law  will  treat  them  as  sustain- 
ing the  rehitions  they  have  assumed  on  the  paper  they  have  issued,  equity 
will,  in  adjusting  their  mutual  rights  and  liabilities  as  between  themselves, 
look  at  the  essential  truth  of  their  relation,  and  make  him  who  really  is  the 
prluL'ipul  delrtor  indemnify  him  who  really  is  the  surety."  Taylor's  Appeal, 
4o-Fa:  81  (isns). 

On  guaranty  operating  as  an  Indorsement,  see  note  10  H.  L.  R.  186. 


12  FORMATION.  (Part  1 


CHAPTER  II 

ESSENTIALS  TO  FORMATION  OF  SURETYSHIP  BY 
SIMPLE  CONTRACT 


SECTION  1.— SURETYSHIP  IN  THE  FORM  OF  A  SIMPLE 
CONTRACT  AND  THE  DOCTRINE  OF  CONSIDERATION 


f 


JORDAN'S  CASE. 

(Court  of  King's  Bench.  Michaelmas  Term,  1536.    Year  Book,  27  Hen.  VIII,  fol. 
24,  pi.  3  [Yetsweirt,  London,  1597].) 

In  the  King's  Bench  one  Jordan  brings  writ  on  his  case.  And  re- 
cites in  the  writ  that  whereas  the  plaintiff  had  one  Tatam  in  execution 
in  the  County  Court  for  a  certain  debt  recovered  against  him  and  the 
defendant  assumpsit  super  se  to  the  plaintiff  that  if  the  said  plaintH? 
wo"uld  discharge  the  said  Tatam  from  execution  he  would  pay  the 
debt  to  the  plaintiff  at  such  a  day  if  the  said  Tatam  did  not  pay  it^ 
him  before:  and  he  shows  how  he  discharged  the  said  Tatam  from 
execution,  and  that  the  said  Tatam  did  not  pay  before  the  day. 
Wherefore  &c.  The  defendant  traverses  the  promise,  and  upon  that 
fact  they  were  at  issue,  and  at  nisi  prius  in  London  the  plaintiff'  gives 
in  evidence  that  the  defendant  came  to  the  wife  of  the  plamtiff^  the 
plaintiff  being  absent,  and  promised  his  wife  that  if  the  plaintiff,  her 
husband,  would  discharge  the  said  Tatam  from  execution,  he  woiJld 
pay  the  debt  on  such  a  day  to  her  husband  if  Tatam  did  not  pay  it 
before  that  date,  then  the  plaintiff  comes  home  and  his  wife  informs 
him  and  he  agrees  to  the  promise  and  thereupon  he  discharged  the  said 
yTatam  from  execution.  The  defendant  says  that  this  evidence  is  of~" 
"mo  consequence  because  the  wife  cannot  be  party  to  such  a  promise 
*  without  the  preceding  command  of  her  husband  or  without  an  agree- 
ment in  advance,  and  so  the  promise  is  void  and  the  agreement  of  the 
husband  afterwards  cannot  make  it  good.  And  it  seemed  to  the  justices 
at  nisi  prius  that  the  exception  was  not  good.  Wherefore  the  defend- 
ant took  a  bill  of  exceptions ;  and  one  of  the  justices  seals  it  and  then  the 
verdict  is  given  for  the  plaintiff,  and  now  at  a  day  in  bank  the  defend- 
ant  alleges  the  matter  aforesaid  in  arrest  of  judgment. 

Knightly  (arguendo) :  You  ought  not  to  go  tcfjudgment,  for  this 
promise  to  the  wife  of  the  plaintiff,  he  being  absent,  is  not 
good     ♦     *     ♦  1     Por  if  I  have  one  in  execution  and  come  to  his 

1  The  remainder  of  the  argument  ou  the  question  of  the  agency  of  the  wife 
Is  omitted 


Ch.  2)  ESSENTIALS  TO   SURETYSHIP  BY  SIMPLE   CONTRACT.  13 

guardian  and  say  to  him  that  he  shall  discharge  him  who  is  in  execu- 
tion and  he  discharges  him,  I  shall  have  action  of  debt  against  the 
guardian. 

Quod  ToTA  Curia  negavit,  and  that  the  law  is  clearly^  contrary. 
Wherefore  for  this  reason  that  is  no  plea.  ""    ^ '£ -^ . ,  *»  ^^^^p '>^ 

Knightly  (arguendo):    Still  I  think  that  this  action  does  not  lie  for   '■*'-"-•. i • 

if  he  could  have  had  action  of  debt  on  this  matter  still  he  shall  not 
have  action  on  his  case  for  that  remedy  he  cannot  have  unless  he  has 
no  remedy  by  any  other  writ. 

ToTA  Curia.  That  is  not  so ;  for  in  many  cases  one  shall  have 
action  on  his  case  where  he  can  have  otherfemedy ;  wherefore  on  this 
acc-5iJfit  it  is  good.  ■  _     _  X-JU^^^-fcisV^ 

Brook.-  It  seems  that  the  promise  to  the  wife  of  the  plaintifif,  he  ^u^  2^  ,^  /^ 
being  absent  was  good  until  the  husband  disagreed.  *  *  *  3  js^^^  ^^  ,  r>f^ 
besides,  as  to  that  which  has  been  said,  that  the  plaintiff  shall  have  \^:^^J/T7r^^ 
writ  of  debt  and  not  this  action,  I  am  of  a  contrary  opinion,  for  I  f'^    ^^ 

understand  that  one  shall  not  have  writ  of  debt  except  where  there 
is  a  contract,  for  the  defendant  has  not  quid  pro  quo  but  the  ac- 
tion is  only  based  upon  the  promise,  which  sounds  merely  in  cove- 
nant, and  if  it  was  by  specialty  the  plaintiff  would  have  action  of  cove- 
nant, but  there  being  no  specialty,  as  it  seems  to  me  he  has  no  other 
remedy  unless  action  on  the  case.  And  a  case  was  adjudged  during 
the  time  that  I  have  been  judge  here  which  was  this:  That  a  stranger 
comes  with  a  man  to  a  baker  of  London  and  says  to  the  baker,  deliver 
to  this  man  as  much  bread  as  he  wants,  and  if  he  does  not  pay  you,  I 
will  pay  you ;  and  the  baker  delivers  certain  bread  to  the  man,  and 
then  the  man  does  not  pay  the  baker  wherefore  the  baker  brings  his 
action  on  his  case  on  the  special  matter  against  the  stranger,  and  the 
stranger  demurred  to  his  action,  and  adjudged  clearly  that  the  action 
lies,  and  the  baker  recovered :    so  it  seems  here.     Wherefore  &c. 

Spelman.*    To  the  same  effect.^ 

Port.*     To  the  same  effect.     *     *     *  7 

Fitz-James,  Chief  Justice.  *  *  *  Now  whether  he  shall  have  action 
of  debt  or  this  action ;  and  it  seems  to  me  that  he  shall  not  have  action 
of  debtj   for  here  there  is  not  any  contract  nor  has  the  defendant  quid 

2  Probably  Richard  Brooke,  though  no  roention  of  him  as  a  judge  of  the 
King's  Bench  is  made  by  either  Foss  or  Dugdale,  who  record  that  he  was 
simultaneously  Chief  Baron  of  the  Exchequer  and  one  of  the  Justices  of  the 
Common  Bench  during  this  period. 

3  The  remainder  of  the  opinion  on  the  agency  of  the  wife  is  omitted. 

4  John  Spelman  appointed  Associate  Justice  of  the  King's  Bench,  1532  obt. 
1544. 

5  The  opinion  discusses  only  the  procedural  question  of  the  bill  of  exceptions 
and  the  question  of  the  agency  of  the  wife. 

6  .John  Port  was  appointed  an  Associate  Justice  of  the  King's  Bench  prior 
to  1533,  the  exact  date  being,  according  to  Foss,  uncertain. 

7  This  opinion  deals*,  exclusively  with  the  power  of  the  wife  to  bind  the 
husband. 


14  FORMATION.  (Part  1 

pro  quo ;  wherefore  he  has  no  other  remedy  than  only  action  on  his  case. 
As  if  a  strangerlnXondon  buys  a  piece  of  cloth  andl  T  say  to  tlTFlRner- 
chant,  if  he  does  not  pay  you  on  such  a  day,  I  will  pay,  here  there  is  not 
a  contract  between  the  merchant  and  myself  and  he  will  not  have  action 
of  debt  against  me.  So  it  is  if  one  is  arrested  for  debt  and  I  say  to  the 
creditors,  are  you  content  to  let  him  go  at  large  and  if  he  does  not 
pay  you  I  will?  Now  if  the  debtor  does  not  pay  the  debt  he  can  have 
action  on  his  case  against  me  and  not  action  of  debt:  so  in  the  case 
of  the  delivery  of  the  bread,  which  has  been  put,  the  plaintiff  cannot 
have  action  of  debt  but  only  this  action.  Wherefore  &c.  And  then 
the  plaintiff  had  judgment  of  record.    Which  note.* 


SYMMONS  V.  WANT. 
(Court  of  King's  Bench.  Trinity  Term,  1818.    2  Starkle,  371.) 

This  was  an  action  of  assumpsit  upon  a  guarantee  by  the^efendant. 

It  appeared, that  Thomas  Want,  tTie  brptTier  of  the  defendant,  was  a 
schoolmaster,  and  that  he  had  entered  into  an  agreement  with  the 
plaintiff,  dated  May  2,  1817,  by  which  the  plaintiff"  agreed  to  let  to  him, 
from  the  half  quarter  next  ensuing,  the  use  of  the  galleries  of  the 
Chapel,  No.  6  Edward  Street,  Soho,  for  a  school  during  the  week_ days, 
at  tlTeTent  of~£^.  per  annum  Tor  the  first  year,  and  i25.  per  annum 
afterwards,  by  four  regular  quarterly  payments,  at  the  usual  days  of 
payment.  It  jwas  also  proved  that  the  following  document  was  injjie 
handwriting  of  the  defendant ;  it  was  directed  to  the  plaintiff,  but  had 
no  date.  "" 

"Sir:  I Jiave  nonobjection  to  guarantee  the  payment  ot-the-rent_ as 
far  as  that  of  each  quarter,  during  Mr.  T.  Want's  continuance  in  pos- 
session, but  you  must  see  that  no  arrears  of  rent  accrue." 

"[Signed]       J.  Want." 

8  T^  _doctrine  of  .Jordan's  Case  that  forbearance  in  any  form  could  not 
create  a  deht  has  remained  the  law  of  England  to  the  latest  day.  In  no  form 
hiis^rortiearance  ever  been  held  to  be  the  quid  pro  quo  of  a  debt,  an ^  the  only 
writ  successfully  employed  has  been  the  action  on  the  case  on  the  coutra?F  of 
assumpsit.    Rogers  v.  Snow.  Dalison,  04  (15  Eliz.). 

Some  of  the  imiumerable  illustrations  of  forbeararrce  promises,  where  the 
action  on  the  case  uiion  the  assumpsit  was  successfully  maintained,  are  the 
following: 

Forbearance  until  Michaelmas  gave  rise  to  an  assumpsit  in  Thornton  v. 
Kemp.  Gouldsborough,  146  (Hilary  Term.  43  Eliz.).  A  stay  of  execution  against 
a  third  person  on  request  of  the  defendant  gave  rise  to  an  assumpsit  in  Jen- 
nings V.  Hatley,  Yelverton,  19  (44  &  45  Eliz.). 

An  agreement  by  a  pawnee  not  to  sell  the  goods  of  his  debtor  for  three 
days  upon  the  defendant's  promise  to  pay  the  debt  Capper  v.  Dickington,  1 
Rolle  Rep.  215  (13  Jac.  I). 

Thus  a  discharge  of  a  debtor  from  Imprisonment  on  request  gave  rise  to 
an  action  on  the  «ise  in  Atkinson  v.  Settree.  Willes'  Reports,  4S2  (1744). 

Judge  Hare,  in  bis  work  on  Contracts  (pages  122,  13.3),  was  the  first  to  call 
attention  to  the  historical  importance  of  Jordan's  Case. 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  15 

It  was  proved  that  Thomas  Want  occupied  the  premises  from  May- 
till  the  middle  of  August,  when  he  left  the  place,  and  had  not  since  been 
heard  of.  The  defendant  had  not  been  called  upon  to  pay  the  rent, 
and  had  received  no  notice  of  the  default,  till  the  following  November. 

Hutchinson,  for  the  defendajit,  objected  that  the  plaintiff  was  not  en- 
titled  to  recover:  *  *  *  2dly.  That  the  terms  "I  have  no  objec-'^>'^^^^'*^*V^ 
tion  to  guarantee"  did  not  amount  to  a  guarantee,  in  the  absence  of  evi- ""' "^  ^'I'^^^f  '*'Vmv 
dence  of  a  request  to  guarantee  or  of  an  acceptance  of  the  offer  to  .  -t^  wSJr  "^ -j-t 
guarantee;  and  he  cited  Mclver  v.  Richardson,  1  M.  &  S.  557,  where -'-^-^'^rj^'^  ^ '^■^v 
it  was  held  that  the  instrument  was  not  a  guarantee,  but  merely  an  ^'^7'^'*^4^ 
offer  to  guarantee,  which  did  not  become  an  absolute  guarantee,  with- 
out an  acceptance  of  it  as  such.     *     *     *  » 

HoLROYD,  J.,  having  called  upon  the  counsel  for  the  plaintiff  to  an- 
swer the  second  objection,  and  to  state  upon  what  count  of  the 
declaration  they  founded  their  claim, 

Gurney_andChitty,  for  the  plaintiff,  answered  that  they  relied  on  the 
third  count^irTlhe  detlafatioiT,  which  set  forth  a  request  by  Thomas 
Want  to  the  plaintiff,  to  sign  the  agreement  already  referred  to,  and 
then  alleged  that  the  defendant,  in  consideration  that  the  plaintiff 
would  sign  the  agreement,  undertook  to  guarantee,  etc.,  and  that  the 
plaintiff  confiding  etc.  did  sign  the  said  agreement. 

And  they  contended  that  the  terms  of  the  letter  proved  that  it  was 
in  answer  to  an  application  to  the  defendant  to  guarantee  the  rent,  and 
that  it  was  written  anterior  to  the  agreement ;  but — 

HoLROYD,  J.,  was  of  opinion  that  the  plaintiff  had  not  established 
a  sufficient  case.  The  letter  itself  being  without  date,  it  did  not  ap- 
pear  whether'Tf  was  written  before  or  after  the  agreement  was  en- 
tere^mto;  and  therefore  the  plaintiff  had  not  proved  the  considera- 
tion as  stated  in~tlie  declaration ;  and  he  was  of  opinion  that  the  doc- 
trine laid  down  by  Lord  Ellenborough  in  Mclver  against  Richardson 
was  applicable  to  the  present  case.  Ac.cordingly  he  directed  a  non- 
suit, with  leave  to  the  plaintiff  to  move  to  set  it  aside,  and  enter  a 
verdict  for  the  plaintiff.^" 


FRENCH  V.  FRENCH. 

(Court  of  Common  Pleas,  1841.    2  Man.  &  G.  644.) 

Assumpsit  for  goods  sold,  money  lent,  money  paid,  and  interest, 
and  upon  an  account  stated. 

Pleas:  Except  as  to  £326.  5s.,  non-assumpsit;  to  that  sum,  pay- 
ment into  court. 

8  A  portion  of  the  argument  has  here  been  omitted. 

io,\XL  executory  agrooment  made  by  the  prospective  creditor  with  the  pros- 
pective iruaiantor  to  give  credit  to  a  third  person  will  sustain  a  guaranty  cov- 
efnv^  Loth  past  debts,  and  the  future  debt  to  be  created  by  the  giving  of  the 
credit.     Boyd  v.  Moyle,  2  Com.  Bench,  G44  (1S4G). 


16  FORMATION.  (Part  1 

The  plaintiff  added  the  similiter,  and  accepted  the  £326.  5s.,  praying 
his  costs  and  charges.^ ^    ♦    *    ♦ 

TiNDAL,  C.  J.  The  only  question  in  this  case  is  whether  the  plain- 
tiff has  a  legal  right  to  recover  the  £146.  3s.  6d.,  and  interest  upon 
that  sum.  To  show  the  defendant's  liability  the  plaintiff  produced  two 
documents.  One  of  them,  which  purports  to  be  an  account  stated, 
contains  this  entry:  "To  principal  and  interest  of  old  account  with 
Dr.  John  French,  transferred,  as  per  letter,  £136.  3s.  6d."  From  this 
entry  it  must  be  inferred  that  the  sum  was  originally  due  from  Dr. 
French,  the  defendant's  father.  But  it  is  said  that  this  debt  was 
transferred,  and  that  there  might  be  a  good  consideration  for  such 
a  transfer.  The  letter,  however,  instead  of  speaking  of  a  transfer, 
states  that  the  defendant  has  received  from  the  plaintiff  the  sum  of 
£321.  5s.  The  effect  of  the  two  documents,  taken  together,  is  to  show 
that  the  defendant  had  allowed  himself  to  be  charged  in  account  with 
a  debt  due  from  his  father. 

'  It  is  suggested  on  the  part  of  the  plaintiff  that  the  transaction  may 
be  considered  as  a  borrowing  of  money  from  the  plaintiff,  and  a  pay- 
ment of  the  father's  debt  with  the  money  so  borrowed.  The  sub- 
stratum of  that  suggestion  must  be  that  the  debt  due  from  Dr.  French 
was  satisfied.  But  it  is  inconsistent  with  such  a  supposition  that  the 
plaintiff  should  afterwards  obtain  from  Dr.  French's  two  daughters 
a  note  or  engagement  to  pay  the  same  debt.  The  ground  of  the  sug- 
gestion therefore  fails;  and  the  case  stands  as  one  in  which  the  de- 
fendant has  undertaken,  without  consideration,  to  pay  the  debt  of  an- 
otlfer^^  and  that,  a  debt  which,  at  the  time  the  undertaking  was  given, 
appears  to  have  been  barred  by  the  statute  of  limitations.  The  rule 
must  be  discharged. 

Bos.\NQUET,  J.,  concurred. 

CoLTMAN,  J.  The  substance  of  the  agreement  was  a  promise  by 
the  defendant  to  pay  the  debt  of  his  father.  To  support  such  an  agree- 
ment, there  must  be  a  sufficient  consideration;  and,  by  the  statute 
of  frauds,  that  consideration  ought  to  appear  upon  the  face  of  the 
instrument. 

Erskixe,  J.,  concurred. 

Rule  discharged. 


MAP,  Executor  of  Holdick,  v.  SIR  ISAAC  SIDNEY. 

(Court  of  Commou  Plea.s,  Hilary  Term,  1623.    Cro.  Jac.  6S3.) 

Assumpsit,  for  that.the  defendant,  in  consideration  the  plaintiff 
Wfiuld  forbear  to  sue  one  J.  S.  on  an  obligation  of  eighty  pounds, 
promised  to  pay  to  him  the  said  debt ;  and  allegeth  in  fact,  in  the  writ, 

11  The  statement  of  facts  has  been  abridged,  being  suffieieutlv  stated  in  the 
opinion  of  the  wurt.  and  the  arguments  of  counsel  have  been  omitted. 

12  Accord:     Owens  v.  Tague,  3  Ind.  App.  245,  29  X.  E.  784  (1S92>. 


Ch.  2)  ESSENTIALS  TO  SURETYSHIP  BY  SIMPLE  CONTRACT.  17 

that  he  forbore  to  sue  the  said  J.  S.  per  magnum  tempus,  and  that 
the  defendant  had  not  yet  paid  it  to  him,  Hcet  requisitus. 

The  declaration  was  that  he  forbore  him  per  magnum  tempus,  viz. 
from  such  a  time  of  the  promise  until  such  a  day,  which  was  for  a 
year  and  a  half  after  the  promise,  yet  he  had  not  paid  it. 

The  defendant  pleaded  non  assumpsit ;  and  it  was  found  against 
him  to  the  damage  of  eighty  pounds.  ^  f^^v^  ■^^^z^^a^ 

Plitcham  moved  in  arrest  of  judgment.^'  \ 

Lord  HoBART,  Winch  and  Hutton  (Jones  being  absent  in  Chan- 
cery) held,  that  the  plaintiff  should  recover :  for  they  all  conceived 
that  a  consideration  to  forbear  to  sue  a  person  for  such  a  debt  is  a 
good  consideration,  and  it  shall  be  intended  a  total  and  absolute  for- 
bearance (as  SuTTOJTand'WiNCH  held);  and  that  if  the  defendant 
paid"if  before  upon  this  promise,  and  after  the  plaintiff  sued  for  the 
debt,  the  plaintiff  is  chargeable  in  an  action  upon  the  case,  for  it  is 
an  implied  promise  in  the  plaintiff  that  he  should  forbear  his  suit  to- 
tally; but  yet  when  the  plaintiff  hath  forborne  a  convenient  time 
(when  there  is  nO  time  mentioned),  if  the  defendant  do  not  pay  the 
debt  according  to  his  promise,  the  plaintiff  may  well  sue  him  upon  his 
promise,  and  he  needs  not  tarry  all  his  life.  And  here,  when  he  shows 
that  he  forbore  per  magnum  tempus,  viz.  such  a  day  and  year,  that 
well  agrees  with  the  writ ;  and  when  the  date  of  the  writ  doth  not 
appear,  it  shall  be  intended  that  he  did  forbear  until  the  day  of  the 
writ;    and  so  the  action  is  well  brought. 

HOBART,  Chief  Justice,  agreed  with  them,  that  the  action  was  well 
brought,  and  the  declaration  good,"  because  he  shows  that  he  did  for- 
bear it  for  a  convenient  time :  and  he  held  that  he  was  not  bound  by 
this  agreement  to  forbear  totally ;  and  denied,  that  upon  this  agree- 
ment he  is  chargeable  in  an  assumpsit,  if  .iie- (after  this  debt  recov- 
ered from  the  defendant)  should  sue  for  the  same  debt ;  for  it  is  not 
a  promise  to  restrain  him  totally,  and  without  express  words  he  is 
not  chargeable  by  promise.  Wherefore  it  was  adjudged  for  the 
plaintiff.^* 

13  The  argument  of  counsel  has  been  omitted. 

14  Accord:   Pafford  v.  WeUbe,  2  Rolle,  88  (1620). 

Thfi_following  American  authorities  are  in  accord:  King  v.  Upton.  4  Me. 
387,  16  Am.  Dec.  266  (1826) ;  Elting  v.  Vanderlyn,  4  Johns.  (N.  Y.)  237  (1S09). 
See  Ames'  Cases  on  Suretyship,  notes,  p.  226.  Obiter,  Lonsdale  v.  Brown,  4 
Wash.  C.  n.  148.  151.  Fed.  Cas.  No.  8.494  (1821) ;  Wills  v.  Ross.  77  Ind.  1.  40 
Am.  Rep.  279  (1881) ;  Ballard  v.  Burton,  64  Vt.  387,  24  Atl.  769,  16  1a  R,  A. 
664  (1892). 

In  Semple  v.  Pink,  1  Exch.  Rep.  74,  16  L.  J.  Ex.  237  (1847),  the  fact  of 
forbearance  was  not  shown  at  the  trial,  though  the  nonsuit  apptears  to  have 
been  upheld  on  the  theory  that  reasonable  forbearance  is  insufficient.     That 
decision  is  adversely  criticized  in  Oldershaw  v.  King,  post,  p.  29. 
Hen.  Sub. — 2 


18  FORMATION.  (Part  1 

SECTION  2.— OFFER  AND  ACCEPTANCE 


GAUNT  V.  HILL. 

(C!otirt  of  King's  r.ench.  nt  Nisi  Prius  after  Easter  Term,  1815.    1  Starkle.  10.) 

A^sumpjit  for  non-payment  of  £70,  in  consideration  of  forbearance. 
The  defendant's  brother,  being  indebted  to  the  plaintr'fi^'irT~ttre 'sum 
of  £140.,  sulYered  judgment  to  go  by  default.  After  which  the  de- 
fendant wrote  to  the  plaintiff  the  following  letter. 

"Sir — That  it  may  not  be  said  that  I  have  made  no  eft'ort  to  save 
my  brother  from  prison,  I  wish  to  know  if  you  will  givejiim^ajtull 
discharge  if  I  will  pay  one  moiety  of  his  debt.  I  have^  specified  what 
Lwill  pay  and  no  more;  if  you  will  accept  this,  call  upon  me  to-mor- 
row  morning." 

Tl;is_l£ller  was  not  dated,  but  the  postmark  upon  it  bore  date  the 
2Sth  of  March.  In  order  to  show  that  the  plaintiff  had  acceded  -to 
this  offer,  he  read  a  letter  sent  by  him  to  the  defendant  on  the  4th-of 
April,  in  which,  after  remonstrating  with  the  defendant  for  not  pay- 
ing one  moiety  according  to  his  oft'er,  he  says :  "I  have  taken  an  opin- 
ion on  your  letter,  and  am  informed  that  I  can  recover  upon  it  against 
you,  therefore  I  shall  not  proceed  against  your  brother." 

LordLEi,i,EXBOROUCH  was  of  opinion  that  the  defendant's  letter  was 
a  mere  proposition  to  pay  a  moiety,  reserving  a  power  to  do  an^^hing 
or  nothing  as  he  pleased  the  next  day,  and  that  at  all  events _it_  would 
be  necessary  to  show  that  the  plaintiff'  had  acceTIecTto  the  proposal  in 
writing. 

Plaintiff  nonsuited.^' 


WESTHEAD  et  al.  v.  SPROSON  and  PIPER. 

(Exchequer  of  Pleas,  Easter  Term,  ISGl.    6  Hurl.  &  N.  72S.) 

Declaration:  That  on  the  23d  of  April,  1860,  the  defendant  made 
and  signed  and  delivered  to  the  plaintiffs  a  guarantee  in  the  words  and 
figures  following,  tliat  is  to  say :  "To  Messrs.  J.  P.  and  E.  Westhead 
&  Co.,  etc. — Gentlemen:  In  consideration  of  your  agreeing,  at  our  re- 

i»  Other    letters   were   inter preted   as    "mere   overtures   to   guarantee"    in 

Mclver  v.  Ricliard-son.  1  M.  &  S.  uTu    (1S1.3) ;    and  see  the  divided  court  in 

Cartlltch  v.  Eyle.s  Comyn's  Rep.  .")7  (10  Geo.  II.   Hilary  Term):  Mozlev  v 

Tinkler,  1  C,  M.  &  R.  G92  (is:r.).     See  Bank  of  Montreal  v.  Munster  Bank    11 

Ir.  Rep.  (Common  Law)  47  (1S77). 

.     The  di-stinction  between  a  general  and  a  special  guaranty  is  fully  discus«ed 

Mn  E\-ansvllle  Nat,  Bank  v.  Knufmann.  03  N.  Y.  273,  4.5  Am.  Rep.  204  {Isk'S 

I  The  general  grviaranty  Is  addres-sed  to  no  particular  pereon;    the  special  guar- 

aijtj-,  to  a  particular  per!«on.  ■->—,«, 


Ch.  2)  ESSENTIALS  TO  SURETYSHIP  BY  SIMPLE  CONTRACT.  19 

quest,  from  time  to  time,  to  supply,  on  credit,  to  W.  Piper  such  goods 
as  he  may  require  and  you  may  think  fit  to  suppjy^jve,  William  Spro- 
son  and  Joseph  Piper,  do  hereby  guarantee  to  you  the  due  and  reg- 
ular payment  of  such  sum  and  sums  of  money  as  he  now  owes,  and 
may~at  any  time  and  from  time  to  time  owe  to  you,  on  any  account 
whatsoever,  so  that  we  shall  not  be  answerable  for  more  than  four 
hundred  pounds  in  respect  of  his  dealings  with  you;  and  we  give  you 
full  liberty  to  extend  the  period  of  credit  to  the  said  William  Piper, 
and  to  hold  over  or  renew  any  bills,  notes,  or  other  securities  you 
may  at  any  time  hold,  and  to  grant  him  and  the  persons  liable  upon 
such  bills,  etc.,  any  indulgence,  &c.  This  guarantee  to  continue  good, 
notwithstanding  any  change  in  the  parties  constituting  your  firm.  Dat- 
ed, etc.  Wm.  Sproson.  Joseph  Piper."  That  the  persons  to  whom 
the  said  guarantee  was  addressed  were  and  are  the  plaintiffs,  and 
that  the  names  William  Sproson  and  Joseph  Piper  attached  to  the 
said  guarantee  were  and  are  the  names  of  the  defendants.  That  al- 
though  the,  plaintiffs  thereupon  accepted  the  said  guarantee  accord- 
ingly, and  were  always  ready  and  willing,  as  the  defendants  well  knew, 
to_  supply  from  time  to  time  the  said  W.  Piper  on  credit  such  goods 
asJiejTiight  require,  according  to  the  terms  of  the  said  guarantee,  and 
although  at  the  time  of  the  giving  the  said  guarantee  the  said  W.  Piper 
owed  to  the  plaintiffs,  and  there  was  then  due  and  payable  from  him 
to  the  plaintiffs  a  large  sum  of  money,  to  wit,  £400.,  which  said  sum 
the  said  W.  Piper  ought  to  have  paid  to  the  plaintiffs  before  suit,  and 
although  the  defendants  before  suit  had  notice  of  the  premises,  and 
were  requested  by  the  plaintiffs  to  pay  them  the  said  sum  of  money, 
to  wit,  £400.,  yet  the  defendants  made  default  in  paying  such  sum, 
and  a  part  thereof,  to  wit,  £300.,  is  still  unpaid,  etc. 

Demurrer  and  joinder  therein. 

PKipson,  in  support  of  the  demurrer.  The  claim  against  the  sure- 
ties is  for  payment  of  moneys  due  when  the  guarantee  was  given; 
but  there  is  no  consideration  to  support  a  promise  to  pay  the  past  debt. 
It  is  not  shown  that  any  new  credit  was  given.  The  supposed  consid- 
eration is  the  agreement.  [Pollock,  C.  B.  This  is  not  such  an  agree- 
ment on  the  part  of  the  plaintiffs  as  the  law  can  enforce.  It  amounts 
only  to  an  agreement  to  treat.]  The  words,  "such  as  you  may  think  fit 
to  supply,"  make  the  supply  entirely  optional  on  the  part  of  the  plaiii- 
tif?s;  therefore,  if  there  is  any  agreement  at  all,  it  is  only  an  agree- 
ment to  supply  just  what  the  plaintiffs  may  please.  In  White  v.  Wood- 
ward, 5  C.  B.  810  (E.  C.  L.  R.  vol.  57),  the  guarantee  was  similar  in 
its  terms  to  that  in  the  present  case,  but  there  the  plaintiff  supplied 
goods.  In  the  course  of  his  judgment  Cresswell,  J.,  said :  "I  think 
that  a  sufficient  consideration  is  disclosed  on  the  face  of  the  guarantee, 
and  that  it  imports  that  the  continued  supply  should  be  bona  fide  and 
to  a  reasonable  extent."  But  that  observation  was  not  necessary  to 
the  decision,  which  is  explained  by  Martin,  B.,  in  Broom  v.  Batch- 
elor,  1  H.  &  N.  255,  2G3,  who  said  that  the  writing  in  White  v.  Wood- 


20  FORMATION.  (Part  1 

ward  was  construed  as  meaning  "that,  conditionally,  on  a  real  and  bona 
fide  future  credit  to  be  given  by  the  plaintiff,  the  defendant  contracts 
to  guaranty."  (He  referred  also  to  Taylor  v.  Brewer,  1  M.  &  Sel, 
290,  and  Bryant  v.  Flight,  5  M.  &  W.  114,  per  Parke,  B.)    *    *    *  '" 

Pollock,  C.  B.  We  are  all  of  opinion  that,  upon  the  true  construc- 
tion of  this  documcnl,  the  plaintiffs  entered  into  no  binding  agree- 
ment to  supply  goods  to  \V.  Piper.  W§  must  therefore  construe  the 
guarantee  as  being  conditional,  so  that,  in  the  event  of  the  plaintiffs 
thinking  fit  to  supply  and  supplying  goods  to  W.  Piper,  there  would 
be  a  performance  of  the  condition,  and  the  defendants  would  be  bound, 
but  not  otherwise.  This  makes  the  agreement  sensible  and  intelligible. 
The  substance  of  Mr.  Mellish's  argument  was  that,  inasmuch  as  the 
parties  meant  to  agree  to  supply,  we  must  put  such  a  construction  on 
the  document  as  to  make  it  a  mutual  agreement.  But  I  have  no  doubt, 
that  what  the  plaintiffs  meant  in  saying,  "we  agree  to  supply,"  was 
to  give  a  sort  of  color  to  the  promise  to  pay  the  existing  debt,  but 
without  being  under  any  obligation  to  supply  any  more  goods. 

Martin,  B.  I  also  think  that  this  document  did  not  bind  the  plain- 
tiffs to  supply  any  goods.  If  the  words  are  transposed  thus :  "In  con- 
sideration of  your  agreeing  to  supply  W.  Piper  such  goods  as  you 
may  think  fit  and  he  may  require" — it  becomes  manifest  that  the  sup- 
ply is  to  depend  entirely  on  the  will  of  the  plaintiffs,  and  that  is  no 
consideration  for  an  agreement. 

Br.\mwell,  B.  If  it  appeared  that  the  plaintiffs  agreed  to  do  any- 
thing of  value,  there  would  be  a  good  consideration  for  the  guarantee. 
But  the  words  "such  goods  as  he  may  require"  may  be  left  out.  be- 
cause, of  course,  the  plaintiffs  could  not  supply  any  other.  Then, 
striking  out  those  words,  what  remedy  would  the  defendants  have 
on  the  supposed  agreement  for  the  nonsupply  of  goods  for  a  month  or 
a  year?  WHiat  damages  could  they  get?  The  only  difficulty  which  I 
have  arises  out  of  the  case  of  Oldershaw  v.  King,  2  H.  &  N.  399,  s. 
c.  in  Err6r,  Id.  517.  If  it  is  possible  to  find  out  what  is  a  reasonable 
time,  I  do  not  see  why  we  should  not  be  able  to  discover  what  is  a 
reasonable  supply  of  goods. 

Wilde,  B.  I  think  that  the  true  meaning  of  this  instrument  is,  that 
if  the  plaintiffs  supplied  goods  to  W.  Piper  the  guarantee  should  at- 
tach, but  not  otherwise. 

Judgment  for  the  defendants.! 

18  The  argument  for  the  plaintiffs  is  omitted. 

t  Contrast  with  Lyun  Safe  Deposit  &  Trust  Co.  v.  Andrews,  180  Mass.  527, 
G2  N.  E.  lOGl  (1902). 


Ch.  2)  ESSENTIALS  TO  SURETYSHIP  BY  SIMPLE   CONTRACT.  21 

SAVAGE  V.  FIRST  NAT.  BANK. 
(Supren.e  Court  of  Alabama,  1895.    112  Ala.  508,  20  South.  398.) 

Appeal  from  the  Circuit  Court  of  Calhoun.  Tried  before  Hon. 
George  E.  Brewer. 

This  was  an  action  brought  by  the  appellee,  the  First  National  Bank 
of  Rome,  Ga.,  on  a  promissory  note  made  by  J.  R.  Graham  &  Son, 
an"3The~appellant,  James  H.  Savage,  and  payable  to  Mrs.  E.  J.  McGhee. 
The  note  was  duly  transferred  to  the  plaintiff  bank.  The  defendant 
Savage  pleaded  specially  that  the  note  sued  on  was  without  considera- 
tion as  to  him,  and  that  the  bank  was  not  the  beneficial  owner  of  the 
note,  on  which  special  pleas,  and  the  plea  of  the  general  issue,  the  case 
was  tried. 

The  plaintiffs  introduced  evidence  tending  to  show  that  the  note 
was  executed  in  settlement  of  a  suit  by  McGhee  Bros,  against  J.  R. 
Graham  &  Son,  and  that  it  had  been  transferred  to  the  plaintiff.  The 
plaintiff  introduced  in  evidence  a  letter  from  J.  H.  Savage  to  McGhee, 
in  which  he  admitted  having  signed  the  note,  but  insisted  on  not  be- 
ing sued  thereon ;  the  letter  having  been  written  for  the  express  pur- 
pose of  inducing  McGhee  not  to  bring  suit  against  Savage.     *     *     * 

As  is  stated  in  the  opinion,  the  evidence  tended  to  show  that  the 
defendant  Savage  signed  the  note  sued  on,  after  it  had  been  executed, 
and  without  any  consideration  moving  to  him. 

There  was  a  verdict  returned  against  the  defendants  in  favorjof 
the  plaintiff;  and  thereupon  the  defendant  Savage  moved  the  court(^^^j^^^ 
for  a  new  trial,  on  the  ground  that  the  verdict  was  contrary  to  the 
law  and  the  evidence.  *  *  *  This  motion  was  overruled,  and  the 
defendant  Savage  duly  excepted.  There  was  judgment  for  the  plain- 
tiff. The  defendant  Savage  appeals,  and  assigns  as  error  the  several 
rulings  of  the  trial  court  to  which  exceptions  were  reserved. 

Head,  J.^''  *  *  *  There,  was  no  conflict  in  the  evidence  going 
to  show  that  Savage  signed  the  note  or  bond  sued  on,  after  it  had 
been  fully  executed  and  had  become  a  complete  contract  between  the 
otEeFparties,  and  that  it  was  signed  by  him  as  surety  without  any  new 
or  additional  consideration.  The  letter  he  afterwards  wrote  concern- 
ing it  was  as  much  a  nudum  pactum  as  the  note  or  bond.  He  was, 
therefore,  entitled  to  the  general  charge  in  his  favor,  if  he  ha3~re- 
quested  it.  The  verdict  was  contrary  to  the  law  and  the  evidence, 
and  on  that  ground  the  motion  for  a  new  trial  ought  to  have  been 
granted.  If  the  instrument  was  sealed,  there  can  be  no  recovery  un- 
der the  present  complaint. 

Reversed  and  remanded. 

17  Only  so  much  of  the  case  and  opinion  is  printed  as  relates  to  the  question 
of  suretyship. 


22  FOU.MATiON.  (Part  1 

JARVIS  V.  WILKINS. 
(Exchequer  of  Pleas,  1841.    7  Mees.  &  W.  409.) 

Assumpsit  on  a  guarantee,  with  counts  for  goods  sold  and  deliv- 
ered, and  on  an  account  stated.  At  the  trial  before  the  undersheritt 
of  Middlesex,  the  following  document  was  proved  by  the  plaintiff: 

"September   11,   1S39. 

"I  undertake  to  pay  to  Mr.  Robert  Jarvis  the  sum  of  £G.  4s.,  for  a 
suit  of,  ordered  by  Daniel  Page.  S.  W.  Wilkins." 

It  appeared  that  the  goods  in  question  were  a  suit  of  clothes,  which 
had  been  furnished  to  Page  subsequently  to  the  giving  of  the  above 
undertaking.  The  plaintiff  obtained  a  verdict  for  £6.  4s.,  leave  being 
reserved  to  the  defendant  to  move  to  enter  a  nonsuit,  in  case  the  court 
should  be  of  opinion  that  the  instrument  was  not  a  guarantee,  but  a 
promissory  note,  which  required  a  stamp.  A  rule  was  accordingly  ob- 
tained in  Michaelmas  term  last.    *     *    *  ^* 

Lord  Abinger,  C.  B.  I  am  of  opinion  that  there  is  nothing  in  this 
objection.  The  cases  which  have  been  cited  were  all  of  them  cases 
where  the  consideration  was  executed,  and  therefore  the  written  prom- 
ise to  pay  the  debt  amounted  to  a  promissory  note ;  but  in  this  case 
it  appears,  from  the  instrument  itself,  that  the  promise  was  made  in 
contemplation  of  a  sale  of  goods  to  be  afterwards  made;  andjt  is  a 
written  undertaking  that,  if  the  plaintiff  will  supply  the  goods  "or- 
dered," the  defendant  will  pay  for  them.  It  is  a  memorandum  of 
guarantee  for  the  sale  of  goods,  not  a  promissory  note,  and  requires 
no  stamp. 

Parke,  B.  I  am  of  the  same  opinion.  Ifjthe  memorandum  con- 
tained only  a  promise  to  pay  £6.  4s.  for  goods  already  supplied,  it 
would  be  a  promissory  note,  and  would  require  a  stamp;  but  the  in- 
troduction of  the  word  "ordered"  makes  all  the  diff'erencer  as  it  shows 
that  it  is  a  promise  to  pay  for  goods  if  supplied,  but  which  were  not 
then  delivered.  We  are  therefore  enabled  to  collect  from  the  instru- 
ment itself  that  the  consideration  for  the  promise  was  not  an  executed 
consideration,  but  the  future  delivery  of  goods  already  ordered.  No 
objection  has  been  made  that  the  contract  varies  from  that  declared 
upon;  and  the  only  questions  are,  first,  is  this  a  promissory  note? 
I  think  it  is  not,  for  the  reasons  I  have  already  stated :  and  secondly, 
if  not  a  promissory  note,  is  it  a  binding  guarantee?  The  rule  is  now 
perfectly  settled,  that  the  consideration  must  appear  upon  the  face' of 
the  instrument  itself,  either  in  express  terms,  or  by  necessary  implica- 
tion. I  think  in  this  case  the  consideration  may  be  collected  by  neces- 
sary inference,  and  therefore  that  the  instrument  is  a  binding  guar- 
antee. 

The  other  Barons  concurred. 

Rule  discharged. 

18  The  arguments  of  counsel  are  omitted. 


Ch.  2)  ESSENTIALS  TO  SURETYSHIP  BY  SIMPLE  CONTRACT  23 

R.  L.  POLK  PRINTING  CO.  v.  SMEDLEY. 

(Supreme  Court  of  Michigan,  1908.    155  Mich.  249,  118  N.  W.  984.) 

Error  to  Wayne;    JMandell,  J. 

Assurnpsit  by  the  R.  L.  Polk  Printing  Company  against  John  H. 
Smedley,  on  the  guarantee  of  the  payment  of  a  printing  contract. 

There  was  judgment  for  the  plaintiff  on  a  verdict  directed  by  the 
court,  and  defendant  brings  error.  Reversed,  and  no  new  trial  or- 
dered. 

The_p,lninti^  conducted -»  printing  business  ia.- the. d[ty._oX.Petroit. 
The  Sail  &  Sweep  Publishing  Company  published  a  magazine  kno\yiL 
as  "."^ail  j^7  S^^ppp  "  The  printing  was  done  by  the  plaintiff.  _The 
plaintiff_had_an  unpaid  account  against  the  Sail  &.  Sweep  Publishing 
Companx._QDLjune  15,  1904,  amounting,  as  is  claimed,  to  $2,888.55. 
The"^ail  &  Sweep  Publishing  Company  desired  plaintiff  to  print  its 
JulVmagazine.  Some_negotiations  at  this  time  were,  entered  i^ito 
beCEeen^J^ix.  Lloyd,  the  manager  of  the  plaintiff,  and  the  defendant 
Smedkyjjooking  to  some  security  for  the  account.  Lloyd  died  before 
this  suit  was  tried.  Consequently  under  the  statute  Mr.  Smedley  can- 
not testify  to  what  took  place  between  them. 

The  result  of  the  negotiations  was  that  on  June  15,  1904,  defend- 
ant Smedley  sent  to  plaintiff  the  following  letter:  "Mr.  Charles  W. 
Lloyd,  Detroit,  Mich. — Dear  Sir:  Mj\  Van  Fleet  this  morning  spoke 
to  rne_concerning  the  Sail  &  Sweep  Publishing  Co7s  account  with  your 
firm.  At  present  the  directors  of  the  company  have  a  plan  under  way 
for  taking  care  of  your  account,  but  we  will  be  delayed  for  a  short 
time  because  of  the  absence  of  Mr.  Franklin  H.  Walker,  of  this  city. 
In  the  meanwhile,  in  order  that  you  may  not  feel  alarmed,  I,  per- 
sonalIy,~vvilI  guarantee  the  account,  although  I  presume  you  know  that 
your  account  is  fully  covered  by  stock  liabilities  of  the  stockholders  of 
the  company.     Very  truly  yours,  John  H.  Smedley." 

After  this  letter  was  written,  plaintiff  printed  the  July  magazine, 
the  cost  oT  which  was  $486.24.  It  continued  to  publish  other  numbers 
into  1905.  On  January  14,  1905,  the  indebtedness  of  the  Sail  &  Sweep 
Publishing  Company  to  plaintiff  being  $3,318.87,  the  Sail  &  Sweep 
Publishing  Company  gave  plaintiff"  a  90-day  note,  guaranteed  by  de- 
fendant Smedley  and  one  Murray,  which  note  is  now  in  suit  pending 
in  this  court.  The  court,  upon  the  ground  that  the  contract  was..am- 
biguous,  permitted  parol  evidence  to  show  the  intention  of  the  par- 
ties.; the  plaintiff  contending  that  it  was  a  continuing  contract  cov- 
ering the  past  and  future  accounts,  the  defendant  contending  that  it 
covered  only  the  cost  of  publishing  the  July  number  of  the  maga- 
zine.    The  court  directed  a  verdict  for  this  amount,  with  interest. 

TYRANT,  C.  J.  (after  stating  the  facts).  It  is  urged  on  the  part  of 
the  plaintiff  that  this  was  a  continuing  guaranty,  covering  both 
past  and  future  indebtedness,  that  such  is  the  plain  intent  appearing 


24  FORMATION.  (Part  1 

upon  the  face  of  the  guaranty,  and  that  therefore  parol  evidence  of 
conversations  at  and  prior  to  the  time  of  its  execution  and  of  the  sur- 
rouiiding  circumstances  is  inadmissible  as  tending  to  change  the  plain 
terms  of  the  contract.  This  contention  cannot  be  maintained.  The 
contract  is  ambiguous.  It  is  impossible  to  tell  to  what  account  it  re^ 
f erred.  If  the  guaranty  included  solely  a  pre-existing  account,  it  was, 
without  consideration  and  void.  1  Brandt  on  Suretyship  &  Guaranty 
(3d  Ed.)  §  97,  and  authorities  cited;  Walrath  v.  Thompson,  4  Hill 
(N.  Y.)  200.  If  it  referred  to  a  future  account,  or  if  it  included  the 
past  and  also  a  future  account,  tliere  would  be  a  valuable  considera- 
tion for  the  promise  of  guariinty.  Parol  evidence  was  therejore  ad- 
missible to  explain  the  ambiguity,  and  determine  what  account  was 
intended  to  be  covered  by  the  guaranty.  Columbus  Sewer  Pipe,  etc., 
Co.  V.  Ganser,  58  Mich.  385.  25  N.  W.  377,  55  Am.  Rep.  697 ;  Wal- 
rath V.  Thompson,  supra;  White's  Bank  of  Buffalo  v.  ]\Iyles,  73  N. 
Y.  335,  29  Am.  Rep.  157;  1  Brandt  on  Sur.  &  Guar.  (3d  Ed.)  §  97. 
The  mouths  of  the  two  persons,  Mr.  Lloyd  and  Mr.  Smedley,  who 
made  the  contract,  being  closed  by  the  death  of  one,  we  must  look 
to  find  other  evidence  of  what  the  parties  intended.  Persons  are  pre- 
sumed to  know  the  law,  and  we  cannot,  therefore,  assume  that  the 
parties  to  this  contract  intended  to  include  only  an  account  wholly  pre- 
existing, and  thus  make  a  void  contract. 

One  Fred  Van  Fleet  was  at  the  time  of  the  transaction  connected 
with  Uie  Sail  &  Sweep  Publishing  Company.  He  saw  Mr.  Lloyd,  the 
manager  of  the  company,  about  the  publication  of  the  July  number. 
He  testified  that  Mr.  Lloyd  asked  to  be  secured,  not  for  the  old  ac- 
count, but  for  the  expense  of  publishing  the  July  number  before  he 
published  it;  that  witness  went  to  see  Mr.  Smedley;  that  while  in  Mr. 
Smedley's  ofiice  Mr.  Smedley  had  a  telephonic  conversation  with  Mr. 
Lloyd ;  and  that,  after  this  conversation,  Mr.  Smedley  agreed  to  take 
care  of  the  bill  for  publishing  the  July  number.  This  is  the  only  tes- 
timony of  any  probative  force  to  show  the  intent  of  the  parties,  ex- 
cept that  the  plaintiff  in  January  following  took  a  guaranty  for  $2,800 
from  Smedley  and  Murray.  There  is  nothing  in  the  record  to  impeach 
or  cast  discredit  upon  the  testimony  of  Mr.  Van  Fleet. 

We  think,  therefore,  that  the  trial  judge  was  correct  in  holding  that 
the  guaranty  covered  only  the  expense  of  the  July  issue,  and  that  he 
was  correct  in  directing  a  verdict  for  that  amount,  unless  the  record 
y  showed  that  the  amount  had  been  paid.  Was  it  paid?  The  answer  to 
'  that  question  depends  upon  how  payments  suBsequehtly  made  should  be 
afiplied.  Hainliff  made  jiQ.dectioii.  It  kept  a  running  account  with  the 
Sail  &  Sweep  Publishing  Company,  charging  it  in  the  continuous  account 
for  work  done,  and  crediting  it  on  the  same  account  with  payments. 
Such  was  the  status  when  this  suit  was  commenced.  We  held  in  Cras- 
ser &  Brand  Brewing  Co.  v.  Rogers,  112  Mich.  112,  70  N.  W.  445, 
G7  Am.  St.  Rep.  389,  that,  where  payments  are  made  and  credited 
generally  upon  an  account,  they  will  in  an  action  against-a-..surety  be 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  25 

applied  upon  the  indebtedness  in  the  order  of  the  creation  of  the  sev- 
eral  items.    See,  also,  Gard  v.  Stevens,  13  Mich.  293,  86  Am.  Decr-&2. 

Applying  this  rule — and  we  see  no  occasion  to  depart  from  it — the 
plaintiff's  account,  guaranteed  by  the  defendant,  was  paid,  and  he  was 
entitled  to  have  a  verdict  in  his  favor.  For  this  reason,  the  judgment 
will  be  reversed,  and  no  new  trial  ordered. 

Blair,  Ostrander,  and  Brooke,  JJ.,  concur.  Montgomery,  J.,  con- 
curred in  the  result. 


BOURKE  V.  BUXTON  and  DE  VILLIERS. 

(Supreme  Court  of  the  South  African  Republic  [Transvaal],  1889.    3  Supreme 
Court  Cases,  S.  A.  Republic  [Transvaal],  39.) 

Buxton,  a  contractor  built  a  house  for  De  Villiers.  He^was  taken 
by  IDeViTIiers  to  Bourke,  a  merchant,  and  introduced  as  an  honorable 
and  trustworthy  man.  On  the  strength  of  this  introduction  Bourke 
supplied  Buxton  with  building  material.  De  Villiers  came  with  Bux- 
ton to  Bourke's  yard,  discussed  prices  of  material,  and  also  supported 
Buxton  with  a  bill,  which  was  paid.  Bourke  stated  that  he  looked  to 
De  Villiers  for  payment.  The  arrangement  between  Buxton  and  De 
Villiers  was  that  on  the  former  obtaining  the  architect's  certificate  De 
Villiers  would  pay  him.  Bujcton  relied  on  this  money  to  pay  Bourke 
for  the  material,  having  no  other  funds  at  his  disposal.  On  produc- 
tiotTof  the  architect's  certificate  De  Villiers  did  not  pay  Buxton,  who 
consequently  left  Bourke  unpaid.  Bourke  now  sued  Buxton  and  De 
Vifli^rs  as  Buxton's  guarantor. 

KoTZE,  C.  J.    The  court  grants  absolution  from  thejnstance. 

S.  JoRissEN  and  De  Korte,  JJ.,  concurred. 


^ 


DOWNING  V.  ROBINSON  et  al. 
(Court  of  Appeals  of  Maryland,  1908.     109  Md.  35,  71  Atl.  129.) 

Appeal  from  the  Circuit  Court  for  Harford  County ;   Duncan,  J. 

The  cause  was  argued  before  Boyd,  C.  J.,  and  Briscoe,  Pearce, 
ScHMUCKER,  Burke,  Thomas,  Worthington,  and  Henry,  JJ, 

ScHMUCKER,  J.,  delivered  the  opinion  of  the  court. 

The  bill  in  this  case  asserts  and  seeks  to  enforce  the  right  of  the 
appeflant  to  the  benefit  of  an  alleged  claim  of  the  appellee  Charles  A. 
Macatee  against  his  coappellees  for  a  portion  of  the  purchase  money 
for  certain  building  lots.  The  material  circumstances  which  are  as-  XT-L 
serted  to  have  conferred  on  the  appellant  the  right  of  subrogation  or 
substitution  to  the  claim  of  Macatee  appear  from  the  record  to  have 
been  as  follows :  In  the  year  1890  a  Virginia  corporation  known  as  the 
"Front  Royal  &  Riverton  Improvement  Company,"  of  which  Henry 


■2G  FORMATION.  (Part  1 

A.  Downing  was  president  and  Charles  A.  Macatee  was  a  director, 
attempted  to  develop  as  an  addition  to  the  town  of  Front  Royal  a 
tract  of  farming  land  lying  in  its  vicinity.  For  that  purpose,  the  means 
then  currently  employed  in  exploiting  town  sites  in  the  valley  of  Vir- 
ginia were  adopted.  Engagements  were  secured  from  various  edu- 
cational, manufacturing,  and  industrial  enterprises  to  estabhsh  them- 
selves on  the  property.  The  land  was  platted  and  laid  out  in  streets 
and  blocks,  and  a  prospectus  was  prepared  and  issued  setting  forth  in 
glowing  terms  the  present  advantages  and  future  prospects  of  the  sit- 
uation, and  then  building  lots  were  offered  for  sale.  The  appellees 
other  than  Charles  A.  Macatee  were  residents  of  Maryland,  and  had 
no  interest  in  the  improvement  company,  but,  their  attention  having 
been  called  to  its  enterprise,  they  visited  Front  Royal,  and  inspected 
the  property  to  see  whether  it  presented  any  opportunities  for  profitable 
investment.  The  fever  of  speculation  then  prevalent  in  that  neigh- 
borhood proved  sufficiently  contagious  to  induce  them  to  agree  on  Oc- 
tober 20,  1890,  to  purchase  from  the  company  rrofTts^blfitdiiig  lots, 
embracing  in  all  about  one  acre  of  land,  at  prices  aggregating  $S,100. 
to  be  paid  one-third  cash  and  the  balance  one  half  in  one  year  and 
the  other  in  two  years  after  date.  A  short  time  thereafter  it  was 
agreed  between  the  purchasers  of  the  lots  and  Charles  A.  Macatee 
that  he  should  assume  one-seventh  interest  in  the  purchase,  and  that, 
as  a  matter  of  convenience,  the  title  to  the  property  should  be  taken 
and  held  in  his  name.  The  first  installment  of  purchase  money  was 
paid  by  the  7  appellees  in  equal  shares,  and  the  11  lots  were  conveyed 
by  the  company  to^Iacatee,  who  gave  to  jt  hi.s_S2_individuaI  bonds  for 
the  2  deferred  installments.  He  then  as  evidence  of  the  nature  of  his 
holding  of  the  title  as  befween  him  and  his  coappellees  executed  and 
delivered  to  them  the  following  declaration  of  trust: 

"This  declaration  of  trust  made  this  day  of  November,  in 

the  year  eighteen  hundred  and  ninety,  by  C.  A.  Macatee,  of  Front 
Royal,  Virginia.  Whereas  the  said  C.  A.  ^^lacatee  has  received  from 
the  Front  Royal  &  Riverton  Improvement  Company  of  Front  Royal, 
Va.,  deeds  for  the  following  lots  in  or  near  Front  Royal,  Va.,  viz. : 
Lots  No.  23  &  24  in  block  23,  Sixth  St.  Lot  14  in  block  18  Sixth  St., 
lots  1  and  2  in  block  17  Va.  avenue,  lots  1  and  2  block  15  Va.  avenue, 
lots  9  &  10  block  21  Commerce  avenue,  and  lots  1  and  2  block  33  War- 
ren avenue  as  located  on  a  plot  of  the  property  owned  by  said  Front 
Royal  &  Riverton  Improvement  Company,  and  whereas  the  said  C. 
A.  Macatee  has  only  a  one-seventh  interest  in  said  lots,  the  other 
six-sevenths  interest  therein  being  owned  equally  by  J.  H.  C.  Watts, 
Martin  L.  Tarrett,  Edwin  H.  Webster  of  Jno.,  William  S.  Forwood, 
Jr.,  Thomas  H.  Robinson  and  Frank  B.  Macatee.  all  of  Harford 
county  in  the  state  of  Maryland,  and  whereas  said  parties  have 
paid  to  the  said  Front  Royal  &  Riverton  Improvement  Company 
one-third  of  the  purchase  money,  each  party  paying  one-seventh 
thereof    (being  $350.58)   at  the   execution   of   said   deeds   to   C.   A. 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  27 

Alacatee;  and  whereas  said  lots  were  purchased  as  aforesaid  for  the 
purpose  of  conveying  them  to  such  purchaser  or  purchasers  at  such 
time  and  for  such  price  as  the  parties  interested  therein  may  direct 
and  to  save  inconvenience  and  delay  in  the  execution  of  a  conveyance 
it  was  agreed  that  the  legal  title  to  said  lots  should  be  put  in  the  name 
of  the  said  C.  A,  Macatee : 

"Now,  therefore,  the  said  C.  A.  Macatee  does  hereby  declare  that 
he  has  only  a  one-seventh  interest  in  the  aforesaid  lots  purchased 
from  the  Front  Royal  &  Riverton  Improvement  Company  and  par- 
ticularly described  in  the  deed  from  said  company  to  the  said  Macatee, 
the  other  six-sevenths  interest  therein  being  owned  equally  by  the  said 
J.  H.  C.  Watts,  Martin  L.  Jarrett,  Edwin  H.  Webster  of  jfno.,  Wil- 
liam S.  Forwood,  Jr.,  Thomas  H.  Robinson,  and  Frank  B.  Macatee, 
of  Harford  county,  Maryland.  Witness  my  hand  and  seal  the  day 
and  year  above  mentioned.  C.  A.  Macatee.      [Seal.]" 

The__second_installment  of  purchase  money  for  the  lots  was  paid 
at  or  near  its  maturity  by  Charles  A.  Macatee  to  whom  the  other  ap- 
pellees each  sent  a  check  for  his  share  of  the  installment,  although  the 
improvement  company  and  its  development  scheme  had  already  sunk 
into  a  languishing  condition.  When  the  third, Justallment.  fell  due, 
Charles  A.  Macatee  paid  his  own  one-seventh  of  it,  but  the  other  ap- 
peflees,  with  the  exception  of  J.  H.  C.  Watts,  never  paid  their  shares 
of  it.  By  that  time  the  speculative  boom  in  the  valley  had  collapsed, 
and  the  improvement  company  and  its  projects  had  come  to  naught. 
Charles  A.  Macatee  was  financially  ruined  by  the  failure  of  the  com- 
pany, and  he  still  remains  in  an  insolvent  condition.  On  the  28th  of 
February,  1898,  Henry  H.  Downing  was  appointed  receiver  of  the  im- 
provement company  by  the  circuit  court  of  Warren  county,  Va.,  and 
directed  to  collect  the  assets  of  the  corporation  and  to  institute  and 
maintain  such  suits  as  might  be  necessary  for  that  purpose.  ^n_Oc- 
tober  21,  1904,  bu^3  days  less  than  12  years  after  the  maturity  of.  the 
las^installment  of  the  purchase  money  for  the  lots  purchased  from  the 
company  by  the  appellees.  Downing,  as  receiver,  having  first  obtained 
leave^gf  the  court  for  that  purpose,  filed  the  present  bill  against  them 
for  the  recovery  of  that  installment,  with  interest.  V 

Thejtheory  of  the  bill  is  that,  as  the  result  of  the  relation  existing  *)>-l..^^,^.rr-  ^ 
between  the  appellees  in  reference  to  the  purchase  of  the  lots  referred 
to,  Charles  A.  Macatee  stands  in  the  attitude  of  surety  for  his  coap- 
pellees,  and  in  that  situation  is  entitled  to  claim  reimbursement  from 
them  to  the  extent  of  their  respective  portions  of  the  unpaid  balance 
of  purchase  money  and  interest,  and  that  the  appellant  as  the  creditor 
of  Macatee  is  entitled  to  the  benefit  of  his  claim  against  them.  All /^  ^ -^'^^'^-^  ^^ 
of  the  appellees  as  defendants  below  answered  the  bill.  Charles  A. 
Macatee  filed  a  separate  answer,  practically  admitting  all  of  the  allega- 
tions of  the  bill,  and  consenting  to  the  granting  of  the  relief  prayed 
for.  The  other  appellees  as  defendants  filed  a  joint  answer,  admit- 
ting the  purchase  of  the  lots  and  their  conveyance  to  Charles  A.  Maca- 


28  FORMATION.  (Part  1 

tee  and  the  execution  by  him  of  the  declaration  of  trust  in  their  favor, 
and  the  payment  by  them  of  two  instahments  of  the  purchase  money 
and  the  non-payment  of  the  third  one  by  any  of  them  except  J.  H. 
C.  Watts,  but  denying  the  existence  of  any  indebtedness  or  obhga- 
tion  on  their  part  to  Macatee  or  to  the. appellant  or  the  corporation 
of  which  he  claimed  to  be  the  receiver.  "•  Their  answer  further  set  up 
by  way  of  defense  that  they  had  been  induced  to  purchase  the  lots  by 
the  fraudulent  representations  of  Downing  and  Macatee  as  president 
and  director  of  the  improvement  company.    They  also  set  up  and  re- 

,^  lied  upon  the  statute  of  limitations  in  their  answer  as  a  defense  to 
the  bill.  The  case  was  heard  in  due  course  in  the  court  below,  and 
the  bill  was  dismissed  by  the  decree  from  which  this  appeal  was  taken. 
('The  appellant  contends  that  in  the  state  of  facts  to  which  we  have 
adverted  Charles  A.  Macatee  slx)uld  be  in  equity  regarded  as  standing 
in  the  situation  of  surety  for  his  coappellees  for  the  payment  of  the 
purchase  money  for  the  11  lots,  and  lie  invokes  in  behalf  of  the  im- 
provement company,  under  whose  title  he  claims,  the  well-recognized 
equitable  proposition  that,  when  a  principal  debtor  hr.s  given  any  se- 
curity or  other  pledge  to  his  surety,  the  creditor  is  entitled  to  the  ben- 
efit of  such  security  or  pledgee  in  the  hands  of  the  surety  to  be  ap- 
plied in  payment  of  the  debt/  '-He  also  relies  upon  the  other  equitable 
doctrine,  which  has  repeatedly  been  recognized  by  this  court,  that  a 
surety,  after  the  debt  has  become  due,  may  maintain  a  bill  to  require 
the  principal  debtor  to  pay  it,  whether  the  surety  has  been  sued  for  it  or 
not.  Both  of  these  two  equitable  doctrines  are  supported  on  the  appel- 
lant's brief  by  the  citation  of  numerous  decisions  of  this  and  other 
courts,  and,  if  either  of  them  were  applicable  to  the  facts  disclosed  by 
the  record,  it  may  be  conceded  that  it  would  be  conclusive  of  his  right 
to  recover. 

r-  It  is,  however,  fundamental  to  both  of  the  propositions  so  relied  on 
by  the  appellant,  that  Charles  A.  Macatee  be  determined  to  have  been 
surety  for  his  coappellees  for  the  payment  of  the  purchase  money  for 
the  11  lots ;  but  we  are  unable  to  find  in  the  record  sufficient  ground 
for  holding  him  to  have  occupied  that  relation  to  them.,  ijle  was  not 
formally  their  surety,  for  the  bonds  which  he  gave  to  the  company 
for  the  deferred  payments  were  not  their  obligations  on  which  he  ap- 
peared as  surety.  They  were  his  individual  obligations  for  a  debt  for 
which  both  he  and  his  coappellees  had  been  originally  liable.- ''.  The 
arrangement  in  reference  to  the  purchase  and  proposed  sale  of  the 
lots  into  which  the  appellees  entered,  as  evidenced  by  the  declaration 
of  trust  executed  by  Macatee,  created  a  tenancy  in  common,  or,  at 
most,  copartnership  as  between  them,  but  it  did  not  ipvolve  a  suretv- 
ship.  A  somewhat  similar  arrangement  as  to  the  purchase  and  sale 
of  lands  for  account  of  several  persons  was  held  by  us  in  Morgart  v. 
Smouse,  103  Md.  463,  63  Atl.  1070,  115  Am.  St.  Rep.  367,  to  have 
constituted  its  participants  copartners.  The  present  case  fails  to  fall 
within  the  operation  of  the  first  mentioned  of  the  two  equitable  doc- 


Ch.  2)  ESSENTIALS  TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  29 

trines  under  discussion,  for  the  further  reason  that  the  record  does 
not  show  that  the  appellees,  other  than  Macatee,  ever  placed  in  his 
hands  any  security  or  pledge  which  can  be  applied  to  the  payment  of 
the  debt  now  soirght  to  be  recovered.  \ 

No^Js-the-appellaiit  entitled  to  the  benefit  of  the  other  proposition  </.^■.u^-.^  |>/W  '- 
relied  on  in  his  brief,  and  supported  by  TEe^uthorities  therein  cite^,  <f  c,.  uljA, 
that,  when  a  surety  or  even  an  agent  has  paid  a  debt  of  the  principal 
debtor,  he  is  entitled  to  recover  from  the  latter  the  amount  so  paid  for 
him,  because  Macatee.  to  whose  right  the  appellant  seeks  to  be  subto- 
gated,  is  not  shown  to  have  paid  any  debt  for  which  his  coappellees 
w^e  liable,  ofBerwise  than  with  funds  furnished  to  him  by  them  for 
that  purpose. 

The  original  liability  of  the  appellees  to  pay  for  the  lots  purchased 
was  so  far  as  the  record  shows  a  simple  contract  obligation.  If  that 
obligation  was  not  extinguished  under  the  rulings  of  this  court  in  Da- 
vidson v.  Kelly,  1  Md.  493,  by  the  giving  and  receipt  of  Macatee's 
individual  bond  for  the  debt,  it  has  long  been  barred  by  the  statute  of 
limitations  which  was  set  up  by  the  answer  of  the  appellees  as  a  de- 
fense to  the  present  suit.  / 

During  the  progress  of  the  case  below  the  appellees  as  defendants  cv-^^r-.r^  '^^ 
took  a  number  of  exceptions  to  the  admission  of  testimony,  but  they 
were  not  passed  upon  by  the  circuit  court  for  the  reason  doubtless 
that  the  appellant  as  plaintiff  had  not  made  out  a  case  for  relief  in 
equity.  Having  come  to  the  same  conclusion  as  to  the  insufficiency  of 
his  case,  we  deem  it  unnecessary  to  notice  those  exceptions.  We  think '^  '"  f^-"^-?/ 
it  due  to  the  appellant  and  to  the  appellee  Charles  A.  Macatee  to  say 
that  in  our  judgment  the  record  does  not  sustain  the  charges  made 
against  them,  in  the  answer  of  the  other  appellees,  of  fraudulent  con- 
duct in  procuring  or  making  the  sale  of  the  lots  on  behalf  of  the  im- 
provement company. 

For  the  reasons  stated  in  this  opinion,  the  decree  appealed  from  will 
be  affirmed. 

Decree  affirmed,  with  costs. 


OLDERSHAW  et  al.  v.  KING. 
(Court  of  Exchequer  Chamber,  1857.    2  Hurl.  &  N.  517.) 

Errm^^n  the  judgment  of  the  Court  of  Exchequer  on  a  special  case. 
The  case  and  judgment  of  the  court  below  are  reported  in  2  Hurl.  & 
N.  399. 

CocKBURN,  C.  J.,  now  said:  ^^  I  am  of  opinion  that  the  judgment 
of  the  court  below  must  be  reversed.     The  qiiestion  arises  on  a  con- 

iB  Arguments  of  counsel  are  omitted. 


30  FOUMATiON.  (Part  1 

tract  of  guarantee.  (His  Lordship  read  the  defendant's  letter.f)  It 
was  contended  in  the  court  below,  and  before  us,  that,  looking  at  the 
language  of  this  document,  it  must  be  taken  that  the  contract  was 
based  entirely  on  the  consideration  that  Oldershaw"  would  forbear  to 
press  for  the  immediate  payment  of  the  debt  due  to  him  at  the  time 
this  letter  was  written ;  and  it  was  said  that  the  consideration  was  in- 
sufficient, an  agreement  to  forbear  to  press  for  immediate  payment  be- 
ing too  vague  to  constitute  the  consideration  for  a  promise ;  and  sev- 
eral authorities  were  cited  in  support  of  that  position,  and  particularly 
the  case  of  Semple  v.  Pink,  1  Exch.  74.  We  think,  however,  that  this 
is  not  the  true  construction  of  the  contract.  I  agree  with  what  was 
said  by  the  Lord  Chief  Baron  in  the  court  below,  that  we  must  not 
construe  tin's  document  with  the  strictness  with  which  we  should  con- 
strue a  pleading,  but  must  look  to  the  whole  of  the  instrument  in  or- 
der to  see  what  was  the  real  meaning  of  the  parties.  Thus,  though 
the  words  of  promise  on  the  part  of  the  defendant  follow  immediately 
after  the  words  "in  consideration  of  your  forbearing  to  press  them 
for  the  immediate  payment  of  the  debt  now  due,"  we  need  not  con- 
strue the  words  as  we  should  the  statement  of  a  contract  in  a  decla- 
ration. It  stands  thus,  the  defendant  says:  John  and  Joseph  Francis 
King  being  indebted  to  you  for  professional  business,  and  cash  lent 
and  advances,  and  you  having  the  right  to  close  the  account  and  insist 
on  immediate  payment,  if,  instead  of  doing  so,  you  will  leave  the  ac- 
count open,  and  make  further  advances,  although  I  do  not  ask  you 
to  bind  yourself  to  do  so,  still,  if  you  do  so,  I  will  be  responsible  to 
you  to  the  extent  of  £1,000.  The  consideration  is  not  simply  tne 
forbearing  to  press  for  immediate  paymenf,  but^aTsoThe  'futu're_ad- 
vances,  which,  though  not  stipulated  for,  were  contemplated  by  the 
parties. 
*i*Lj,^u  -  ■^"^  supposing  the  sole  consideration  was  the  forbearing  to  press 
*yvj'  r^^  for  immediate  payment,  I  should  not  be  prepared  to  assent  to  the' 
1*^  I  doctrine  laid  down  in  Semple  v.  Pink.    Tliere  are  authorities  for  say~ 

ing  that  an  agreement  to  forbear  for  a  short  time]^  or  a  Httle  time,  is 
too  indefinite  to  constitute  a  consideration 'foF  a  contract ;   but  I  am 

t  "21  Manchester  Terrace.  August  24.  1S48. 

"Dear  Sir:  I  am  aware  that  uiy  uncles  J.  and  J.  F.  King  stand  consider- 
ably indebted  to  you  for  professional  business  and  for  cash  lent  and  advanced 
to  them,  and  that  it  is  not  in  their  power  to  pay  you  at  present,  and  as  in  all 
probability  they  will  become  still  further  indebtetl  to  you,  though  I  by  no 
means  intend  that  this  letter  shall  create  or  imply  any  obligation  on  your'part 
to  increase  your  claim  against  them,  I  am  willing  to  bear  you  harmless  against 
any  loss  arising  out  of  the  past  or  future  transactions  between  you  and  my 
said  uncles  to  a  certain  extent  and  therefore  in  consideration  of  your  forbear- 
ing to  press  them  for  the  immediate  payment  of  the  debt  now  due  to  you,  I 
hereby  engage  and  agree  to  guarantee  you  the  payment  of  any  sum  that  they 
may  be  indebted  to  you  upon  the  balance  of  accounts  between  vou  at  any- 
time during  the  next  six  years,  to  the  extent  of  £1,000.  whenever  called  upon 
by  you  to  pay  the  same,  and  after  twelve  calendar  months  previous  notice. 

"To  Robert  Oldershaw,  Esq.  I  remain,  &c. 

"William  Thomas  King." 


k\^(^ 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  31 

nqt^t  all  prepared  to  assent  to  the  proposition  that  an  agreement _to 
forbear  for  a  reasonable  time  would  not  be  sufficient.    I  see  no  reason 
why  the  question  as  to  what  is  a  reasonable  time  should  not  be  con- 
sidered and  determined  with   reference  to  the  circumstances  of  the 
case  by  a  jury.    As,  however,  in  the  view  I  take  of  this  case,  the  con- 
tract discloses  a  sufficient  consideration  independently  of  such  forbear- 
ance, it  is  not  necessary  to  go  the  length  of  overruling  Semple  v.  Pink. 
R^Ec=y   I  concur  in  the  opinion  expressed  by  the  Lord  Chief  Baron 
in' the  court  below,  and  the  Lord  Chief  Justice  in  this  court,  and  there- 
fore I  think_that  the  judgment  of  the  majority  of  the  court  below  ought 
to  be  reversed.    The. first  question  is  upon  the  construction  of  the  ^c^/^  ^^e^.^fu<X^  rf  ^ 
ument,  whether  it  is  a  contract  in  consideration  of  time  being  given  by       ^*^  ''"'^ 
the  creditmvto  the  debtor,  or  a  contract  in  consideration  of  time  being  / 
so  given,  and  further  advances  to  be  made?     Looking  at  the  whole 
letter,  and  the  circumstances  under  which  it  was  written,  and  consid- 
ering the  importance  of  further  advances,  I  come  to  the  conclusion 
that  the  consideration  contemplated  was,  that  further  advance  should 
be  made,  and  time  given  by  the  creditor  before  he  would  press  for 
the  payment  of  the  existing  debt.     Though  the  contract  did  not  bind 
the  creditor  to  make  further  advances,  or  to  give  time  unless  he  chose 
to  do  so,  it  is  clear  that  if  he  did  make  the  advances  and  did  give  time, 
that  which  was  contingent  at  the  time  when  the  instrument  was  writ-   >.,/-_  6<L^ 
ten  became  an  absolute  and  binding  contract.     I.  am  also  of  opinion,    j^  •j^kj^'T^ 
that,  although  the  amount  of  further  advances  and  of  the  time  to  be  i^^^/c    ^ 
given  is  not  defined,  still,  if  time  is  given  and  advances  are  made,  it  '    ^  d^'''''*'^^ 
is_  enough.     These  undefined  terms  ought  to  receive  a  construction  in 
reference  to  facts  given  in  evidence  "ut  res  magis  valeat  quam  pereat." 
If  the  guarantor  has  had  the  advantage  he  bargained  for,  we  must 
hold  him  to  his  promise.  ^^ 

That  suffices  for  the  judgment  of  reversal  in  the  present  case.  I/^ 
concur  with  the  Lord  Chief  Justice  with  respect  to  the  case  of  Semple 
v.  Pink,  1  Exch.  74.  I  do  not  assent  to  the  doctrine  that  a  guarantee 
in  consideration  of  an  agreement  to  give  time  is  void  unless  the  time 
to  be"  given  is  defined  in  the  contract.  But  it  is  not  necessary  to  de- 
ytide_that_point^ 
Y  [Williams,  ])■  I  am  of  the  same  opinion.  I  think  that  the  case  in- 
'\^m\^s~  ho  "question  oT~Taw  at  all.  Tf  merely  turns  on  the  construction 
of  the  guarantee.  In  my  opinion,  the  true  meaning  of  the  instrument 
is  that  the  defendant  contracted  with  Oldershaw  that  if,  without  press- 
ing for  immediate  payment,  he  would  continue  his  transactions  unin- 
terruptedly with  the  defendant's  uncle,  that  the  defendant  would  guar- 
anty the  payment  of  the  balance  of  their  account  at  any  time  within 
six  years,  to  the  extent  of  il,000.  If  that  was  the  true  construction 
of  the  agreement,  then  the  holding  it  valid  is  in  accordance  with  all 
the  authorities  cited  in  the  argument.  /\   ,, 

'CrompTon,  J.J  I  do  not  disagree  with  the  result  of  the  judgments    /d^'^-'U-.^fvv* 
ij\'hiciniave  tTePn  delivered,  but  I  am  bound  to  say  that  I  differ  from        '>' 


32  FORMATION.  (Part  1 

the  rest  of  the  court  as  to  the  construction  of  this  contract.  I  think 
the  view  taken  of  the  meaning  of  the  parties  by  my  Brother  Bram- 
WELL  in  his  judgment  is  the  correct  one.  I  agree  that  we  must  see 
what  is  the  promise  and  what  is  the  consideration  upon  which  it  is 
founded,  and  that  to  ascertain  this  we  may  look  at  all  the  facts  of  the 
case.  And  I  quite  agree  with  the  doctrine  established  in  the  case 
of  Johnston  v.  Nicholls,  1  C.  B.  251  (E.  C.  L.  R.  vol.  50),  that  where 
there  is  a  consideration,  that  is  sufficient  to  support  a  promise  to  guar- 
an'tee  either  past  or  future  debts.  My  Brother  Maule  puts  the  case 
on  the  true  ground,  viz.,  that  the  substance  of  such  a  contract  as  the 
present  is  that,  in  consideration  that  the  plaintiffs  will  do  something 
in  future,  the  defendants  promise,  in  like  manner,  to  do  something 
in  future.  Here,  supposing  that  the  consideration  is  good,  it  is  clear 
it  would  support  a  promise  to  pay  the  balance,  whether  arising  from 
new  or  old  debts.    Then  what  is  the  consideration? 

^^>.         A      The  answer  to  that  question  does  not  depend  on  any  technical  rule, 
"^  but  on  a  consideration  of  the  whole  document  as  a  mercantile  instru- 

'^  ment,  treating  that  which  the  parties  have  expressed  in  words  as  that 
which  they  really  intended  to  express.  I  think  the  meaning  is:  If 
you  forbear  to  press  for  the  immediate  payment  of  the  old  debt,  I  will 
agree  to  guarantee  the  balance,  whether  it  remain  the  same  or  whether 
it  is  added  to.  There  are  not  two  promises.  It  is  one  promise  to  pay 
the  balance,  whether  arising  from  fresh  dealings  or  from  the  former 
dealings.  It  is  said  to  be  part  of  the  understanding  that  there  should 
be  fresh  dealings ;  but  I  think  that  is  not  so,  and  that  the  parties  meant 
the  promise  to  apply,  whether  there  were  fresh  dealings  or  not.  To 
construe  the  document  otherwise  seems  to  me  to  be  putting  a  mean- 
ing upon  it  different  from  that  which  the  parties  intended.  Oldershaw 
is  not  to  engage  himself  to  make  further  advances,  and  it  is  clear  to 
my  mind  that  the  defendant  engaged  to  pay,  if  Oldershaw  gave  time ; 
and,  on  the  other  hand,  if  Oldershaw  did  not  give  time,  that  no  action 
could  have  been  maintained  on  this  guarantee,  notwithstanding  that 
he  made  fresh  advances.  Therefore  it  seems  to  me  that  the  parties 
did  not  intend  it  to  be,  and  we  should  be  altering  the  contract  if  \ye, 
make  it,  a  part  of  the  consideration  for  the  promise  that  there  should 
be  any  fresh  dealings.  The  consideration  was  that  Oldershaw  should 
not  press  for  immediate  payment,  and  I  think  that  the  giving  a  rea- 
sonable time  is  a  sufficient  consideration. 
/  K      In  the  old  authorities,  mentioned  in  Comyn,  it  is  said  to  be  sufficient 

*-'S  |«nc^^  c    j£  there  is  an  agreement  for  forbearance  for  a  definite  portion  of  time, 
<— Aievw*    °^  ^^^  ^  reasonable  time ;  and  in  Payne  v.  Wilson,  7  B.  &  C.  423,  Lord 
"  Tenterden  rests  his  judgment  on  the  ground  that  it  must  be  taken 

that  the  plaintiff  had  suspended  proceedings  for  "a.  definite  or  reason- 
able time."  I  ^o  not  see  any  great  difficulty  in  saying  that  what  is  a 
reasonable  time  may  be  determined  at  nisi  prius.  It  may  be  difficult 
to  say  what  a  reasonable  time  is ;  but  the  difficulty  is  not  greater  than 
in  many  other  cases  where  there  is  a  promise  to  do  a  thing  in  a  rea- 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  33 

sonable  time.  And  the  only  distinct  authority  against  that  is  the  case 
of  Semple  v.  Pink.  The  court,  however,  in  that  case  had  really  to 
decide  whether  there  was  a  variance  between  the  guarantee  proved 
and  that  set  out  in  the  declaration.  If  I  had  to  decide  the  case  now,  I 
should  be  inclined  to  say  that  a  reasonable  time  might  be  implied,  be- 
cause no  time  was  mentioned  in  the  contract.  That  was  the  point  be- 
fore  the  cotiii^ 

WiLLES^.  /  I  am  of  the  same  opinion.    Assuming  that  we  are  only  .^^^.^^^^  ;  ,,  '^ 
nc/Tooirlo'  the  words  of  the  document^  and  to  see  what  is  there  stated  ^,>^j[^  L 
as  the  consideration  for  the  contract  without  regard  to  the  previous   ^^^,^±2^^;^^^ 
recital,  the  consideration  would  appear  to  be  "forbearing  to  press  for   '^r,;  '^w/*^  *" 
the  immediate  payment  of  the  debt  due."    There  are  many  authorities 
which  show  that  in  cases  like  the  present  the  word  "immediate"  may 
be  construed  to  mean  within  a  reasonable  time  to  do  the  act  in  ques- 
tioned^ Accordingly,  I  think  that  forbearing  to  press  for  immediate 
payment  means  forbearance  for  a  reasonable  time.  ~     v   ' .  - 

~Then  It  is  said  that  that  is  not  "a  sufficient  consideration,  because  of  "^^"^  ^^  Y" 
the  indefiniteness  of  the  word  "reasonable,"  and  because  it  might  be 
competent  to  the  person  who  entered  into  a  contract,  engaging  to  for- 
bear for  a  reasonable  time,  to  sue  the  next  instant,  or  within  a  very 
short  time.  Looking  for  a  moment  to  the  mode  in  which  the  question 
of  reasonable  or  unreasonable  time  would  be  determined,  the  difficulty 
vanishes.  The  question  whether  the  creditor  had  forborne  for  a  rea- 
sonable time  orliof~would  be  determined  by  the  jury.  Now,  suppose 
the  consideration  expressed  had  been  forbearing  for  such  a  time  as  a 
jury  who  might  try  the  question  should  consider  reasonable,  there  can 
be  no  doubt  but  that  it  would  be  a  perfectly  good  contract,  and  for  a 
good  consideration.  That  is  what  is  tacitly  expressed  in  this  instru- 
ment. There  are  many  cases  in  which,  the  reasonableness  of  the  time 
in  which  to  do  a  thing  not  being  fixed  by  legal  decisions,  as  in  the  case 
of  the  dishonor  of  a  bill  of  exchange,  it  is  left  to  the  jury  as  a  ques- 
tion of  fact  with  reference  to  the  circumstances  of  the  particular  case. 
\  do  not  see  on  what  principle  an  agreement  to  forbear  for  a  time 
stipulated  for  by  the  parties  should  not  constitute  a  good  considera- 
tion. There  are  authorities  to  that  effect:  Com.  Dig.,  "Action  on  the 
Case  on  Assumpsit,"  (B)  (Bl).  In  Payne  v.  Wilson,  7  B.  &  C.  423 
(E.  C.  L.  R.  vol.  14),  Lord  Tenterden  seems  to  treat  it  as  clear  that 

-0  That  a  request  to  forj^ear  suit,  followed  by  forbearance  for  a  reasonable 
tiuifi,  ^Yill  constitute  a  consideration,  is  settled  in  Wills  v.  Ross,  77  lud.  17  3^ 
Am.  Rep.  279  (ISSl) ;  Hakes  v.  Hotchkiss.  23  Vt.  231  (1S51). 

A  promise  "in  consideration  of  your  witlidrawing  the  petition  you  have  pre- 
senterTfor  winding  up  the  company  called  .John  King  &  Co."  has  been  held  suf- 
ficient. "If  a  man  expressly  contracts  that,  a  particular  petition  being  with- 
drawn, he  ^-ill  pay  a  sum  of  money,  that  is  a  good  contract;  it_was  his  own 
folly  not  to  provide  against  another  petition  being  filed.  It  is  obvious  that 
aT'reat"  benefit  Is  gained  by  the  withdrawal  because  of  the  disinclination  to 
commence  a  new  proceeding  after  so  much  labor  and  expense  have  been 
wasted."    Bramwell,  B.,  in  Harris  v.  Venables,  L.  R.  7  Exch.  235  (1872). 

Hen.  Sub. — 3 


/ 


34  ■  FOKMATiON.  (Part  1 

the  forbearance  for  a  reasonable  time  would  be  sufficient  considera- 
tion. No  doubt  there  are  authorities  on  the  other  side;  but  if  we  are 
to  choose  between  authorities,  one  class  of  which  tends  to  defeat,  and 
the  other  class  to  uphold  the  intention  of  the  parties,  I  should  have  no 
ifficulty  in  adhering  to  the  latter  class. 

The  construction  put  upon  this  instrument  by  ray  Brother  Cromp- 
TON  was  that  which  first  suggested  itself  to  my  mind ;  but  I  tliink  that 
it  ^s  not  likely  that  the  parties,  in  the  relation  in  which  they  stood  to 
each  other  at  the  time  the  guarantee  was  given,  looked  to  forbearance 
alolieTs  the  consideration.  Tjiere  is  a  recital  which  shows  that  it 'was 
expected  that  the  dealings  would  continue  between  Oldershaw  and  J- 
affdj.  F.  King.  I  find,  by  the  subsequent  part  of  the  instrument,  that 
It  was  supposed  that  they  might  continue  during  six  years ;  and  then 
there  is  the  suggestion  that  "in  all  probability  they  will  become  still 
more  indebted,"  evidently  expressing  a  desire  that  the  advances  should 
be  continued,  not  binding  the  creditor  to  make  advances,  but  to  in- 
duce him  to  make  them.  Probably,  therefore,  the  most  just  construc- 
tion of  the  instrument  is  that  which  has  been  put  upon  it  by  my  Lord 
Chief  Justice  and  my  Brothers  Erle  and  Williams.  Butjneither 
view  of  the  case  the  plaintiffs  are  entitled  to  recover,  and  the  judg- 
nTenrof.the  court  below  ought  to  be  reversed,  and  judgment  given  for 
the  plaintiffs,  both  as  to  past  and  future  advances.  " 

Judgment  reversed.^^ 


WHk^NNE  V.  HUGHES. 
(Court  of  Exchequer,  1S73.     21  Wkly.  Rep.  628.) 

Case  stated  without  pleadings. 

It  appeared  that  tliFTate  DTD.  Hughes  had  been  solicitor  of  jthe 
plaintiff,  and  as  such  had  been  intrusted  by  him  with  moneys,  which 
were  still  in  his  hands  at  the  time  of  his  death. 

Thg  defendant,  with  two  other  persons,  was  by  will  appointed  ex- 
ecutor of,  and  remained  in  charge  of,  the  offices  of  O.  D.  Hughes. 
Thelplsmtiff  required  from  the  defendant  a  settlement  of  the  accounts 
between  himself  and  the  testator.     The  amount  was  £500. 

On  tjie  15th  February,  18T2,  the  plaintiff's  agent  wrote  the  follow- 
ing letter  to  defendant:  "I  have  this  morning  received  the  most  per- 
emptory instructions  to  settle  this  account.  Be  good  enough  to  ar- 
range something  by  to-morrow." 

Tojhis  the  defendant  replied  on  the  Ifith  February:  "I  undertake 
to  pay  £500.  on  the  account  between  my  late  brother,  Mr.  O.  D. 
Hughes  and  your  client  on  or  before  this  day  three  weeks."  On  the 
15th  April  the  defendant  paid  to  the  plaintiff  £50.  on  account  of  the 
£500. 

21  No  notice  of  the  sale  of  goods  appears  to  have  been  given  in  Evans  v. 
Beattie,  5  Esp.  26  (1S03),  yet  recovery  was  had. 


^ 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP   BY   SIMPLE   CONTRACT.  35 

The_pIajntiff_.CQntended  that  the  guarantee  contained  in  the  letter 
of  16tli  April  was  given  b}-  defendant  in  his  personal  and  individual 
character;  contra,  the  defendant  that  the  guarantee  was  only  binding 
on' him  in  his  representative  character  as  executor.-^ 

/Kelly,  C.  B.  The  plaintiff  is  entitled  to  judgment.  There  are  two 
lett£is_J:a-Consider  in  this.  case.  The  first  from  plaintiff's  agent  to 
defendant:  "I  have  this  morning  received' the  most  peremptory  in- 
structions to  settle  this  account.  Be  good  enough  to  arrange  some- 
thing by  to-morrow." 

The  second  in  reply  from  the  defendant :  "I  undertake  to  pay  £500. 
on  the  account  between  my  late  brother,  Mr.  O.  D.  Hughes,  and  your 
client  on  or  before  this  day  three  weeks." 

It  is  true  that-the, plaintiff  did  not  expressly^  agree  to  forbear  suing 
for  three  weeks,  but  he  did  in  fact  forbear,  and  that  to  me,  independ- 
ently of  all  authority,  appears  to  be  a  good  consideration  for  the  de- 
fendant's promise  to  pay,  and  consequently  I  hold  that  ^he  defend- 
ant entered  into  a  good  and  binding  promise. 

Braimwell.  B^    I  am  of  the  same  opinion.    The  obvious  meaning  of 
these  letters  is,  "If,  instead  of  suing,  you  will  wait,  I  will  pay  you  in 
three  weeks."     Three   weeks   is   not  mentioned  by   the   plaintiff,   yet 
it  is  dear  that  a  delay  of  three  weeks  was  bargained!  for  and  accorded. 
This  is  an  action  against  an  executor,  charging  him  with  liability  on 
behalf  of  a  testator.    The  first  clause  of  the  fourth  section  of  the  ^^^^-        ■j^T'^jJ^^ 
ute  of  frauds  requires  for  purposes  of  suing  that  a  promise  to  such  "^ 
effect  should  be  in  writing.     The  mercantile  law  amendment  act  dis- 
penses with  the  necessity  of  the  consideration  for  a  promise  to  answer 
for  the  "debt,  default,  or  miscarriage  of  another"  being  in  writing,  yet 
it  may  be  that  the  mercantile  law  amendment  act  is  limited  to  the  sec- 
ond clause  of  the  third  section  of  the  statute  of  frauds,  for  the  very 
words  of  the  third  section  of  the  mercantile  law  amendment  act  ap- 
pear in  that  second  clause.     But,  however  that  may  be,  the  natural 
construction  of  the  letters  above  referred  to  is,  "If  you  will  give  me        ,       ^    , 
time  I  will  pay."     Certainly  the  creditor  is  not  thereby  bound  to  wait.     ^^^J^^lSj^  J 
The  contract  is  what  may  be  called  unilateral,  one  under  which  the     ■'^jurjr^' 
promisor  is  contingently  liable.     The   creditor,   however,   does   wait,        ^**'^"*«'<^ 
and  then  the  promise  to  pay,  upon  the  expiration  of  the  delay,  becomes 
binding  upon  the  defendant. 

The  argument  that  the  plaintiff  ought  on  his  side  to  have  expressly 
agreed  to  wait  three  weeks,  otherwise  that  there  is  a  mere  bare  prom- 
ise, is  met  by  this  consideration,  that  the  plaintiff  did  show  his  con- 
sent to  such  delay  in  suing  by  his  delay  to  sue.  The  only  difficn1ty^>>'^u.^r^w,  ^L 
presented  to  my  mind  by  Oldershaw  v.  King  is  that  the  creditor  never  ■''■'^<AyJL  twu. 
undertook  to  pay  at  any  specific  time,  and  therefore  that  the  consid- 
eration was  void  for  uncertainty.  It  was  said  that  the  forbearance 
should  be  for  a  reasonable  time,  and  when  we  inquire  how  a  "rea- 

2  2  The  arguments  of  counsel  are  omitted- 


36  FORMATION'.  (Part  1 

sonable  time"  is  to  be  determined,  we  find  Willes,  J.,  proposing  that 
the  question  should  be  decided  by  a  jury.  That  is  unsatisfactory^  and 
the  case  on  that  point  appears  to  me  not  well  decided.  But  in  the 
Court  of  Exchequer  Chamber  the  judges  held  that  the  creditor  had 
done  nothing,  and  therefore  on  this  point  it  is  a  decided  authority 
against  the  defendant's  contention. 

^PoLLOCK^.  I  am  of  the  same  opinion.  If  this  case  had  been  ar- 
gued  only  on  authority,  Semple  v.  Pink,  1  Exch.  74,  apart  from  Old- 
ershaw  v.  King,  would  have  been  a  strong  authority  in  favor  of  jMr. 
Morgan  Lloyd's  contention.  Semple  v.  Pink  was  cited  in  Oldershaw 
V.  King,  and  although  the  court  did  not  expressly  overrule  it,  I  be- 
lieve the  effect  of  the  later  case  has  been  to  override  the  former. 

Judgment  for  the  plaintiff. 


CREARS  v.  HUNTER. 

(Court  of  Appeal,  1887.     L.  R.  10,  Q.  B.  Div.  341.) 

Appeal  from  the  order  of  the  Queen's  Bench  Division  (Day  and 
Wills,  J  J.)  setting  aside  the  verdict  and  judgment  for  the  plaintiff  at 
the  trial. 

The  facts  in  substance  appeared  to  be  as  follows : 

The  action  was  on  a  promissory  note,  the  defense  being  that  there 
was  no  consideration  for  the  making  of  the  note  by  the  defendant? 

The  defendant's  father,  since  deceased,  had,  before  the  defendant 
came  of  age,  borrowed  a  sum  of  £200.  from  the  plaintiff,  promising 
thai  his  son,  the  defendant,  when  of  age,  would  become  surety  for 
the  debt.  In  1877,  the  defendant  being  then  of  age,  the  plaintiff 
brought  a  promissory  note  stamp  to  the  defendant's  father's  house^ 
wliefe"the  defendant  then  was,  and  the  promissory  note  now  sujed  up- 
on was  then  drawn  up  and  signed  by  the  defendant's  father  and  Jhe 
defendant.  By  such  note  they  jointly  and  severally  promised  to  pay 
to  the  plaintiff  or  order  "the  sum  of  i200.,  being  money  lent,  with  in- 
terest on  the  same  from  Martinmas  last  past  half-yearly  at  the  rate  of 
.5  per  cent,  per  annum,"  There  was  no  evidence  as  to  anything  being 
said  by  the  parties  in  relation  to  the  signing  of  the  note.  Interest  had 
been  paid  upon  the  note.  It  appeared  that  on  several  occasions  such 
interest  was  paid  in  the  defendant's  presence,  and  the  receipts  for  such 
payments  of  interest  were  made  out  to  the  defendant's  father  and  the 
defendant  jointly.  The  principal  being  still  due,  the  plaintiff*  brought 
his  action  on  the  note  against  the  defendant  Hunter  and  his  father's 
executor. 

The  learned  judge  at  the  trial,  A.  L.  Smith,  J.,  appeared,  in  sub- 
stance, to  have  told  the  jury  that,  if  the  note  was  signed  by  the  de- 
fendant in  order  that  the  plaintiff  might  give  time  to  his  father,  and 
the  plaintiff  did  give  time,-  there  would  be  a  good  consideration  for 


Ch.  2)  ESSENTIALS  TO  SURETYSHIP  BY  SIMPLE   CONTRACT.  37 

the  making^of  the  note  by  the  defendant,  and  he  left  it  to  the  jury 
to  say  whether  there  was  such  consideration. 

Thejury  found  for  the  plaintiff. 

The^Divisional  Court  set  aside  the  verdict  on  the  ground  that  there 
was  no  evidence  of  consideration,  and  entered  judgment  for  the  de- 
fendant.^^ 

Lord  EsHER,  M.  R.  In  this  case  the  defendant's  father  had  bor- 
rowed money  of  the  plaintiff,  and  was  actually  liable  to  pay  the  amount 
so  borrowed.  The  plaintiff  purchased  a  promissory  note  stamp,  and 
went  with  it  to  the  house  of  the  defendant's  father,  and  there  found 
the  defendant's  father  and  the  defendant,  who  was  at  that  time  under 
no  obligation  whatever  to  the  plaintiff.  A_£romissory  note  was  drawn 
up,  which  does  not,  it  is  true,  on  the  face  of  it  provide  for  any  delay 
in  payment  of  the  amount  due  by  the  father,  because  the  father's  lia- 
bility on  the  note  arose  immediately  after  it  was  slghed,'^  if  the  plam- 
tift"  Tiad  chosen  to  sue  on  it.  The  note  does  nevertheless  indicate  on 
the  face  of  it  that,  though  there  was  no  binding  agreement  to  Tor- 
bear,  the  parties  did  contemplate  that  the  note  might  not  be  sued  on 
for  some  time,  because  provision  is  made  for  the  payment  of  interest 
half-yearly  by  the  son  jointly  with  the  father.  It  rnay  be  true  that 
there  was  no  evidence  of  any  request  in  express  terms  by  the  son  that 
the  plaintiff  would  forbear  to  sue  the  father," but  "What  was  the  sub- 
stance of  the  transaction  contemplated  in  the  minds  of  the  parties? 
Was  not  the  understanding  obviously  that,  if  the  plaintiff  would  for- 
bear to  sue  the  father,  the  defendant  would  becorne  ^a^Dle  on  the  note? 
I  take  it  to  be  undbubted  law  that  the  mere  fact  oT  ibrbearance  would  • 
not  be  a  consideration  for  a  person's  becoming  surety  for  a  debt.  It 
IS  quite  clear  on  the  other  hand  that  a  binding  promise  to  forbear 
would  be  a  good  consideration  for  a  guarantee.  y 

The  question  is  whether,  if  the  guarantor  requests  the  creditor _ to    ","**^**^'<v^ 

forbear  from  suing  and  the  creditor  on  such  request,  although  he  does ^  "'^^  fv^ 

not  at  the  time  bind  himself  to  forbear,  does  in  fact  afterwards  for-  '^rw^^.^j,^ 
bear  to  sue,  there  is  a  good  consideration  for  the  guarantee.  It  seems  -'  ^-'-'^yi 
to  me  that  it  was  laid  down  in  Oldershaw  v.  King,  2  H.  &  N.  399, 
517,  that  there  would  in  such  a  case  be  a  good  consideration,  and  I 
do  not  think  that  any  of  the  cases  cited  to  us  is  really  to  the  contrary. 
Erie,  J.,  there  said:  "Looking  at  the  whole  letter  and  the  circum- 
stances under  which  it  was  w^ritten,  and  considering  the  importance 
of  further  advances,  I  come  to  the  conclusion  that  the  consideration 
contemplated  was  that  further  advances  should  be  made  and  time  given 
by  the  creditor  before  he  would  press  for  payment  of  the  existing 
debt.  Though  the  contract  did  not  bind  the  creditor  to  make  further 
advances  or  to  give  time,  unless  he  chose  to  do  so,  it  is  clear  that,  if 
he  did  make  the  advances  and  did  give  time,  that  which  was  contingent 
at  the  time  when  the  instrument  was  written  became  an  absolute  and 

as  The  arguments  of  counsel  are  omitted. 


38  FORMATION.  (Part  1 

binding  contract."  It  clearly  follows  from  what  he  there  says  that, 
if  at  the  request  of  the  guarantor  the  creditor  does  in  fact  forbear, 
there  is  a  sufficient  consideration  to  bind  the  guarantor,  who  has  prom- 
ised to  pay  the  debt. 

It  waj_ar2iicd_  that  the  request  to  forbear  must  be^  express — J3ut 
it  seerns  to  me  that  the  question  whether  the  request  is  express  or  is_ 
to  be  inferred  from  the  circumstances  is  a  mere  question  of  evidence. 
If 'a  request  is  to  be  implied  from  the  circumstances,  it  is  the  same 
as  if  there  were  an  express  request.  The  question  is,  therefore,  wheth- 
er there  was  sufficient  evidence  in  this  case  to  entitle  the  jury  to  in- 
fer that  the  understanding  between  the  plaintiff  and  defendant  was 
that,  if  the  plaintiff  would  give  time  to  the  father,  the  defendant  would 
make  himself  responsible.  I  am  of  the  opinion  that  there  was  evi- 
dence to  go  to  the  jury  that  what  the  parties  really  understood  in  their 
minds  was  that,  if  the  plaintiff  would  give  the  defendant's  father  time 
to  turn  round,  the  defendant  would  guarantee  the  payment  of  the 
principal  in  the  end  and  in  the  meantime  interest  at  the  rate  of  5  per 
cent,  per  annum  half-yearly.  I  not  only  think  that  there  was  evidence 
of  such  an  understanding,  but  I  entirely  agree  with  the  inference  drawn 
by  the  jury.  I  cannot  see  any  other  reasonable  explanation  of  the 
transaction  than  that  the  understanding  was  as  I  have  said. 

For  these  reasons  I  think  that  the  verdict  and  judgment  at  the  trial 
were*  right,  and  that  the  decision  of  the  Divisional  Court  must  be  re- 
versed. " 

I<iNDL,EV,  L.  J.  I  am  of  the  same  opinion.  In  this  case  the  plaintiff 
obtained  a  verdict  in  an  action  on  a  promissory  note,  the  question  left 
to  the  jury  being  whether  there  was  any  consideration  for  the  defend- 
ant's giving  the  note.  The  Divisional  Court  have  set  aside  the  ver- 
dict and  entered  judgment  for  the  defendant  on  the  ground  that  there 
was  no  evidence  of  any  consideration.  We  therefore  have  to  consider 
whether  there  was  any  evidence  of  a  good  consideration  for  the  sig- 
nature of  the  note  by  the  defendant.  Looking  at  the  document  and 
the  history  of  the  transaction,  I  cannot  invent  any  rational  theory  by 
which  to  account  for  the  defendant's  giving  the  note  except  that  it 
was  for  the  purpose  of  benefiting  his  father  by  procuring  for  him  time 
to  pay  the  debt.  To  say  otherwise  appears  to  me  inconsistent  with 
human  nature  and  the  whole  character  of  the  transaction.  It  may  be 
that  there  is  no  evidence  that  the  defendant  actually  said  that  he  would 
be  liable,  if  the  plaintiff  would  give  his  father  time.  But,  except  on 
the  theory  that  such  was  the  understanding  between  the  parties,  the 
defendant's  conduct  is  inexplicable.  I  cannot  think  that  there  was 
no  evidence  for  the  jury  that  there  was  forbearance  by  the  plaintiff 
at  the  request  of  the  defendant.  On  the  contrary,  the  evidence  to  the 
effect  that  there  was  seems  to  me  overwhelming. 
/\  Then  the  question  arises  whether  that  would  constitute  a  sufficient 
consideration.  Upon  looking  into  the  authorities  it  seems  to  me  to 
be  the  result  of  other  cases  besides  Oldershaw  v.  King,  2  H.  &  N. 


X 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY  SIMPLE   CONTRACT. 


39 


517,  and  Mills  v.  New  Zealand  Alford  Estate  Company,  32  Ch.  D. 
2G6,  that  it  is  not  essential  that  the  plaintiff  should  have  agreed  to  for- 
bear: it  is  quite  sufficient  if  he  did  forbear  at  the  request  of  the  de- 
fendant. It  is  argued  that  in  thus  deciding  we  contravene  the  deci- 
sion in  the  case  of  Crofts  v.  Beale,  11  C.  B.  172.  But  I  do  not  so  read 
that  case.  There  the  question  v*^as  left  to  the  jury  whether  there  was 
consideration  or  not,  the  judge  having  told  them  that,  if  the  note  was 
given  to  prevent  legal  proceedings  against  the  principal  debtor,  there 
was  sufficient  consideration  for  it.  The  jury  found  for  the  defendant, 
i.  e.  that  there  had  been  no  request  and  no  consideration.  In  this  case 
the  jury  found  that  there  was  consideration, 
y  Lopes,  L-  J..  In  this  case  the  question  is  whether  there  was  evi- 
/  dence  of  a  consideration  for  the  making  of  this  note  by  the  defend- 
ant. The_2aw_ap4iears  .to  be  that  a  promise  to  forbear  is  a  good  con- 
sideration, but  also  that  actual  forbearance  at  the  request,  express  or 
implied,  of  the  defendant  would  be  a  good  consideration.  Taking  the 
latter  of  these  two  alternatives,  it  is  undisputed  that  there  was  actual 
forbearance  from  suing  in  this  case.  That  by  itself  would  not  be  suf- 
ficient; such  forbearance  must  have  been  at  the  request,  express  or 
implied,  of  the  defendant.  There  is  no  evidence  here  of  any  express 
request.  It  seems,  however,  clear  that  there  is  evidence  of  an  im- 
plied request,  and  I  think  the  jury  were  justified  in  finding  that  there 
was  such  a  request.  Unless  it  were  to  procure  forbearance,  it  is  incon- 
ceivable why  the  defendant  should  have  signed  the  note  at  all.  The 
case  is  strengthened  when  it  is  borne  in  mind  that  the  note  provides 
for  the  pa3'ment  of  interest  half-yearly  by  the  father  and  son  jointly, 
thus  clearly  indicating  to  my  mind  that  forbearance  was  contemplated 
at  the  request  of  the  son. 

For  these  reasons  I  think  the  judgment  of  the  court  below  should 
be  reversed. 

Appeal  allowed.^* 


EDDOWES  et  al.  v.  NIELL. 
(Supreme  Court  of  Peunsylvania,  1793.    4  Dall.  133,  1  L.  Ed.  772.) 

This  was  an  action  on  the  case,  for  goods  sold  and  delivered  to 
William  Niell,  upoiTa  speciafassumpsit  by  the  defendant,  Thomas 
NieU,  to  guarantee  the  payment  of  the  price.  Pleas:  (1)  Non-as- 
sumpsTt;  on  which  issue  was  joined;  and  (2)  the  statute  of  hmita- 
tions,  to  which  resident  beyond  seas  was  replied,  etc. 

2  4  The  English  cases  must  be  read  in  reference  to  the  fourth  section  of  the 
statute ■oTTfaTias,  and  the  decision  of  Waiu  v.  Waiiters.  5  East,  10  (1S04),  aud 
its  subsequent  nullification  by  the  "Mercantile  Law  Amendment  Act,"  19  ^ 
20Uict.  c.  97,  §  3.  . ,  .    , 

In  those  American  jurisdictions  which  tolerate  parol  evideuce  of  the  considr 
eration,  the  question  arises  presented  by  the  principal  case.  A  number  of 
these  cases  are  collected  in  Amrs'  Cas.  on  Suretyship,  note,  pp.  225,  226. 


40  FORMATION.  (Part  1 

The  plaintiffs  were  British  merchants,  from  whom  William  Niell,  a 
tracle?~7n  Baltimore,  was  accustomed  to  import  goods,  ^n  the  14th 
of  January,  1771,  his  brother,  the  defendant,  wrote  a  letter  to  tlTem, 
in  which  he  said,  "that  to  strengthen  his  brother's  credit,  he  would 
guarantee  all  his  dealings  with  their  house."  Several  shipments  of 
goods  were  made  both  before,  and  after,  the  receipt  of  this  letter ;  and 
William  Niell  continued  to  make  payments  on  account,  till  the  year 
1775,  when  the  Revolutionary  War  began  its  agitations,  and  all  com- 
mercial and  amicable  intercourse,  between  Great  Britain  and  the  United 
States,  was  suspended  until  the  peace  of  1TS3.  In  the  year  1784,  the 
plaintiffs  sent  a  power  of  attorney  to  collect  the  debts  due  to  them  here. 
TheTr  agent  applied  to  William  Niell,  who  acknowledged  the^ustice  of 
the  debt,  but  claimed  an  abatement  of  eight  years'  interest,  on  account 
of  the  war,  and  a  further  credit  upon  giving  his  bond  for  the  amount 
which  the  agent  refused.  In  1785,  William  Niell  died,  leaving  the  de- 
fendant, his  executor,  to  whom,  in  that  character,  the  agent  of  the 
plaintiffs  applied  for  payment;  and  he  answered,  by  admitting  the 
claim,  and  recommending  a  suit  against  the  estate.  No  demand, 
howeveivjvas- made,  on  the  ground  of  the  defendant's  guarantee,  tili- 
about  the  time  of  commencing  the  present  action,  in  January  1790.-^ 
y  By  THE  Court.  Letters  of  credit  are  a  common,  and  useful,  instru- 
ment in  the  course  of  commerce.  They  are,  however,  of  a  very  serious 
nature;  and  the  writer  is  bound  to  comply  with  the  contents,  accord- 
ing to  their  genuine  and  honest  import.  Tn  ot<;Wj  t^  Tender  them  oblig_- 
atory  as  a  contract,  it  is  not  necessary  that  they  should  be  answered, 
if  credit  is  given  upon  them.  Like  the  case  of  transmitting  a  bond  in  a 
Teffer,  acquiescence  and  acceptance  are  implied,  in  the  silent  receipt  of 
the  instrument. 
'^  It  liasbeen  urged  that  the  lapse  of  nineteen  years,  without  notice  of  a 
default  in  payment  by  the  principal,  is  a  virtual  abandonment  of  all  re- 
course to  the  surety,  on  the  principles  applicable  "to  bills  of  exchange, 
and  to  other  negotiable  instruments.  But  there  is  no  analogy  between 
the  cases ;  for  the  engagement  of  the  letter  of  credit  extends,  in  its  very 
nature,  to  various  future  transactions,  without  reference  to  time  or 
amount.  It  is  true,  however,  that  the  gross  negligence  of  a  creditor, 
even  of  the  obligee  in  a  bond,  may  operate  to  discharge  a  surety,  as 
where  the  obligee  is  requested  by  the  surety  to  proceed  against  the 
principal,  in  order  to  save  the  debt,  if  he  neglects  or  refuses  to  do  so, 
the  surety,  both  in  law  and  equity,  will  be  exonerated;  and  this  is  the 
case  in  2  Brown's  Chancery  Reports,  579/^-  But  does  the  evidence 
in  the  present  action  justify  an  adoption  of  the  rule?  From  the  years 
1771  and  1772,  when  the  shipments  were  made,  until  the  year  1775, 
when  payments  were  first  suspended,  there  could  be  no  reason  for  call- 
ing on  the  defendant.    From  1775,  till  the  peace  of  1783,  the  debtor  was 

»5  The  arguments  of  counsel  are  omitted. 

««  This  is  an  incorrect  statement.    See  post,  chapter  IX,  section  1. 


Ch.  2)  ESSENTIALS  TO   SURETYSHIP  BY   SIMPLE  CONTRACT.  41 

guilty  of  no  default,  which  would  warrant  an  application  to  the  surety ; 
for  he  was  prevented,  by  the  war,  from  corresponding  with  the  creditor, 
and  making  any  payment,  or  remittance,  on  account  of  the  debt.  As 
soon  as  the  peace  had  restored  the  intercourse  between  the  parties,  the 
creditor  applied  for  payment  to  the  debtor,  who  acknowledged  the 
debt,  claimed  an  abatement  of  interest,  and  made  some  overtures  for 
a  settlement,  but  died  in  the  next  year,  without  effecting  anything  in 
that  respect.  The  agent  of  the  plaintiffs  then  addressed  the  defendant, 
not  as  surety,  but  as  executor,  of  his  brother ;  and,  indeed,  it  does  not 
appear  that  the  agent  knew  of  the  letter  of  credit  till  some  time  after- 
wards. 

On  this  review  of  the  facts,  we  cannot  perceive  any  culpable  neg- 
ligence",  on  the  part  of  the  plaintiff57ln"pufsljing' their  originatnlebtor ; 
nor  is  it  clear  that  they  had  any  right  to  call  upon  the  defendant,  as  a  "> 
surety,  until  they  had  failed  in  their  endeavors  to  recover  from  the 
principal,  or  the  principal  had  become  notoriously  insolvent.  The  want 
of  notice,  therefore,  in  such  a  case,  and  under  such  circumstances^  does 
not,  in  itself,  furnish  a  bar  to  the  demand;  and  although,  in  some  in- 
stances  oT'^ebts,  a  lapse  of  time  wiir  warrant  a  presumption  of  pay- 
ment, yet,  from  the  nature  of  this  contract,  no  such  presumption  can 
arise  here. 

Verdict  for  the  plaintiffs. ^^ 

27  Accord:     Reigart  v.  White,  52  Pa.  438  (1866);    Cowan  et  al.  v.  Roberts,  IS^^e/.f  wM"  7  ^ 
134  N.  C.  415,  46  S.  E.  979,  65  L.  R.  A.  729.  101  Am.  St.  Rep.  845  (1904).  ./  "    cU/c 

See  Mathews  v.  Chrisman,  20  Miss.  595,  51  Am.  Dee.  124  (1849).  "'    ''^  I 

Contra :  Evans  v.  McCormiclv.  167  Pa.  247,  31  Atl.  563  (1895) ;  Acme  Mfs. 
Co.  V.  Reed,  197  Pa.  359.  47  Atl.  205,  80  Am.  St.  Rep.  832  (1900) ;  Lachman 
V.  Block.  47  La.  Ann.  505,  17  South.  1.53.  28  L.  R.  A.  255  (1895) ;  Milroy  v. 
Quinn,  69  Ind.  406,  35  Am.  Rep.  227  (1879)  which  concedes  that  when  "the 
thing  guaranteed  is  definite  in  its  amount,  and  known  to  the  guarantor  at  the 
time  he  gives  his  guaranty,  neither  notice  of  the  acceptance  of  the  guaranty, 
nor  of  the  default  of  his  princiijal  needs  to  be  given  to  the  guarantor"  ;  Oaks 
V.  Weller,  13  Vt.  106,  37  Am.  Dec.  583  (1841). 

In_some  jurisdictions  the  question  of  the  right  to  notice  has  been  met  by 
rather  yiolentl.f'EotdtPg  a  mere  offer  to  guarantee  the  payment  of  any  goods 
which  mav  be  sold  as  "a  direct,  absolute,  and  original  promise."  See  Wright 
\\  Griffith,  121  Ind.  478.  23  N.  E.  281,  6  L.  R.  A.  639  (1890),  and  Nading  v.  Mc- 
Gregor, 121  Ind.  465,  23  N.  E.  283,  6  L.  R.  A.  686  (1890),  wherein  notice  was, 
by  the  above  method  of  dealing  with  the  problem,  held  unnecessary. 

TIi.e  notion  that  the  minds  of  the  contracting  parties  must  meet  has  like- 
wise been  invoked  to  justify  some  of  the  decisions  contra  to  the  principal 
case.  See  German  Savings  Bank  v.  Drake  &  Co.,  112  Iowa.  184,  83  N.  W.  960, 
51  L.  R.  A.  758,  84  Am.  St.  Rep.  335  (1900).  Nading  v.  McGregor,  supra. 

A  jlistinction  (whether  or  not  based  upon  any  substantial  difference  is  a 
matter  for  discussion)  is  taken  between  an  offer  to  guarantee  a  pre-existing 
cTebt'and  a  debt  to  be  presently  created.  Notice  of  acceptance,  it  has  been 
s.Tjlins  unnecessary  in  the  former,  but  not  in  the  latter  case.  Wills  vr~Ross, 
77  Ind.  1,  40  Am.  Rep.  279  (1881). 


42  FOUMATioN.  (Part  1 

LEXT  et  al.  V.  PADELFORD. 
(Supreme  Judicial  Court  of  Massachusetts,  1S13.  10  Mass.  230,  6  Am.  Dec.  119.) 

The  plaintiffs  declared,  in  case,  that  a  certain  writ  of  execution  in 
their  favor,  and  against  one  Joseph  Barney,  was  in  the  hands  of  T. 
Hinsdale,  a  deputy  sheriff,  which  the  said  Barney  was  unable  to  satisfy, 
and  that  the  defendant,  by  his  written  note,  undertook  and  promised 
the  plaintiffs,  in  consideration  that  ihey  wouT3  d^Iay~TlTH~service  of 
said  execution  until  the  first  Monday  of  June  then  next,  and,  in  con- 
sideTaHbn  "Of  value  received  by  the  defendant  of  said  Barney,  that  the 
said  Barney  should  make  his  appearance  and  be  ready  at  Pittsfield,  at 
theTavern  of  J.  M.,  either  to  pay  sard^>^iTtlon~fmeanTrig  any  ex^ggu- 
ticm  that  might  issue  upon  the  same  judgment),  or  to  surrender  himVelf 
to  any  officeT  wTio  might  have  such  execution  on  said  day,  and  that^if 
Barney  was  not  ready,  etc.,  as  aforesaid^the  defendant  would  pay  to 
the  plaintiffs  the  amount  due  upon  such  execution,  with  the  interest 
tfier eon  from  the  day  of  making  the  promise;  and  the  defendant  re- 
served to  himself  the  right  to  go  after  the  said  Barney,  if  he  should  go 
out  of  the  state,  and  deliver  him  at  the  place  above  mentioned  on  the 
fourth  Monday  of  June  aforesaid,  thereby  intending  to  exonerate  him- 
self from  his  said  obligation.  And  the  plaintiffs  aver  that,  confiding 
in  the  defendant's  said  promise  and  undertaking,  the  service  of  said 
execution  was  delayed,  etc.,  and  no  service  has  ever  been  made  upon  it ; 
that  said  Barney  did  not  make  his  appearance,  etc.,  although  the  said 
Hinsdale  was  then  and  there  ready  to  receive  payment,  or  to  take  the 
body  of  the  said  Barney;  that  the  defendant  did  not  deliver  him  at, 
etc.,  on  the  said  fourth  Monday  of  June,  although  the  said  Hinsdale 
was  then  there  ready  to  take  his  body,  etc. ;  and  that  the  defendant  has 
never  in  any  manner  discharged  said  execution,  or  paid  the  said  inter- 
est. Whereby  an  action  has  accrued  to  the  plaintiffs  to  recover  of  him 
the  amount  due  upon  said  execution,  with  the  said  interest.  Yet 
though  often  requested,  etc. 

In  a  second  count,  the  plaintiffs  set  forth  the  judgment  on  which  the 
execution  issued,  the  return  of  the  first  execution,  which  was  in  force 
and  in  the  hands  of  the  deputy  sheriff  at  the  time  of  the  promise  alleged, 
and  the  issuing  of  an  alias  execution,  with  like  averments,  as  in  the 
first  count. 

The  defendant  pleaded,  1st,  the  general  issue,  which  was  joined; 
and,  2dly,  in  bar,  that  the  said  Barney  did,  before  the  said  first  Mon- 
day in  June,  viz.,  on  the  2d  day  of  March,  1809,  go  into  the  state  of 
New  York  to  reside;  that  previously  to  the  said  fourth  Monday  in 
June,  viz.,  on  the  17th  day  of  the  same  month,  the  same  Barnjey  did 
seasonably  set  off  to  return  to  this  commonwealth,  to  surrender  him- 
selT  at  the  said  tavern  on  the  said  fourth  Monday  of  June,  to  ariy 
officer  having  the  said  execution;  and  on  his  way,  on  the  19th  day  of 
June,  within  the  state  of  New  York,  was  attacked  with  bodily  sickness. 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP   BY   SIMPLE   CONTRACT.  43 

and  was  there  of  necessity  confined  and  detained  by  said  sickness,  so 
long  a  time  that  he  could  not  possibly  surrender  himself,  or  be  delivered 
by  the  defendant,  at  the  said  tavern,  to  any  officer  having  the  said 
execution;  and  that,  as  soon  afterwards  as  he  possibly  could,  on  the 
day  succeeding  the  said  fourth  Monday,  he  arrived  at  the  said  tavern, 
and  offered  to  surrender  himself  to  the  said  Hinsdale,  then  holding  the 
said  execution. 

The  plaintiffs,  in  their  replication,  traverse  the  said  sickness,  and  ^.cc^J^ 
tender  ap  issue  to  the  country,  which  is  joined  by  the  defendant. 

At  the  trial  of  the  issues  thus  joined,  which  was  had  before  Parker,    '    v/^/y 
J.,  at  the  last  Alay  term  in  this  county,  the  plaintiff's  offered  in  evidence, 
in  support  of  their  declaration,  a  writing  signed  by  the  defendant,  of 
which  the  following  is  a  copy : 

"Whereas,  there  is  now  an  execution  in  the  hands  of  Theodore 
Hinsdale,  Jr.,  deputy  sheriff,  in  favor  of  James  W.  Lent  and  William 
H.  Folger,  against  Joseph  Barney,  for  the  sum  of  $795.74,  and  it  can- 
not now  be  paid  by  said  Barney :  Therefore,  if  said  execution  can  be 
delayed  till  the  first  Monday  of  June  next,  and  in  consideration  of  value 
received  of  said  Barney,  I  hereby  agree  and  promise  that  said  Barney 
shall  make  his  appearance,  and  be  ready  at  Pittsfield,  in  the  county  of 
Berkshire,  at  the  house  of  Joseph  Merrick,  either  to  pay  said  execution, 
or  to  surrender  himself  to  any  officer  who  may  have  the  same  at  that 
time,  or  I  will  pay  the  same,  with  the  interest  from  this  time,  to 
said  Lent  and  Folger.  Savoy,  Feb.  28,  1809.  And,  further,  I  reserve 
to  myself  the  right  to  go  after  said  Barney,  if  he  goes  out  of  the  state, 
and  deliver  him  at  the  place  above  mentioned  on  the  fourth  Monday 
of  June  aforesaid.  Manley  Padelford." 

The  counsel  for  the  defendant  admitted  the  execution  of  the  said 
writing,  but  objected  to  the  admission  of  it  in  evidence  to  the  jury, 
because  it  did  not  contain  any  evidence  of  a  promise  to  the  plaintiffs, 
nor  of  any  consideration  for  the  promise,  and  because  it  substantially 
varied  from  the  declaration,  which  objection  was  overruled  by  the 
judge,  and  said  writing  was  admitted  in  evidence. 

No  other  evidence  of  the  promise  or  consideration  was  offered  by 
the  plaintiffs ;  but  it  was  proved  and  admitted  that  Barney  did  not  ap- 
pear at  Pittsfield,  and  offer  himself  to  said  Hinsdale  on  the  first. or 
fourth  Monday  of  June,  1809,  nor  until  the  day  following  the  latter, 
when  he  arrived  there  and  offered  to  surrender  himself  to  said  Hins- 
dale, who  then  had  said  execution  in  full  force.  And  it  was  admitted 
that  the  execution  was  in  the  hands  of  Hinsdale  on  the  day  when  the 
said  writing  was  signed.  It  was  also  proved  by  parol  testimony,  which 
was  objected  to,  that,  at  the  request  of  the  debtor,  the  agent  for  the 
plaintiffs  authorized  the  officer  to  forbear  arresting  him,  upon  obtaining 
the  contract  declared  upon.  It  was  likewise  admitted  that  an  alias  ex- 
ecution was  in  the  hands  of  the  same  officer  on  the  day  after  the 
fourth  Monday  in  June,  and  that,  by  direction  of  the  same  agent  of  the 


44  FORMATION.  (Part  1 

plaintiffs,  the  officer  refused  to  arrest  the  debtor,  when  he  offered  to 
surrender  himself. 

The  jury  were  instructed  that  the  contract  declared  upon  and  pro- 
T  tfw^  duced  was  sufficient  in  law  to  support  the  action,  and  that,  if  the  evi- 

'  dence  offered  by  the  defendant  on  the  second  issue  failed  of  proving- 

it,  they  ought  to  return  their  verdict  for  the  plaintiffs  on  both  issues, 
and  that  the  damages  ought  to  be  equal  to  the  debt  and  costs  upon 
the  ex>:ution,  with  interest  thereon  from  the  commencement  of  the  ac- 
tion. 
/fli^*^  Ln^-^  ^  verdict  being  accordingly  found  for  the  plaintiffs,  a  new  trial  was 
Jv  .r  moved  for  by  the  defendant,  because  the  judge  admitted  the  writhig 

aforesaid,  whereas  it  is  variant  from  the  declaration,  in  that  it  does 
not  appear  that  the  promise  was  made  to  the  plaintiffs,,  npr  upon  such 
consideration  as  is  alleged  in  the  declaration;  because  the  judge  in- 
structed the  jury  that  the  said  writing  contained  evidence  of  a  promise 
to  the  plaintiffs,  and  of  a  sufficient  consideration  to  support  the  plain- 
tiffs' declaration,  no  other  evidence  thereof  being  offered ;  becausenhe 
judge  instructed  the  jury,  if  they  found  a  verdict  for  the  plaintiff,  to 
give  the  entire  sum  mentioned  in  said  promise  in  damages,  although 
it  was  proved  that  the  said  Barney  came  to  said  tavern  in  Pittsfield, 
and  offered  to  surrender  himself  to  said  Hinsdale,  who  then  had  said 
execution  in  full  force,  on  the  day  next  after  the  said  fourth  Monday 
in  June;  and  bccau^Hhe  judge  admitted  parol  evidence  to  prove  that 
delay  of  the  said  execution  was  given  on  receiving  said  promise. 

The  defendant  also  moved  in  arrest  of  judgment,  because  there  is  no 
sufficient  consideration   for   the  defendant's  pr.omjse   alleged   in"  the 
plaintiffs'  declaration,  it  not  aj)pearing  that  any  promise  or  agreement 
wasmade  on  the  part  of  the  plaintiffs^  as  the  ground  of  the  promise  on 
the  part  of  the  defendant,  and  because  the  supposed  promise  of  the  de- 
fendant is  a  collateral  undertaking,  and  there  is  no  averment,  in  the 
declaration  of  notice  to  the  defendant,  that  said  Barney  did  not  appear 
at  the  time  mentioned,  nor  of  any  request  to  pay  the  money  demanded 
before  the  suit  was  brought.^® 
/      Jackson,   j.     *     *     *     'j^j^g  f^j-g^   point  to  be   considered,   in   the 
'      motion  for  a  new  trial,  is  the  supposed  variance  between  the  declaration 
'^'j    and  the  writing  produced  in  evidence.    It  is  never  necessary  to  declare 
-*<  in  the  precise  words  of  a  written  promise.    It  is  always  allowable,  and 

often  necessary,  to  declare  according  to  their  legal  effect  and  import. 
In  the  present  case,  we  have  no  doubt  that  the  promises  contained  in 
the  writing  were  made  to  the  plaintiffs.  They  are  the  only  persons'in- 
terested  in  the  subject  of  the  promises,  which  do  not  purport  to  be  made 
to  any  other  person ;  and  the  defendant  expressly  promises,  in  the  event 
whi«h  has  happened,  to  pay  the  money  to  the  plaintiffs.  It  is  like  the 
case  of  a  common  promissory  note.    The  words  of  the  note  are,  "For 

28  The  arguments  of  counsel,  as  also  a  portion  of  the  opinion  dealing  with 
the  stntntp  of  frauds  and  the  memoranduiu,  also  on  the  question  of  agency, 
are  omitted. 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  45 

value  received  I  promise  to  pay  to  A.  B. ;"  but  in  the  declaration  upon 
such  a  note  it  is  always  alleged  that  the  defendant  promised  A.  B.  to 
pay  him.  >< 

As  to  the  other  supposed  variance,  we  are  equally  satisfied  that  the  i.'^\.tLv/.>^oU^^^ 
declaration  comports  with  the  legal  effect  of  the  writing.    The  expres-  ■^'^^  jcn^u^.v 
sion,  "if  the  execution  can  be  delayed,"  as  introduced  in  this  paper,  is  Kwr<v>^-v 
equivalent  to  saying  "if  you  will  delav  it,"  or  "in  consideration  that 
you  will  delay  it."  AtY       >-    t 

The  next  ground  of  the  motion  for  a  new  trial  is  the  supposed  mis-     '  ''"'      -re^^^^ 
direction  of  the  judge  in  instructing  the  jury  that  the  contract  was       '" "  '^ 
sufficient  in  law  to  support  the  action.  We  are  all  satisfi^  that  this 
direction  was  right.    We  have  already  said  that  the  contract  was  made 
with  the  plaintiffs ;    and,  indeed,  it  further  appears,  from  the  report, 
that  it  was  made  by  the  express  authority  of  their  agent.     *     *     *  < 

As  to  the  amount  of  damages,  we  are  satisfied  that  the  jury  were  i5>e---''- —-f  * 
rightly  instructed  by  the  judge.  This  is  not  merely  an  agreement  by  iJS^t^^^,^ 
the  defendant  to  do  a  collateral  thing;  nor  is  the  money  to  be  paid  by 
way  of  penalty  for  a  breach  of  the  contract.  We  do  not  consider  the 
damages,  thus  liquidated  by  the  parries,  to  be  unreasonable  in  the  event 
which  was  contemplated,  and  which  has  since  occurred.  The  defendant 
has  agreed,  in  a  certain  event,  to  pay  this  sum ;  and  we  have  no  power, 
in  this  case,  to  alter  his  agreement.  v 

There  are  two  grounds  of  the  motion  in  arrest  of  judgment.     The  \jA*dJ^J^f^^ 
first  is  that  no  sufficient  consideration  for  the  defendant's  promise  is  u^t,ji  ir^/u>~jrc^ 
set  forth  in  the  declaration.    The  declaration  states  that,  in  considera-  i,,,.v>^  ;,  t^^ 
tion  that  the  plaintiffs  would  delay  the  service  of  their~execij1;ion,  the 
defenclant  promised;  and  then  it  is  averred  that  the  plaintiffs  did  delay    . 
tlae  service  accordingly.    This  appears  to  us  sufficient.    TtTstlie  usual  • 
mode  of  declaring  in  such  case  in  the  "BbbWoFentries. 

This  manner  of  stating  the  consideration  and  the  contract  is  not 
confined  to  cases  of  forbearance.  It  is  not  uncommon,  in  the  case  of 
goods  sold,  to  declare  that,  in  consideration  that  the  plaintiff  would 
sell  and  deliver  to  the  defendant  such  goods,  the  latter  promised  to  pay 
a  certain  price,  and  then  to  aver  that  he  did  sell  and  deliver  them 
accordingly.  So,  in  consideration  that  the  plaintiff  would  do  any  other 
specific  thing,  and  then  aver  the  performance,  without  alleging  that  the 
plaintiff  had  promised  to  do  it.  This  is  not  one  of  the  cases  in  which  it 
is  necessary  to  state  in  the  declaration  mutual  promises,  as  the  con- 
sideration of  each  other.  _  Xu^t^  f>-^  ,^ 

The  other  ground  of  the  motion  in  arrest  of  judgment  at  first  ex-   ri-^^il^^ 
cited  the  most  doubt  in  the  minds  of  the  court.   It  is  the  want  of     '      'r*'*^^  ' 
averring  notice  to  the  defendant  that  the  said  Barney  did  not  appear  / 

at  the  time  and  place  prescribed,  and  a^  special  recgiest  to  the  defendant 
to  pay  the  money. 

But,  upon  further  consideration,  we  are  all  satisfied  that  the  declara- 
tion is  in  this  respect  sufficient.  The  general  rule  is  perfectly  well 


46  FOUMATioN.  (Part  1 

settled.  When  tlie  matter  alleged  lies  peculiarly  in  the  knowledge  of  the 
plaintiff,  he  must  aver  that  the  defendant  had  notice;  but,  when  It  lie's 
equally  in  the  knowledge  of  the  defendant,  such  averment  is  unnec- 
essary. The  case  at  bar  comes  within  the  latter  branch  of  the  rule. 
Tliere  was  no  act  to  be  done  exclusively  by  the  plaintiffs.  It  may  even 
be  said  that  the  matter,  by  which  the  defendant  was  to  be  discharged, 
was  an  act  to  be  performed  by  himself.  He  promises  that  Barney  shall 
make  his  appearance ;  he  undertakes  to  have  him  at  a  day  and  place 
certain,  and  he  must  know  whether  he  has  done  so. 

But,  without  going  to  this  length,  it  is  sufficient  if  the  act  were  to.be 
done  by  a  stranger.  The  defendant  had  as  good  means  of  information 
as  the  plaintiffs,  and  he  was  bound  to  take  notice  whether  Barney  made 
his  appearance  at  the  time  and  place  appointed.  It  was  not  necessary, 
then,  for  the  plaintiffs  to  give  him  formal  notice  of  the  fact ;  and,  of 
course,  it  is  not  necessary  to  aver  such  notice  in  the  declaration. 
y.  As  to  the  want  of  averring  a  special  request,  we  should  yield  with 
difficulty  to  such  an  objection,  after  a  verdict  on  the  merits  of  the  case. 
The  only  use  of  a  special  request  is  to  avoid  vexatious  suits,  by  giving 
to  the  defendant  an  opportunity  of  paying  an  undisputed  demand.  It 
is  apparent,  in  the  case  before  us,  that  it  would  have  been  a  fruitless 
ceremony.  We  are  not,  howeyerj  satisfied  that  such  a  request  was  re- 
quired by  the  strictest  rules  of  law.  The  defendant  may  be  considered 
as  agreeing  to  do,  or  cause  to  be  done,  one  of  two  things.  When  he 
knew  that  the  one  was  not  performed,  he  became  immediately  liable'  to 
peflornnhe  other.  The  payment  of  the  money  became  a  present  duty, 
as^if  there  had  been  no  alternative  in  the  original  contract.  In  suclTa 
case,  the  general  averment  of  licet  ssepius  requisitus  is  sufhcient. 
Judgment  on  the  verdict.^* 

20  AD_£2iLlumsliYe  nmiotation.  to  the  case  of  Lent  v.  Padelford  was  written 
by  Hare  and  Wallace  in  2  Am.  Leading  Cases  (5th  Ed.)  pp.  .59-141,  tracing  the 

tifriish  dtv-isions,'  and  showing  that  the  common  law  of  simple  contract  fur- 
!hes  no  warrant  for  the  position  that  the  offeree  of  an  offer  to  become  snre- 
or  gnarantor  must  notify  the  offeror  that  action  has  been  taken  on  his  off6r. 
tvlment  incurred  on  request  is  sufficient  consideration  to  support  assuniilsit. 
Til  accord  with  the  principal  case  are  the  following  American  decisions : 
Cowan  et  al.  v.  Roberts,  134  N.  C.  415.  40  S.  E.  97'J,  C5  L.  R.  A.  729.  101  Am. 
St.  Rep.  S45  (1904),  drawing  an  imaginary  distinction  between  a  suretyship 
and  a  guaranty  in  relation  to  the  law  of  offer  and  acceptance.  Mathews  v. 
Chrlsman.  20  Miss.  595.  51  Am.  Dec.  124  (1849).  (.Semble)  Gates  v.  McKee,  13 
N.  Y.  232,  G4  Am.  Dec.  545  (1855).  holding  a  guarantee  to  be  continuing  but  no 
evidence  of  notice;  Snyder  v.  Click.  112  Ind.  293,  13  N.  E.  5S1  (1887);  Whit- 
ney V.  Groot.  24  Wend.  (N.  Y.)  82  (1840). 

In  Smith  v.  Dann,  6  Hill  (N.  Y.)  .543  (1844),  the  court  said,  by  Mr.  Justice 
Bronson:  "The  defendant  invited  the  plaintiffs  to  sell  goods  to  Steel  &  Wall, 
on  his  priauiso  to  guaranty  the  payment  of  the  debt.  The  plaintiffs  assented 
and  delivered  the  goods.  The  proposition  of  one  party  was  accepted  by  the 
other,  and  according  to  our  notions  of  the  law  tliis  made  a  comi)lete  contract. 
•  •  •  If  the  defendant  wanted  notice,  and  did  not  get  it.  from  the  i>ersons 
whom  he  thought  worthy  of  credit,  it  was  his  business  to  inquire  and  ascer- 
tain what  had  lieen  done.  *  *  ♦  We  cannot  add  a  condition  that  the  de- 
fendant shall  have  notice.  He  should  have  provided  for  that  himself  in  the 
proposal  made  to  the  plaintiffs.    I  know  there  are  cases  which  require  notice ; 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  47 

LENNOX  et  al  v.  MURPHY  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1898.    171  Mass.  370,  50  N.  EJ.  644.) 

Contract,   against   Patrick  Murphy  and   Michael   Murphy,   upon  a 
guaranty,  dated  August  17,  1895,  and  signed  by  the  defendants.    Writ 
dated  August  29,  189G.    Patrick  ^ilurphy  alone  defended.    Trial  in  the'  F^,^^J^Lu^ 
superior  court,  without  a  jury,  before  Sheldon,  J.,  who  found  for  the  1    '^^ 

detendant,  and,  with  the  consent  of  the  parties,  reported  the  case  for 
the  determination  of  this  court.     The  facts  appear  in  the  opinion. 

HolmES_,  J.  This  is  an  action  on  a  guaranty  "to  the  extent  of  ten 
thousand  dollars,  on  obligations  contracted  and  to  be  contracted  by 
Murphy  Brothers  with  P.  Lennox  &  Co.,  for  a  period  of  three  years, 
with  the  understanding  that  P.  Lennox  &  Co.  give  Murphy  Brothers  a 
permanent  credit  of  at  least  twenty  thousand  dollars  in  leather  for  the 
above  period  of  three  years."  The  action  is  defended  only  by  Patrick 
Murphy.  At  the  trial  in  the  court  below,  after  the  evidence  was  in, 
the  judge  found  for  the  defendant,  and  the  case  is  here  on  a  report,  by 
the  terms  of  which,  if  the  ruling  was  wrong,  judgment  is  to  be  entered 
for  the  plaintifts.  The  grounds  mainly  urged  in  support  of  the  ruling 
are  want  of  consideration  and  a  failure  to  notify  the  defendant  of  the 
acceptance  of  the  guaranty.  X 

There  was  evidence  that,  before  Patrick  Murphy  signed  the  guaranty,  flo^ji.,,  t'-^^'- 
one  of  the  firm  whose  obligations  were  to  be  guaranteed  exhibited  to  c^ 
him  an  instrument  to  be  signed  by  the  plaintiffs,  and  told  him  the  con- 
tents of  it,  and  told  him  also  that  if  he  would  sign  the  guaranty  it  would 
keep  the  speaker  on  his  feet  and  keep  him  going.  The  only  reasonable 
inference  from  this  and  other  evidence  is  that,  in  spite  of  the  usual 
formula,  "for  one  dollar  and  other  consideratiotisT'  the  guafantyTin 
facf~\vas  executed  in  consideration  of  the  plaintiffs'  signing  the  other 
iristrument  referred  to,  and  that  Patrick  Murphy  understood,  when  he 
signed,  that  if  he  signed  the  plaintiffs  would  sign.  The  plaintiffs  signed 
as  expected. 

The  instrument  executed  by  the  plaintiffs  was  as  follows :  "For  one 
dollar  and  other  considerations,  we,  P.  Lennox  &  Co.  guarantee  Murphy 
Brothers  a  permanent  credit  for  three  years  to  the  amount  of  twenty 
thousand  dollars  in  leather,  and  agree  that  Murphy  Brothers  shall  not 
owe  P.  Lennox  &  Co.  less  than  twenty  thousand  dollars  at  any  time 

but  we  think  they  are  not  based  upon  the  common  law,  and  for  that  reason 
they  have  not  been  followed  in  this  state." 

A  distinction — ^^vhether  or  not  based  upon  any  substantial  difference  is  a__ 
matter  for  discussion — is  taken  between  an  offer  to  g:uaranty  a  pre-existing 
debt  and  a  debt  to  be  presently  created.     Notice  of  accejitance  is  said  to  be 
unnecessary  to  the  former,  but  not  in  the  latter,  case.    Wills  v.  Iloss,  77  Ind. 
1,  40  Am.  Rep.  279  (1881). 

The  general  question  is  ably  treated  and  many  cases  are  collected  by  W.  P. 
Rogers,  Dean  of  the  Law  Department  of  the  University  of  Cincinnati,  in  a 
I>aper  entitled  "Notice  of  Acceptance  in  Contracts  of  Guaranty,"  5  Columbia 
Law  Review,  215  (1905). 


48  FORMATION.  (Part  1 

during  this  period,  except  at  their  own  option,  and  Murphy  Brothers 
agree  to  buy  leather  from  P.  Lennox  &  Co.,  to  the  extent  of  at  least 
twenty-five  thousand  dollars  per  annum,  and  P.  Lennox  &  Co.  agree 
lo  sell  Murphy  Brothers  as  cheap  as  any  reliable  shoe  manufacturer. 
This  agreement  to  be  null  and  void  in  case  Murphy  Brothers  become 
insolvent  during  this  period.    P.  Lennox  &  Co." 

When  this  paper  was  signed,  the  consideration  was  furnished  and 
the  offer  in  the  defendants'  instrument  became  a  contract,  unless  some 
one  of  the  objections  which  we  shall  mention  bars  the  way.  The 
gravest  of  these  is  that  the  plaintiffs'  undertaking  does  not  satisfy  the 
stipulation  in  the  defendants'  guaranty.  The  guaranty  calls  for  a  per- 
nianent  credit  of  at  least  $20,000  for  three  years.  The  plaintiffs'  agree- 
ment contains  a  statement  that  IMurphy  Bros,  agree  to  buy  leather 
to  the  extent  of  at  least  $25,000  per  annum,  and  it  might  be  held  that  the 
failure  of  Murphy  Bros,  to  buy  to  that  extent  would  excuse  the  plain- 
tiffs from  their  undertaking,  or  in  other  w^ords  that  Murphy  Bros.' 
performance  of  their  agreement  is  introduced  as  a  condition  into  an 
undertaking  to  do  what  is  called  for  unconditionally  by  the  guaranty. 
It  may  be  that  this  objection  would  be  fatal  if  the  guaranty  had  called 
in  the__same  terms  for  a  counter  agreement  not  yet  framed.  But,  as 
we  have  said,  in  fact  the  words  were  an  abbreviated  reference  to  a  paper 
already  in  existence,  although  not  yet  signed.  It  is  plain  that  the 
words  of  the  guaranty  need  construction.  It  is  not  to  be  supposed  that 
the  giving  of  credit  for  three  years  is  contemplated  as  the  consideration, 
for  that  would  leave  the  guarantors  unbound  until  the  three  years  had 
elapsed.  The  consideration  must  be  a  promise  to  give  credit.  But  the 
operation  of  the  promise  as  consideration  has  to  be  proved  by  evidence 
outside  the  writing.  The  words  on  their  face  do  not  go  further  than  to 
state  a  condition,  if  they  do  that.  Curtis  v.  Hubbard,  6  Mete.  186.  191, 
192.  The  question  is  whether  in  that  aspect  they  do  not  state  an  abso- 
lute condition — whether  they  are  open  to  explanation  from  the  circum- 
stances. We  are  of  opinion  that  the  circumstances  may  be  con- 
sidered in  aid  of  the  interpretation.  The  words  "with  the  understand- 
ing," when  read  in  connection  with  tire  facts,  refer  to  an  understai;d- 
ing  already  readied  and  put  in  writing,  a  counter  agreement  by  the 
plaintiffs  with  the  partners  guaranteed.  This  counter^_agre^ment  is 
absolute  and  free  from  other  condition  than  the  performance  of  _the 
consideratipn,  and  for  purposes  of  reference  it  is  not  necessary  to 
set  out  this  necessarily  implied  term  any  more  than  it  is  in  the  case  of  a 
memorandum  of  a  promise  under  our  statute  of  frauds.  Haves  v, 
Jackson,  159  Mass.  451,  3-t  N.  E.  683. 

The  proviso  that  the  plaintiffs'  agreement  shall  be  void  in  case 
Murphy  Bros,  become  insolvent  during  the  period  of  its  running  only 
expresses  what  would  be  implied  in  any  event.  For  although  it  has  been 
said  that  an  agreement  to  sell — even  if  it  would  seem  to  a  partnership, 
which   is   dissolved   by   insolvency — is   not  discharged   by   insolvency 


Ch.  2)  ESSENTIALS  TO  SURETYSHIP  BY  SIMPLE   CONTRACT.  49 

yet  it  is  agreed  that  insolvency  would  put  an  end  to  the  right  to  pur- 
chase on  credit  or  without  a  tender  of  the  price.  Morgan  v.  Bain,  L. 
R.  10  C.  P.  15,  21,  27.  See  Cremer  v.  Higginson,  1  Mason,  323,  337, 
Fed.  Cas.  No.  3383.  The  obligation  to  sell  on  credit  was  all  that  con- 
cerned the  defendant.  Moreover,  if  what  we  have  said  as  to  the  refer- 
ence to  this  document  is  correct,  it  is  taken  up  with  all  its  terms  into 
the  defendant's  undertaking.  X       A^k 

But  it  isj>bjected  furtlier  that  acceotancc-X)!  the- g-uai^anty,.  or,  more  //u^ 

strictly,  the  furnishing  of  the  consideration  by  the  plaintiffs,  was  not       J^'        ^"^ 
conmiunicated  to  the  defendant.    We_are  of  opinion,  as  we  have  said,  j  **^''  "^^^ 

that  it  would  have  been  open  to  the  presiding  justice  to  find  that  the  ^*^'| 
guaranty  was  signed  on  the  understanding  that,  if  it  was  signed,  the 
plaintiffs  would  sign.  If  so,  when  the  understanding  was  carried  out, 
it  was  not  necessary  to  noTify  the  defendant.  He  already  had  all  the 
notice  he  needed,  and  to  send  him  notice  would  have  been  merely  a 
formal  act,  which  is  not  required  either  by  custom  or  by  the  theory  of 
contract.  There  is  no  universal  doctrine  of  the  common  law,  as  under- 
stood in  this  commonwealth,  that  acceptance  of  an  offer  must  be  com- 
municated in  order  to  make  a  valid  simple  contract,  although  such  a 
necessity  might  be  inferred  from  some  of  the  language  in  Davis  v. 
Wells,  104  U.  S.  159,  26  L.  Ed.  686  and  Davis  Sewing  Machine  Co.  v. 
Richards,  115  U  S.  524,  6  Sup.  Ct.  173,  29  L.  Ed.  480.  See  Paige  v. 
Parker,  8  Gray,  211;  Hatch  v.  Hobbs,  12  Gray,  447;  First  National 
Bank  v.  Watkins,  154  Mass.  385,  387,  388,  28  N.  E.  275;  Bishop  v. 
Eaton,  161  Mass.  496,  499,  37  N.  E.  665,  42  x\m.  St.  Rep.  437 ;  Bascom 
V.  Smith,  164  Mass.  61,  41  N.  E.  130;  Brogden  v.  Metropolitan  Railway, 
2  App.  Cas.  666,  691;  Harriman,  Contracts,  86-89;  Langdell,  Con- 
tracts §  2  et  seq(f^'  ^     /         f 

If  a  contract  was  made,  the  only  remaining  objections  urged  against  ^''f"^^.,*y*^'^ 
the  plaintiff's'  recovery  are  that  they  did  not  perform  their  contract,  '^^^^-^ 
and  that  they  could  not  sue  until  after  the  three  years  had  elapsed. 
The  former  proposition  is  put  upon  the  ground  that,  although  Murphy 
Bros,  owed  the  plamtifEs  more  than  $20,000,  only  the  sum  of  $16,000 
was  in  the  form  of  a  debt  for  merchandise,  and  the  rest,  $8,000,  was 
in  the  form  of  notes.  The  notes  were  given  by  Murphy  Bros,   for 
leather,  and  we  do  not  perceive  what  difference  the  change  in  the  form 
of  the  indebtedness  made  with  regard  to  the  plaintiffs'  contract,  al- 
though as  a  matter  of  bookkeeping  the  notes  m-y  have  been  charged  on  y  .  ^     . 
a  separate  page.    Norton  v  Eastman,  4  Greenl.  (Me.)  521,  525.    There     y^.J^JS^^^ 
is  nothing  in  the  guaranty  which  requires  the  plaintiffs  to  wait  three        V^--^ 
years  before  bringing  suit     Marsh  v.  Day,  18  Pick.  321. 

Judgment  for  the  plaintiffs. ^^ 

80  See,  also,  Chapin  v.  La'pham,  20  Pick.  467  (1S38). 

31  Where  the  offer  is  accepted  when  made,  and  a  bilateral  contract  then 
arises  between  the  surety  and  the  creditor,   obviously  no   notice  would  be 

Hen. Sub. — 4 


> 


50  FORMATION.  (Part  1 

PAYNE  &  WOOD  V.  IVES,   SARGON   &  MANN. 
(Court  of  King's  Bench,  1823.    3  Dow.  &  Ry.  6G4.) 

Assumpsit  upon  a  .c^uaranty.  Plea,  non-assumpsit,  and  issue  thereon. 
At  the  trial  before  Abbott,  C.  J.,  at  the  adjourned  Middlesex  sittings, 
after  last  Trinity  term,  the  case  was  thig :  The  plaintiffs  (who  were 
coach-lace  manufacturers),  in  March,  1821,  having  furnished  Mr. 
Stubbs  (who  was  in  the  habit  of  shipping  goods  to  India,  under  the  firm 
oT~John  Stubbs  &  Co.)  with  lace  to  the  amount  of  fS37.  applied  to  the 
defendants,  one  of  whom,  Mrs.  Ives,  was  aunt  to  Stubbs,  to  guarantee 
the"  payment  of  that  supi.  To  this  the  defendant  Alann,  on  the  part  of 
Ris  firm,  consented,  and  the  following  guaranty  was  given  to  the  plain- 
tiffs, being  in  the  handwiMling  of  Mann,  and  signed  by  him  only,  on 
behalf  of  the  firm :  "We  undertake  to  indorse  any  bill  or  bills  Mr.  John 
Stubbs  may  give  to  Messrs.  Payne  &  Co.,  in  part  payment  of  an  order 
lor  lace, Avhich  is  now  being  executed  for  him;  ]\Iessrs.  Payne  &  Co. 
to  allow  £5.  per  cent,  on  the  amount, of  the  said  Trills  for  tTie~~said 
guaranty.     Ives,  Sargon  &  Mann.    April  19,  1821." 

Tjie  goods  were  delivered  to  Stubbs,  who  immediately  shipped  them 
for  India,  and  at  the  same  time  paid  the  plaintiffs  £500.  in  money  and 
wine,  and  in  the  month  _of  _J_une  following  accepted  a  bill  drawn  on 
him  by  the~^aintiffs,  for  £337.  at  eighteen  months  date,~which~is 
thVperiOcT'of  credit  usually  allowed  in  the  India  trade.  The  plain- 
tiff's retained  the  bill,  without  making  any  application  to  the  defend- 
ants to  indorse  it,  for  the  space  of  seventeen  months  and  ten  days, 
when  Stubbs  having  become  insolvent,  and  the  plaintiff's  being  "ac- 
quainted with  that  fact,  tendered  the  defendants  £17.  the  amount  of 
the  commission  mentioned  in  the  guaranty,  and  required  them  to  iif- 
ddrse  the  bill.  The  defendants,  however,  declined  either  to  accept  .the 
commission,  or  to  indorse  the  bill,  and  after  some  interval  the  present 
action  was  brought.    Uponjthis,evidence  two  objections  were  taken_for 

required.  Lynn  Safe  Deposit,  etc.,  Co.  v.  Andrews.  ISO  Mass.  527,  62  N.  E. 
l(3mr(TI)02) ;  White  v.  Woodward,  5  M.  G.  &  S.  SOS  (1S4S). 

Tliis_i)aLat  is  well  expressed  in  Cooke  v.  Ome.  37  111.,  at  page  189  (1865): 
"The  proposition  comes  from  Orne.  He  says  by  the  letter  of  Henkle.  if  Cooke 
will  gujiranty  the  payment,  I  ^\ill  sell.  Cooke  writes  in  the  postsa-ipt  of 
Hulnie  «fc  White's  letter  that  he  will  guaranty.  The  moment  he  wrote  that 
acceptiiuce  of  Orne's  offer,  the  bargain  was  complete.  He  then  knew  that  the 
goods  were  to  be  furnished  upon  his  credit.  He  knew  his  guaranty  was  al- 
ready accepted,  and  that  he  would  be  responsible  for  the  goods,  if  furnished 
before  the  guaranty  was  withdrawn,  and  within  a  reasonable  time.  Any  fur- 
ther notice  of  the  acceptance  of  the  guaranty  would  have  been  superlluous." 

"The  mutuality  of  obligation  is  not  a  sound  criterion.  In  a  contract  of 
guaranty  for  further  advances  to  a  third  person,  the  plaintiff  is  not  always 
bound  to  make  the  advances ;  but  the  duty  to  see  him  harmless  arises  upon 
the  advances  being  made."  Tatteson,  J.,  in  trills  v.  Blackall,  11  Q.  B.  358 
(1S47). 

In  Dover  Stamping  Co.  v.  Noyes,  151  Mass.  342.  24  N.  E.  53  (ISOO),  no  fur- 
ther notice  was  given  than:  "We  are  much  obliged  for  the  assurance  given 
us  regarding  Messrs.  F.  P.  Field  &  Co.,  and  on  the  strength  of  it  will  be  glad 
to  continue  the  trade."    There  was  judgment  for  plaintiff. 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  EY   SIMPLE   CONTRACT.  51 

thejief endants :  First,  that  the  guaranty  having  been  signed  by  one 
partner  only,  without  any  proof  of  the  privity  of  the  others,  could  not 
bind  the  latter,  and  w^ould  not  support  a  joint  action  against  all  the  part- 
ners, and  for  this  Duncan  v.  Lowndes,  3  Campb.  478,  was  cited ;  and, 
second^  that  the  plaintiffs,  by  having  kept  the  bill  for  more  than  seven- 
teen months,  without  ever  tendering  the  commission,  or  demanding  the 
indorsement  till  after  they  knew  that  Stubbs  was  insolvent,  had  waived 
the  benefit  of  the  guaranty.  The  Chief  Justice  overruled  the  objections, 
and  left  it  to  the  jury  to  say,  first,  whether  the  guaranty  had  been  given 
with  the  privity  and  consent  of  all  the  defendants  ;  and,  second,  whether 
in  their  opinion  the  plaintiffs  had  in  fact  discharged  the  defendants 
from  their  responsibility,  by  omitting  to  call  upon  them  to  indorse  the 
bill  for  so  long  a  period.     The  jury  found  for  the  j)laintiffs.^^ 

Abbott,  C.  J.  I  think  there  ougH  to'be  a  new  trial  in  this  case,  but 
it  must  be  upon  payment  of  costs  by  the  defendants.  The  £5.  per  cent, 
is  to  be  allowed  "for  the  said  guaranty,"  and  therefore  the  plain  mean- 
ing of  the  contract  is  that  the  indorsement  of  the  bill  should  be  the  con- 
sideration for  the  commission,  and  that,  until  the  bill  was  indorsed,  no 
commission  should  be  due.  This  I  take  to  be  the  legal  construction  of  , 
the  instrument,  and  then  the  question  arises,  whether  the  application'^ 
for  the  indorsement  was  made  inHue  time.  Now  the  general  rule  of  law 
upon  such  subjects  is  clear,  namely^  that  the  demand  must  be  made  with- 
in a  reasonable  and  convenient  time.  But_for  the  plaintiffs  to  forbear 
thdr  demand  for  seventeen  months  out  of  eighteen  was  neither  reason- 
able nor  convenient,  for  it  was  inflicting  an  injury  upon  the  defendants 
by  keeping  them  during  all  that  time  out  of  their  commission.  Besides, 
here  the  plaintiffs  lie  by  until  they  learn  that  Stubbs  has  become  insol- 
vent, and  until  they  discover  that  the  indorsement  is  the  only  means  by 
which  they  can  secure  their  debt;  and  but  for  that  discovery,  they  prob- 
ably never  would  have  applied  at  all.  That  I  think  they  were  not  en- 
titled to  do  under  the  agreement,  and  consequently  that  they  ought  not 
to  have  recovered  in  this  action.  The  whole  case  certainly  depended"^ '"^Av^ 
much  upon  a  question  of  fact,  and  was  therefore  for  the  decision  of^ 
the  jury ;  but  I  also  think  that  the  construction  of  the  agreement  is  a 
question  of  law,  and  as  the  defendants  chose  to  introduce  two  grounds 
of  defense,  one  good  and  the  other  bad,  the  latter  of  which  is  now  aban- 
doned, I  think  the  jury  were  somewhat  misled,  and  that  the  plaintiffs 
are  entitled  to  have  the  case  reconsidered  on  the  only  true  ground, 
namely,  the  construction  of  the  guaranty. 

BaylEy,  J.  I  entertain  no  doubt  upon  the  legal  construction  of  this 
guaranty.  It  gives  the  plaintiff's  an  option  to  have  the  indorsement  or 
not,  but  it  provides  That  they  are  not  to  pay  the  commission  unless  they 
do~haye  the  indorsement.  It  is  signed  by  the  defendants  only,,  and 
therefore  it  is  binding  upon  them  only,  for  if  it  had  been  intended  to 
have  been  binding  on  both  parties,  both  would  have  signed  it.     Then 

82  The  arguments  of  counsel  are  omitted. 


52  FORMATION.  (Part  1 

the  option  given  to  tlie  plaintiffs  ought  to  have  been  made  in  reasonable 
time,  and  at  any  rate  before  that  event  occurred,  of  which,  if  the  de- 
fendants had  known,  they  would  never  have  signed  the  guaranty.  I 
am  therefore  of  opinion  that  the  conduct  of  the  plaintiffs  has  been  con- 
trary to  the  spirit  of  the  agreement,  and  that  the  case  ought  to  be  sub- 
mitted to  the  consideration  of  another  jury. 

HoLROYD,  J.  It  is  quite  clear  that  this  instrument  was  not  originally 
binding  upon  both  parties,  because,  although  it  begins  with  the  words 
"We  undertake,"  it  is  signed  by  the  defendants  only.  It  has,  I  think, 
been  held  that  an  instrument,  beginning  "It  is  agreed"  and  signed  by 
one  of  the  parties  only,  was  not  binding  upon  the  other  party,  until  ac- 
cepted by  him.  ^^  Now  here  there  never  was  any  acceptance  by  the 
plaintiffs ;  they  had  an  option  to  make  the  agreement  binding  by  paying 
the  commission,  but  they  did  not  exercise  that  option  till  within  a  few 
days  of  the  bill  becoming  due,  and  till  they  knew  of  the  insolvency  of 
the  acceptor.  I  think  they  were  not  justified  in  that  delay,  and  that  is 
the  only  question  in  the  cause.  With  respect  to  bonds,  it  is  laid  down 
by  Lord  Chief  Baron  Comyns,  ^*  that  "where  a  condition  is  to  do  a 
transitory  thing  without  limiting  any  time,  it  ought  to  be  done  immedi- 
ately, viz.  in  convenient  time."  But  it  cannot  be  said,  that  the  tender  of 
the  commission  in  this  case  was  made  "in  convenient  time" ;  for,  on  the 
contrary,  the  plaintiffs  delayed  acting  upon  the  contract,  until  circum- 
stances had  occurred,  which  were  dehors  the  contract,  and  which  ren- 
dered it  unsafe  to  the  defendants  to  fulfill  it.  I  am  therefore  of  opinion 
that  the  rule  for  a  new  trial  ought  to  be  made  absolute. 

Rule  absolute,  upon  payment  of  costs. 


DAVIS  SEWING  MACH.  CO.  v.  RICHARDS  et  al. 

(Supreme  Court  of  the  United  States,  1885.    115  U.  S.  524,  6  Sup.  Ct  173,  20 

L.  Ed.  480.) 

This  was  an  action,  brought  in  the  Supreme  Court  of  the  District 
of  Columbia,  upon  a  guaranty  of  the  performance  by  one  John  W. 
Fto*»-  Poler  of  a  contract  under  seal,  dated  December  17,  1872,  between  him 
and  the  plaintiff  corporation,  by  which  it  was  agreed  that  all  sales  of 
sewing  machines  which  the  corporation  should  make  to  him  should  be 
upon  certain  terms  and  conditions,  the  principal  of  which  w-^re  that 
Poler  should  use  all  reasonable  efforts  to  introduce,  supply  and  sell  the 
machines  of  the  corporation,  at  not  less  than  its  regular  retail  prices, 
throughout  the  District  of  Columbia  and  the  counties  of  Prince  George 
and  Montgomery  in  the  state  of  Maryland,  and  should  pay  all  indebted- 
ness by  account,  note,  indorsement  or  otherwise,  which  should  arise 
from  him  to  the  corporation  under  the  contract,  and  should  not  engage 

33  Vide  1  Saund.  291,  note  1;  Id.  320,  note  4. 
»*  Com.  Dig.  tit  "Condition,"  G,  5. 


Ch.  2)  ESSENTIALS  TO  SURETYSHIP  BY   SIMPLE  CONTRACT.  53 

in  the  sale  of  sewirfg  machines  of  any  other  manufacture,  and  that  the 
corporation,  during  the  continuance  of  the  agency,  should  sell  its  ma- 
chines to  him  at  a  certain  discount,  and  receive  payment  therefor  in 
certain  manner;  and  either  party  might  terminate  the  agency  at 
pleasure. 

The  guaranty  was  upon  the  same  paper  with  the  above  contract,  and 
was  as  follows : 

"For  value  received,  we  hereby  guarantee  to  the  Davis  Sewing  Ma-  l^.'i^..,ji^  , ,, 
chine  Company,  of  Watertown,  N.  Y.,  the  full  performance  of  the  fore-  ^  (r-^'c^j^ 
going  contract  on  the  part  of  John  W.  Poler,  and  the  payment  by  said 
John  W.  Poler  of  all  indebtedness  by  account,  note,  indorsement  of 
notes  (including  renewals  and  extensions)  or  otherwise,  to  the  said 
Davis  Sewing  Machine  Company,  for  property  sold  to  said  John  W. 
Poler,  under  this  contract,  to  the  amount  of  three  thousand  ($3,000) 
dollars.    Dated  Washington,  D,  C,  this  17th  day  of  December,  1872. 

"A.  Rothwell. 
"A.  C.  Richards." 

Under  the  guaranty  were  these  words : 

"I  consider  the  above  sureties  entirely  responsible.  Washington, 
December  19,  1872.  J.  T.  Stevens." 

At  the  trial  the  above  papers,  signed  by  the  parties,  were  given  in 
evidence  by  the  plaintiff,  and  there  was  proof  of  the  following  facts : 
On  December  17,  1872,  at  Washington,  the  contract  was  executed  by 
Poler,  and  the  guaranty  was  signed  by  the  defendants,  and  the^xon- 
tract  and  guaranty,  after  being  so  signed,  were  delivered  by  the  de- 
fendants to  Poler,  and  by  Poler  to  Stevens,  the  plaintiff's  attorney,  and 
by  Stevens  afterwards  forwarded,  with  his  recommendation  of  the  sure- 
ties, to  the  plaintiff  at  Watertown  in  the  state  of  New  York,  and  the 
contract  there  executed  by  the  plaintiff.  The  plaintiff  afterwards  de- 
livered goods  to  Poler  under  the  contract,  and  he  did  not  pay  for  them. 
The  def endants^had  no  notice  of  the  plaintiff's  execution  of  the  contract 
or  acceptance  of  the  guaranty,  and  no  notice  or  knowledge  that  the 
plaintiff  had  furnished  any  goods  to  Poler  under  the  contract  or  upon 
the  faith  of  the  guaranty,  until  January,  1875,  when  payment  therefor 
was  demanded  by  the  plaintiff"  of  the  defendants,  and  refused.  At  the 
time  of  the  signing  of  the  guaranty,  the  plaintiff  had  furnished  no 
goods  to  Poler,  and  the  negotiations  then  pending  between  the  plaintiff" 
and  Poler  related  to  prospective  transactions  between  them.  x  («>:*u,f  ^Z*,;,^ 

TVif^  rmift  inqtrnri-pd  fhe  jury  as  f ollows :  "It  appearing  that,  at  the 
time  the  defendants  signed  the  guaranty  on  the  back  of  the  contract 
between  the  plaintiff  and  Poler,  the  plaintiff  had  not  executed  the  con- 
tract or  assented  thereto,  and  that  the  contract  and  guaranty  related  to 
prospective  dealings  between  the  plaintiff  and  Poler,  and  that  subse- 
quently to  the  signing  thereof  by  the  defendants  the  attorney  for  the 
plaintiff  approved  the  responsibility  of  the  guarantors  and  sent  the  con- 
tract to  Watertown,  N.  Y.,  to  the  plaintiff",  which  subsequently  signed 
it,  and  no  notice  having  been  given  by  the  plaintiff  to  the  defendants 


> 


W/^^- 


54  FORMATION.  (Part  1 

of  the  acceptance  of  such  contract  and  guaranty,  and  that  it  intended 
to  furnish  goods  thereon  and  hold  the  defendants  responsible,  the  plain- 
tiff cannot  recover,  and  the  jury  should  find  for  the  defendants." 

A  verdict  was  returned  for  the  defendants,  and  judgment  rendered 
thereon,  which  on  exceptions  by  the  plaintiff  was  affirmed_^at  the  gen- 
eral term,  and  the  plaintiff  sued  out  this  writ  of  error,  pencfTng'wIiich 
one  of  the  defendants  died  and  his  executor  was  summoned  in.  ^^ 

Mr.  Justice  Gray  delivered  the  opinion  of  the  court.  After  stating 
the  facts  in  the  language  above  reported,  he  continued: 

The  decision  of  this  case  depends  upon  the  application  of  the  rules  of 
law  stated  in  the  opinion  in  the  recent  case  of  Davis  v.  Wells,  104  U.  S. 
159,  26  L.  Ed.  686,  in  which  the  earlier  decisions  of  this  court  upon 
the  subject  are  reviewed.^,®-^ 

Those  rules  may  be  summed  up  as  follows:  A  contract  of  guaranty, 
like  every  other  contract,  can  only  be  made  by  the  mutual  assent  of  the 
parties.  If  the  ei^aranty  is  signed  by  the  guarantor  at  the  reqitest'of 
the  other  party,(^3^r  if  the  latter's  agreement  to  accept  is  contempora- 
neous with  the  guaranty,  ^/  or  if  the  receipt  from  him  of  a  valuable  con- 
sideration, however  small,  is  acknowledged  in  the  guaranty,  the  mutual 
assent  is  proved,  and  the  delivery  of  the  guaranty  to  him  or  for  his  use 
completes  the  contract.! ^  But  if  the  guaranty  is  signed  by  the  g;uarantor 

«o  The  authorities  cited  by  counsel  are  omitted. 

88  In  this  case  the  coutract  of  the  guarantor  was  by  specialty,  and  further- 
more the  specialty  acknowledged  the  receipt  of  a  present  consideration  of  $1. 
It  was  held  that  no  notice  of  acceptance  was  required. 

In  point  of  fact,  at  the  date  of  execution  of  the  guaranty  there  was  a  bal- 
ance against  the  principal  of  .$9,000.  which  was  subse^iuently  reduced  to  $6,200 
when  the  account  was  closed.  It  does  not  appear  that  the  debit  balance  was 
ever  increased  at  any  time  by  temporary  advances  of  credit  See,  in  accord 
with  Davis  v.  Wells,  Bryant  v.  Stout,  16  Ind.  App.  .380,  44  N.  E.  68,  4.5  N.  B. 
343  (ISOO) ;    Powere  v.  Bumcratz,  12  Ohio  .St.  273  (1861). 

"If.  however,  the  guarantor  covenants,  instead  of  giving  a  parol  promise,  he 
will  be  irrevocably  bound  In  spite  of  the  want  of  mutuality,  because  sealed 
agreements  follow  the  rule  of  the  civil  law  that  an  undertaking  followed  by 
assent,  constitutes  a  unilateral  contract,  although  nothing  is  done  or  promised 
on  the  other  side."    Ilare  on  Conti'acts,  p.  181. 

37  But  if  this  merely  means  that  where  the  offeror  (the  guarantor)  agrees  to 
extend  the  credit  if  the  offeree  (the  guarantee)  will  sign,  the  case  falls  under 
the  second  class  given  in  the  opinion. 

If  this  means  that  a  request  to  know  whether  a  guaranty  will  be  given 
will  not  make  a  contract  when,  following  such  request,  the  written  offer  to 
guaranty  is  acted  on,  the  proposition  Is  contradicted  by  the  cases  below  re- 
ferred to  under  note  39. 

3  8  But  a  mere  agreement  to  accept  the  defendant  as  guarantor,  without 
contemi)oraneously  agreeing  to  make  the  advance  to  the  principal,  would  not 
be  a  common-law  contract. 

t  It  is  submitted  that  the  following  classification  of  cases  is  in  accordance 

ith  the  common  law: 

(1)  Guarantor  or  surety  is  offeror,  and  writes  to  guarantee:  "If  you  will  for- 
bear to  sue  X.,  I  will  guarantee  his  debt"  Forbearance  for  a  reasonable  time 
gives  rise  to  a  unilateral  contract  of  assumpsit,  and  notice  of  acceptance  is  un- 
necessary. Lent  V.  Padelford,  10  Mass.  230,  6  Am.  Dec.  119  (1813),  supra, 
p.  42. 

(2)  Guarantor  or  surety  is  offeror,  and  writes  to  guarantee:  "If  you  will 
sell  goods  to  X.,  I  will  guarantee  his  debt"'    Sale  and  deliverj-  to  X.  gives  rise 


Ch.  2)  ESSENTIALS   TO   SUKETYSUIP   KY   SIMPLE   CONTRACT.  55 

without  any  previous  request  of  the  other  party,  and  in  his  absence,  for 
no  consideration  moving  between  them  except  future  advances  to  be 
made  to  the  principal  debtor,  the  guaranty  is  in  legal  effect  an  offer  or 
proposal  on  the  part  of  the  guarantor,  needing  an  acceptance  by  the 
other  party  to  complete  the  contract.^^- 

Th_e  case  at  bar  belongs  to  the  latter  class.  There  is  no  evidence  of 
any  request  from  the  plaintiff  corporation  "to  the  guarantors,  or  of  any 
consideration  moving  from  it  and  received  or  acknowledged  by  them  at 
the  time  of  their  signing  the  guaranty.  The  general  words  at  the 
beginning  of  the  guaranty,  "value  received,"  without  stating  from 
whom,  are  quite  as  consistent  with  a  consideration  received  by  the 
guarantors  from  the  principal  debtor  only.  The  certificate  of  the 
sufficiency  of  the  guarantors,  written  by  the  plaintiff's  attorney  under 
the  guaranty,  bears  date  two  days  later  than  the  guaranty  itself.  The 
plaintiff's  original  contract  with  the  principal  debtor  was  not  executed 
by  the  plaintiff  until  after  that.  The  guarantors  had  no  notice  that 
their  sufficiency  had  been  approved,  or  that  their  guaranty  had  been  ac- 
cepted, or  even  that  the  original  contract  had  been  executed  or  assented 

to  a  unilateral  contract  at  common  law,  and  notice  of  acceptance  and  of  sale 
is  therefore  unnecessary.  Lennox  v.  Murpby,  171  Mass.  370,  50  N.  E.  644 
(189S).     Contra,  Davis,  etc.,  Co.  v.  Ricliards,  supra,  p.  52. 

(3)  Guarantor  or  surety  is  offeror,  and  writes  to  guarantee:  "If  you  will 
promis^  ,to  sell  goods  to  X.,  I  will  guarantee  his  debt."  Guarantee  promises 
to  sell.  This  forms  a  bilateral  contract,  and  further  notice  of  acceptance  or 
of  sale  is  superfluous.  Lynn,  etc.,  Co.  v.  Andrews,  ISO  Mass.  527,  62  N.  E. 
1061  (1902),  and  cases  in  note  31,  ante,  p.  50.  See  note,  "Necessity  of  Notice 
to  a  Guarantor  of  Acceptance  and  Default,"  in  20  H.  L.  R.  4S5,  503. 

(4)  Guarantee  is  offeror,  and  writes  to  surety  or  guarantor:  "If  you  will 
guarantee,  I  promise  to  sell  goods  to  X."  Guarantor  promises  (contemporane- 
ously or  by  letter).  This  forms  a  bilateral  contract,  and  further  notice  of  ac- 
ceptance or  of  sales  is  superfluous.    Cooke  v.  Orne,  37  111.  189  (1863). 

(5)  Guarantor  or  surety  seals  and  delivers  to  guarantee  a  specialty  cove- 
nanting to  guarantee  X.'s  debt  if  goods  are  sold  to  him.  A  sale  and  delivery 
to  X.  follows.  There  is  here  a  specialty  contract,  and  notice  of  sales  is  super- 
fluous. Davis  V.  Wells,  Fargo  &  Co.,  104  U.  S.  159,  26  L.  Ed.  686  (1881).  Pow- 
ers v.  Bumcratz,  12  Ohio  St.  273  (1861). 

3  9  But  this  proposition  is  in  contradiction  of  Lent  v.  Padelford.  See  ante, 
page  42;  arid  eSTSes^  in  note  to  that  case ;  Cartlitch  v.  Eyles,  Comyu's  Reports, 
558  (1738). 

In  Somersall  v.  Barneby,  Cro.  Jac.  287  (1611),  where  the  plaintiff,  upon 
solicitation  of  the  defendant,  became  surety  for  the  defendant's  son  in  reliance 
upon  the  promise  of  the  defendant  to  save  the  plaintiff  harmless,  and  thereby 
suffered  loss,  it  '^•as  moved  in  arrest  of  judgment,  "because  it  is  not  alleged 
that  he  gave  notice  unto  the  defendant  of  that  bond,  nor  requested  him  to 
save  him  harmless  from  it ;  and  the  defendant  is  a  stranger  thereto,  and  doth 
not  know  in  what  bonds  the  plaintiff  is  obliged  with  his  said  son ;  and  being  a 
future  thing  to  be  entered  into  by  the  plaintiff,  the  defendant,  being  a  stran- 
ger, ought  to  have  notice  thereof  from  him ;  but  if  it  had  been  to  save  him 
hannless  from  bonds  formerly  entered  into,  it  had  been  otherwise,  for  there 
by  intendment  the  defendant  had  as  well  cognizance  of  them  as  the  plaintiff; 
sed  non  allocatur ;  for  the  court  said  it  'was  all  one,  and  that  he  at  his  peril 
ought  to  take  notice  thereof.  •  *  *  Wherefore  it  was  adjudged  for  the 
plaintiff." 

Injipparent  accord  are  other  subsequent  English  cases:  Evans  v.  Beattie. 
5  Esp.  26  (1803),  where  no  notice  appears  to  have  been  given  of  the  sale  and 
delivery. 


56  FORMATION.  (Part  1 

to  by  the  plaintiff,  until  long  afterwards,  when  payment  was  demanded 
of  tiiem  for  goods  supplied  by  the  plaintiff  to  the  principal  debtor. 
Judgment  affirmed.'*"' 


DUTCHMAN  v.  TOOTH. 
(Court  of  Common  Pleas,  Trinity  Term,  1839.    5  Bing.  N.  C.  577.) 

To  assumpsit  on  a  promise  by  the  defendant  (in  consideration  that  the 
plaintiff,  at  the  defendant's  request,  had  paid  the  defendant  2s.  6d.)  to 
guarantee  the  plaintiff  that  he  should  be  paid  for  goods,  before  the 
promise,  consigned  by  him  to  the  defendant's  brother,  Jolm  Tooth,  at 
Sydney,  and  also  for  goods  that  might  thereafter  be  consigned  to  him : 

The  dff endant  pleaxled.  that  the  promise  in  the  declaration  mentioned 
was  a  special  promise  on  the  part  of  the  defendant  to  answer  for  the 
debt  and  default  of  Tooth  in  the  declaration  mentioned,  and  that  no 
agreement  in  respect  of  or  relating  to  the  promise  or  cause  of  action, 
nor  any  memorandum  or  note  thereof,  wherein  the  consideration  for 
the  said  special  promise  was  stated  or  shown,  was  in  writing  and  signed 
by  the  defendant,  or  by  any  other  person  by  him  thereunto  lawfully  au- 
thorised, according  to  the  form  of  the  statute  in  such  case  made  and 

*o  Accord:  Evans  v.  McCormick.  1G7  Pa.  247.  31  Atl.  5G3  (lS9o) :  Acme  Mfg. 
Co.  vTTTTOn,  197  Pa.  .^.59,  47  Atl.  205.  80  Am.  St.  Rep.  832  (1900) ;  Sears  v.  Swift 
&  Co.,  GG  111.  App.  49G  (1S9G) ;  German  Savings  Bank  v.  Drake  &  Co.,  112  Iowa, 
184.  S3  N.  W.  9G0,  51  L.  R.  A.  758,  84  Am.  St  Rep.  335  (1900). 

Contra:  Tilt-Kenney  Shoe  Co.  v.  Haggarty,  43  Tex.  Civ.  App.  335,  114  S. 
W.~SS?r(190G).  See  Doud  v.  National  Park  Bank.  54  Fed.  84G.  4  C.  C.  A.  607, 
2  U.  S.  App.  655  (1893).  where  the  principal  case  was  not  followed  on  the 
gronnd.  inter  alia,  that  in  the  principal  case  the  gnarantor  merely  signed  for 
accommodation.  See.  also,  cases  cited  In  notes  to  Lent  v.  Padelford,  ante,  p. 
42.  and  Eddowes  v.  Neal.  ante.  p.  39. 

See  the  adverse  criticism  of  the  principal  case  in  Hare  on  Contracts,  pp. 
ISO,  318-325. 

Notice  of  acceptance  was  said  (obiter)  to  be  required,  by  Story,  J.,  in  Doug- 
lass V.  Rej-nolds,  7  Pet.  12G,  8  L.  Ed.  626  (1833),  on  the  supposed  authority  of 
Russell  V.  Clark.  7  Cranch.  69,  3  L.  Ed.  271  (1812)7  Edniondston  v.  Drake,  5 
Pet.  624,  8  L.  Ed.  251  (1831),  Oxley  v.  Young,  2  H.  Bl.  613  (1796),  and  Peel  v. 
Tatlock.  1  Bos.  &  Pull.  419  (1799). 

Subsequently  and  distinctly  deciding  that  notice  is  requisite  is  the  case  of 
Adams  v.  Jones,  12  Pet.  207,  9  L.  Ed.  1058  (1838),  opinion  by  Story,  J.,  with 
Baldwin.  J.,  dissenting. 

The„origin  of  the  rule  expressed  in  the  principal  case  is  perhaps  to  be 
found  in  the  frequent  practice  of  merchants  to  write  letters  offering  to  indorse, 
or  accept  bills  of  exchange  for  accommodation.  See  the  cases  referi-ed  to  in 
Mathews  v.  Chrisman,  20  Miss.  595,  51  Am.  Dec.  124  (1S49). 

Unless  the  bill  was  presented  for  signature  within  a  reasonable  time  there 
could  be  no  liabilitj'  (of  course  none  on  the  bill)  upon  the  simple  contract. 
Payne  v.  Ives,  3  D.  &  R.  664  (1S23),  supra. 

ANTien,  therefore,  cases  arose  where  the  offer  was  to  guarantee  credit  to  a 
certain  amount,  without  offering  to  accept  or  indorse  commercial  paper,  though 
English  courts  never  have  required  notice  of  acceptance  (the  detriment  in- 
curred on  request  creating  the  assumpsit),  American  courts  have  assimilated 
such  an  offer  to  the  case  of  Payne  v.  Ives,  and,  though  no  acceptance  or  in- 
dorsement was  necessary  to  create  a  liability,  they  have  held  very  frequently, 
as  In  the  principal  case,  that  notice  of  acceptance  must  be  given. 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY   SIMPLE   CONTRACT.  57 

provided;  but  that  the  said  promise  in  the  declaration  mentioned  was 
contained  in  a  certain  memorandum  in  writing,  signed  by  the  defendant, 
and  which  was  as  follows: 

"I  hereby  guarantee  to  you  the  payment  of  the  proceeds  of  the  goods 
you  have  consigned  to  my  brother,  John  Tooth,  of  Sydney,  in  your  ship 
the  John  Woodall,  Captain  Henderson,  and  also  any  future  shipments 
you  may  make  to  him,  in  consideration  of  the  sum  of  2s.  6d.  paid  me, 
which  I  hereby  acknowledge  to  have  received." 

And  that  the  defendant  was  ready  to  verify. 

Demurrer  and  joinder. 

Gurney  appeared  for  the  plaintiff,  but  the  court  called  on 

Barstow,  who  was  for  the  defendant,  to  support  the  plea.  He  ob- 
jected  to  the  guaranty  that  it  ought  to  show  a  consideration  moving 
from  the  plaintiff,  and  it  did  not  appear  on  this  instrument  who  paid  the 
defendant  the  2s.  6d. 

TiNDAL,  C.  J.  The  fair  intendment  of  the  whole  is  that  it  was  paid 
by_the^plaintiff  to  ^  the  de  f endant.  Why  shouFd  anybody  go  ouf  af~fais 
way  to  pay  for  the  plaintiff  ?  ~~ 

Judgment  for  plaintiff.  ^^ 

41  Accord:    Solary  v.  Stultz,  22  Fla.  263  (1886).  )^nK-~^  .«o->/ 4, ^ 

In  Lawrence  v.  McCalmont  et  al.,  2  How.,  at  page  452,  11  K  Ed.  326  (1844). 
Mr.  Justice  Story  said:  "The  fifth  x)oint  is  that  there  is  uo  valid  consider- 
ation to  support  the  guarantee.  This  Is  pressed  under  two  aspects:  The  first 
is  that  the  consideration  was  past,  and  not  present;  for  the  letter  of  credit 
had  been  already  delivered  to  J.  and  A.  Lawrence  by  the  agents  of  the  London 
house.  The  second  is  that  the  payment  of  the  one  dollar  is  merely  nominal, 
and  not  sufficient  to  sustain  the  guarantee,  if  it  had  been  received ;  and  itns 
urged  that  it  was  not  received.  As  to  this  last  point,  we  feel  no  difficulty. 
The  guarantor  acknowledged  the  receipF  of  the  one  dollar,  and  is  now  es- 
topped to  deny  it.  If  she  has  not  received  it,  she  would  now  be  entitled  to 
recover  it.  A,j:aluable  consideration,  however  small  or  nominal,  if  given  or 
stipulated  for  In  good  faith,  is,  in  the  absence  of  fraud,  sufficient  to  support 
an^^action  on  any  parol  contract;  and  this  isjKiually  true  as  to  contracts  of 
guarantee  as  to  other  contracts.  A  s'tipulatibn  in  consideration  of  one  dollar 
is'^usf  as  effectual  and  valuable  a  consideration  as  a  larger  sum  stipulated  for 
or  paid." 

Similarly  a  consideration  of  only  $1  was  held  sufficient  iiLFurst  &  Bradley  ^. 
Mfg.  Co.  V.  Black,  111  Ind.  308,  12  N.  E.  504  (1887).  A  ^^^~yf>'-^  l-iw 

"The  bond  of  the  surety  company  differs  in  two  important  particulars  .from    '■iU-^jj^^  aa,^ 
the^  iisiial  simple  obligation  of  the  individual  surety:     First.     It  is  issued,  not    ^     ^  ^^.       >*r«*' 
gratiiitously,  or  as  a  friendly  act,  but  for  full  compensation  received  by  the    '   "' ''  !  '-*'* 
surety,  the  premium,  moreover,  being  fixed  by  the  company.     Second.     Pre- 
pared by  the  company  and  in  its  interest,  the  contract  contains  numerous 
clauses  restrictive  of  the  company's  liability.     These  conspicuous  differences 
have  induced  the  courts  to  construe  the  contract  of  the  surety  company  as  one 
of  insurance  rather  than  as  one  of  suretyship,  and  to  establish  the  rule  that 
all  ambiguities  in  the  language  employed  must  be  resolved  in  favor  of  the 
insured  and  against  the  insurer."    Richards  on  Insurance,  pp.  G55,  C66. 


58  FORMATION.  (Part  1 

OFFORD  V.  DAVIES  et  al. 
(Court  of  CJommon  Bench,  1802.     12  C.  B.  [J.  Scott  (N.  S.)]  "48.) 

The  first  count  of  the  declaration  stated  that  by  a  certain  instrument 
in  writing,  signed  by  the  defendants  and  addressed  and  deUvered  by 
the  defendants  to  the  plaintiff,  the  defendants  undertook,  promised  and 
agreed  with  the  plaintiff  in  the  words  and  figures  following,  that  is  to 
say:  "We,  the  undersigned,  in  consideration  of  your  discounting,  at 
our  request,  bills  of  exchange  for  Messrs.  Davies  &  Co.,  of  Newtown, 
Montgomeryshire,  drapers,  hereby  jointly  and  severally  guaranty  for 
the  space  of  twelve  calendar  months  the  due  payment  of  all  such  bills 
of  exchange,  to  the  extent  of  £  600.  And  we  further  jointly  and  sever- 
ally undertake  to  make  good  any  loss  or  expenses  you  may  sustain  or 
incur  in  consequence  of  advancing  Messrs.  Davies  &  Co.  such  moneys." 

Averment,  that  the  plaintiff,  relying  on  the  said  promise  of  the  de- 
fendants, after  the  making  of  the  said  promise,  and  within  the  space  of 
twelve  calendar  months  thereafter,  did  discount  divers  bills  of  exchange 
for  the  said  ]\Iessrs.  Davies  &  Co.,  of  Newtown  aforesaid,  certain  of 
which  bills  of  exchange  became  due  and  payable  before  the  commence- 
ment of  this  suit,  but  were  not  then  or  at  any  other  time  duly  paid,  and 
the  said  bills  respectively  were  dishonored,  and  that  the  plaintiff,  after 
the  making  of  the  said  promise,  and  within  the  said  twelve  calendar 
months,  advanced  to  the  said  Afessrs.  Davies  &  Co.  divers  sums  of 
money  on  and  in  respect  of  the  discount  of  the  said  last-mentioned  bills 
so  dishonored  as  aforesaid,  certain  of  which  moneys  were  due  and  ow- 
ing to  the  plaintiff  before  and  at  the  time  of  the  commencement  of  this 
suit,  and  that  all  things  had  happened  and  all  times  had  elapsed  neces- 
sary, etc.,  yet  that  the  defendants  broke  their  said  promise,  and  did 
not  pay  to  the  plaintiff  or  to  the  respective  holders  for  the  time  being 
of  the  said  bills  of  exchange  so  dishonored  as  aforesaid,  or  to  any 
other  person  entitled  to  receive  the  same,  the  respective  sums  of  money 
payable  by  the  said  bills  of  exchange ;  nor  did  the  defendants  pay  to  the 
plaintiff  the  said  sums  of  money  so  advanced  by  the  plaintiff'  as  afore- 
said, or  any  part  thereof,  whereby  the  sums  payable  by  the  said  bills 
of  exchange  so  dishonored  as  aforesaid  became  lost  to  the  plaintiff,  and 
he  became  liable  to  pay  and  take  up  certain  of  the  said  bills  of  ex- 
change, and  did  pay  and  take  up  certain  of  the  said  bills  of  exchange, 
and  was  forced  and  obliged  to  and  did  expend  certain  moneys  in  en- 
deavoring to  obtain  part  of  certain  of  the  said  bills  of  exchange,  and 
the  plaintiff  lost  the  interest  which  he  might  have  made  of  his  moneys 
if  the  said  bills  had  been  duly  paid  at  maturity. 

£ourth  plea,  to  the  first  count,  so  far  as  the  same  relates  to  the  sums 
payable  by  the  defendants  in  respect  of  the  sums  of  money  payable  by 
the  said  bills  of  exchange  and  the  said  sums  so  advanced,  jhat,  after 
the  making  of  the  said  guarantee,  and  before  the  plaintiff  had  dis^ 


Ch.  2)  ESSENTIALS   TO   SURETYSHIP  BY  SIMPLE   CONTRACT.  59 

coyinted  sudi-HUa-  of  exchange^  and  befoxe  he  had  ady5liced^uch_^rns 

of  money,  the  defendants  countermanded  the  said  guarantee,  and  re- 
quested the  plaintiff  not  to  discount  such  bills  pf  exchange,  and  not  to 
advSTTceTuch  moneys.  '     "i 

To  this  plea  the  plaintiff  demurred,  the  ground  of  demurrer  stated  in 
the  margin  being,  "that  the  fourth  plea  offers  no  defense  to  that 'part 
of  \he  declaration  to  which  it  is  pleaded,  for  that  a^party  c^ivingji  guar- 
antee (for  a  definite  period)  has  no  power  to  countermand  it  without 
the  assent  of  the  person  to  whom  it  is  given."       .      . 

Joinder.  ^^ 

Erle,  C.  J.,  now  delivered  the  judgment  of  the  court.*' 

The  declaration  alleged  a  contract  by  the  defendants,  in  consideration 
that  the  plaintiff  would  at  the  request  of  the  defendants  discount  bills 
for  Davies  &  Co.,  not  exceeding  £600.,  the  defendants  promised  to 
guaranty  the  repayment  of  such  discounts  for  twelve  months,  and  the 
discount,  and  no  repayment.  The  plea  was  a  revocation  of  the  promise 
before  the  discount  in  question ;  and  the  demurrer  raises  the  question 
wheUier  the  defendants  had  a  right  to  revoke  the  promise.  We  are  of 
opinion  that  they  had,  and  that  consequently  the  plea  is  good 

T^is  promise  by,  ilself  cr.eates  no  obligation.  It  is  in  effect  coiidi- 
tioned  to  be  binding  if  the  plaintiff  acts  upon  it,  either,.to  the,  benefit  gi 
the  defendants  or  to  the  detriment  of  himself.  But,  until  the  condition 
has  been  at  least  in  part  fulfilled,  the  defendants  have  the  power  of  re- 
voking it.  In  the  case  of  a  simple  guarantee  for  a  proposed  loan,  the 
right  of  revocation  before  the  proposal  has  been  acted  on  did  not  ap- 
pear to  be  disputed.  Then,  are  the  rights  of  the  parties  affected  either 
by  the  promise  being  expressed  to  be  for  twelve  months,  or  by  the  fact 
that  some  discounts  had  been  made  before  that  now  in  question,  and 
repaid?    We  think  not. 

The  promise  to  repay  for  twelve  months  creates  no  additional  liability 
on  the  guarantor,  but,  on  the  contrary,  fixes  a  limit  in  time  beyond 
which  his  liability  cannot  extend.  And,  with  respect  to  other  discounts, 
which  had  been  repaid,  we_cpnsider  _e^ch_discQunt^as  a  separate  transac- 
tion, creating  a  liability  on  the  defendant  till  it  is  repaid,  and,  after  re- 
payment, leaving  the  promise  to  have  the  same  operation  that  it  had 
before  any  discount  was  made,  and  no  more. 

Judgment  for  the  defendants.** 

42  The  arguments  of  counsel  are  omitted. 

43  The  reporter  notes  that  "the  case  was  argued  before  Erie,  C.  J.,  Williams. 
J.,  Willes,  J.,  and  Byles,  J." 

4  4  "The  difference  between  contracts  which  become  valid  on  assent,  jjid 
those  which  derive  their  obligation  from  the  passage  of  a  consideration7~ts 
marked  by  this  decision  [I  e.,  Calvert  v.  Gordon,  .3  M.  &  R.  124  (182S>,T?ee 
post,  p.  381]  'With  great  distinctness.  A  covenant  to  be  answerable  for  such 
defaults  as  may  be  committed  by  a  third  person  during  his  continuance  in 
the  employment  of  the  covenantee  cannot  be  annulled  by  the  covenantor  with- 
out the  consent  of  the  other  party  to  the  obligation.  In  Calvert  v.  Gordon 
the  bond  sued  on  was  conditioned  for  the  fidelity  of  one  Edwards  as  collecting 
clerk  of  the  plaintifCs  while  he  should  continue  in  their  service.    The  obligor 


60  FORMATION.  (Part  1 


CHAPTER  III 

GENERAL  ESSENTIALS  TO  THE  FORMATION  OF  ALL 
CONTRACTS  OF  SURETYSHIP 


SECTION  1.— CAPACITY— PERSONAL  INCAPACITY  OF 

PRINCIPAL 


GOODELL  V.  BATES  et  al. 
(Supreme  Court  of  Rhode  Island,  1SS3.    14  R.  I.  G5.) 

Exceptions  to  the  Court  of  Common  Pleas. 

DuRFEE,  C.  J.  This  case  comes  up  on  exceptions  from  the  court  of 
common  pleas.  It  is  debt  on  a  replevin  bond  ;  the  defendant  in  replevin, 
who  is  the  plaintiff  here,  having  recovered  judgment  for  return  and  res- 
toration. The  writ  of  replevin  was  defective,  in  that  it  omittedi  the 
words  "original  writ"  in  the  proviso  or  exemption  clause.  In  Parker  v. 
Palmer,  13  R.  I.  359,  this  court  held  that  such  an  omission,  objected  to 
by  the  defendant,  was  fatal  to  the  writ  without  amendment.  The  court 
did  not  hold  that  the  writ  was  utterly  void,  for,  if  it  had  so  held,  it  could 
not  have  permitted  an  amendment.  We  do  not  think  the  defect  is  one 
of  which  the  plaintiff  in  replevin,  who  is  himself  responsible  for  it,  can 
take  advantage;  but,  on  the  contrary,  we  think  a  judgment  for  return 
and  restoration  is  good  against  the  plaintiff  in  replevin,  in  spite  of  the 
defect.    The  first  three  exceptions  must  therefore  be  overruled. 

died  after  the  execution  of  the  bond,  and  the  defendant,  as  his  executrix, 
thereupon  gave  notice  that  she  would  no  longer  be  responsible  for  the  good 
conduct  of  Edwards,  and  that  if  the  plaintiffs  continued  to  employ  him  they 
must  take  the  risk.  The  only  difference  betn*een  this  case  and  Offord  v.  Da- 
vies  arose  from  the  seal.  The  court  held  that  the  guarantor  might  have  stipu- 
lated that  he  should  be  entitled  to  withdraw  on  notice.  He  had  not  done  so, 
and  had,  on  the  contrary,  covenanted  to  be  answerable  during  an  Indefinite 
period.  Such  engagement  was  obligatory,  and  must  be  observed.  An  ajipli- 
cation  was  subsequently  made  for  relief  in  etiuity  without  success.  The  result 
of  the  authorities,  therefore,  is  that,  inasmuch  as  a  guaranty  under  seal  is 
binding  immediately  upon  delivery  and  acceptance,  it  cannot  be  recalled  bj 
the  covenantor,  even  when  conditioned  for  the  performance  of  some  act  by  the 
covenantee  which  constitutes  its  consideration,  or  more  properly  cause,  and 
which  the  latter  may  omit  or  fulfill  at  pleasure.  An  unsealed  guaranty,  on 
the  other  hand,  does  not  become  obligatory  until  a  consideration  moves  from 
the  creditor,  and  a  revocation  will  consequently  be  in  time  down  to  the  last 
moment  before  he  gives  or  agrees  to  give  the  credit  required  by  the  guaran- 
tor."   Hare  on  Contracts,  pp.  310.  .311. 

See.  also,  note  in  13  H.  L.  R.  21G,  on  "Revocation  of  Guaranty  by  Death  of 
Guarantor." 


'\. 


Ch.  3)       GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  61 

The  action  of  replevin  was  brought  against  the  plaintiff  by  Adolphus 
D.  Putnam  and  Fannie  M.  Putnam,  his  wife.  The  bond  was  signed  by- 
said  Adolphus  and  Fannie  as  principals,  and  by  William  R.  Page  and 
Israel  G.  Bates  as  sureties.  The  writ  here  was  sued  out  against  all  four, 
but  was  only  served  on  Page  and  Bates,  and  Bates  alone  answered  the 
case.  On  the  trial  evidence  was  adduced  to  show  that  Fannie  M.  Put- 
nam, when  she  signed  the  bond,  was  not  only  a  married  woman,  but 
alsb  an  infant.  The  fourth  and  fifth  exceptions  are  for  the  refusal  of? 
the  court  below  to  rule  that  a  replevin  bond  given  by  an  infant  is  void-^"^^**^ 
able  by  such  infant,  and  that  such  a  bond,  if  voidable,  is  insufricient. 
We  do  not^think  the  refusal  was  error,  or  at  least  material  error,  be- 
cause we  think  that,  if  the  infant  was  not  bound,  the  other  obligors  were 
nevertheless  liable ;  the  right  to  take  advantage  of  the  disability  being 
confined  to  the  infant^and  the  defendant  in  replevin.  The  bond  was  vol- 
untarily given,  and  to  allow  the  obligors,  who  were  sui  juris,  to  set  up 
the  disability  of  a  co-obligor  to  defeat  it,  would  be  to  allow  them  to 
take  advantage  of  their  own  wrong.  The  bond  is  good  at  common  law, 
if  not  under  the  statute.  Morse  v.  Hodsdon,  5  Mass.  314;  Simonds  v. 
Parker,  1  Mete.  (Mass.)  508;  Bigelow  v.  Comegys,  5  Ohio  St.  2-56; 
Burgess  v.  Merrill,  4  Taunt.  468 ;  Hartness  v.  Thompson,  5  Johns. 
(N.  Y.)  160.  Any  technical  objection  to  the  joinder  of  the  infant  or 
feme  covert,  such  as  is  noticed  in  Porter  v.  Bradley  and  Wife,  7  R.  I. 
538,  is  obviated  by  the  statute.  Pub.  St.  R.  I.  c.  204,  §§  31,  32,  34. 
And  the  same  statute  obviates  the  other  objections  in  regard  to  the  mis- 
joinder of  parties  made  by  exception  or  motion  in  arrest  of  judgment. 
The  sixth  exception  must  be  overruled  for  substantially  the  same  rea- 
sons for  which  the  fourth  and  fifth  are  overruled.    *    *    *  i 


JOHN  WINN  V.  SANFORD. 

(Supreme  Judicial  Court  of  Massachusetts,  1887.    145  Mass.  302,  14  N.  E.  119, 

1  Am.  St.  Rep.  461.) 

Contract  against  the  surety  upon  the  following  bond,  executed  by 
Susan  B.  Winn  as  principal  and  by  the  defendant  as  surety-: 

'TCnow  all  men  by  these  presents,  that  we,  Susan  B.  Winn,  wife  of 
John  Winn,  of  Nantucket,  as  principal,  and  Frederick  C.  Sanford,  of 
Nantucket,  as  surety,  are  holden  and  stand  firmly  bound  unto  John 
Winn,  of  Nantucket,  above  named,  in  the  sum  of  three  hundred  dollars, 
to  the  payment  of  which  to  the  said  John  Winn,  or  his  executors,  ad- 
ministrators, or  assigns,  we  hereby  jointly  and  severally  bind  ourselves, 

1  Only  so  rnuch  of  the  opinion  is  printed  as  relates  to  the  question  of  ca- 
pacity. 

As  to  coA-erture  of  principal,  a^ccorcj:  Wagoner  v.  Watts,  44  X.  J.  Law,  126 
(1882). 

As  to  infancy  of  principal,  accord:  Dexter  v.  Blanchard,  11  Allen  (Mass.) 
36o  (1S65),  obiter. 


G2  FOHMATioN.  (Part  1 

our  heirs,  executors,  and  administrators.  The  condition  of  this  obhga- 
tion  is  such  that,  whereas,  in  a  settlement  of  differences  between  said 
John  Winn  and  Susan  B.  Winn,  it  was  agreed  by  said  Susan  B.  Winn, 
and  on  her  behalf  that  she  should  give  to  said  John  Winn  a  bond,  with 
surety,  *to  release  dower  whenever  requested,  and  make  no  further 
claim  on  said  John  Winn  for  any  support  or  for  any  cause  whatever' : 
Now,  therefore,  if  said  Susan  B.  Winn  shall,  whenever  requested,  sign 
release  of  dower  in  any  real  estate  of  said  John  Winn,  and  shall  make 
no  further  claim  upon  him  for  any  support  or  for  any  cause  whatever, 
then  this  obligation  shall  be  void;  otherwise,  it  shall  be  and  remain  in 
full  force  and  virtue." 

Trial  in  the  superior  court,  without  a  jury,  before  Thompson,  J.,  who 
ruled,  as  matter  of  law,  "that  the  bond  sued  on  cannot  be  madeJJic^ 
X'M.     J  basis  of  any  legal  claim  against  the  defendant;   that,  Mrs.  Winn  not 
ibeinfr  liable  to  her  husband  under  it,  the  defendant  is  not  liable" — and 
found  for  the  defendant.    The  plaintiff  alleged  exceptions. 

Devexs,  J.    It  iUiue^as.^  general  proposition,  that  the  liability  of  a 

guarantor^or  of  a  surety  js  limited  by  that  of  his  prjncipal.    But  to  this 

X  there  are  certain  e^cceptions.    Thus,  where  the  principal  is  excused  from 

.   liability  for  reasons  personal  to  himself,  and  which~cro  hoFaffecrthe 

(  ^debt  he  has  incurred  or  the  promise  he  has  made,  the  surety  would  not 

be  entitled  to  the  benefit  of  this  excuse.    In  such  case,  he  is,  in  a  certain 

sense,  an  independent  promisor,  and  must  perform  his  promise. 

In  Maggs  V.  Ames,  4  Bing.  470,  the  defendant  had  guaranteed  the 
purchases  made  by  a  married  woman  incapable  of  making  a  contract. 
The  question  in  the  case  was  whether  this  guaranty  should  have  been 
in  writing;  but  it  is  assumed  throughout,  by  court  and  counsel,  that,  if 
it  had  been  in  writing,  the  defendant  would  have  been  liable,  although 
there  could  have  been  no  liability  on  the  part  of  the  principal. ' 
/  T.)  In  a  similar  manner,  where  one  becomes  a  surety  for  the  performance 
of  a  promise  made  by  a  person  Incompetent  to  contract,  his  contracHs 
not  purely  accessorial,  nor  is  his  liability  necessarily  ascertained  by  de- 
termining whether  the  principal  can  be  made  liable.  Fraud,  deceit  in 
inducing  the  principal  to  make  his  promise,  or  illegality  thereof,  all  of 
which  would  release  the  principal,  would  release  the  surety,  as  these 
atl'ect  the  character  of  the  debt ;  but  incapacity  of  the  principal  party 
promising  to  make  a  legal  contract,  if  understood  by  the  parties,  is  the 
very  defense  on  the  part  of  the  principal  against  which  the  surety  as- 
sures  the  promisee.  Yale  v.  Wheelock,  109  Mass.  502. 
r  The  bond  in  the  case  at  bar  is  several,  as  well  as  joint.  It  appears 
from  it  that  Mrs.  Winn  is  the  wife  of  the  obligee,  and  it  recites  the 
agreement  made  between  them.  This  agreement  made  by  her  is  void, 
so  far  as  the  case  now  discloses,  solely  because  of.  her  incapacity  to  con- 
tract; but  this  should  not  release  the  defendant  from  his  engagement 
that  she  should  perform  the  promise  made  by  her.  The  defense  whicli 
Mrs.  Winn  personally  has,  resulting  from  her  situation,  should  not  be 
open  to  him. 


Ch.  3)        GEXEKAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  63 

Nor_do_;vve  perceive  that  any  distinction  can  be  made,  as  suggested  by    -^^rclw^ 
the  defendant,  between  the  promise  of  a  married  woman,  which  is  void, 
arid  that  of  a  minor,  which  is  voidable.     In  either  case,  the  surety  as- 
sures the  promisee  against  the  incapacity  of  the  principal  to  make  a  le- 
gal contract,  whether  it  be  more  or  less  incomplete. 

The  cases  in  which  it  has  been  held  that  the  coverture  of  the  prin-  '  A«-*l»r^iCw  i«*, 
cipal  promisor  at  the  time  of  making  her  promise  will  not  discharge 
the  surety,  when  such  coverture  was  known  to  him,  are  numerous,  and 
have  arisen  on  many  descriptions  of  contract.  Smyley  v.  Head,  2  Rich. 
Law  (S.  C.)  590,  45  Am.  Dec.  750.  Kimball  v.  Newell,  7  Hill  (N.  Y.) 
116.  Nabb  v.  Koontz,  17  Md.  283.  Jones  v.  Crosthwaite,  17  Iowa, 
393.  Weed  Sewing  Machine  Co.  v.  Maxwell,  63  Mo.  486.  St.  Albans 
Bank  v.  Dillon,  30  Vt.  122.  73  Am.  Dec.  295.  Davis  v.  Statts,  43  Ind. 
103,  13  Am.  Rep.  382.    Stillwell  v.  Bertrand,  22  Ark.  375. 

Exceptions  sustained.^ 


ROBBINS  et  al.  v.  ROBINSON  et  al. 
(Snprenie  Court  of  Pennsylvania,  1S9G.    176  Pa.  341,  35  Atl.  337.) 

Assumpsit  for  goods  sold  to  the  Philadelphia  Optical  &  Watch  Com- 
pany, Limited,  upon  written  guaranty,  before  Sulzberger,  J. 

The  plaintiff  offered  in  evidence  the  following  agreement: 

"We  hereby  agree  to  extend  the  Philadelphia  Optical  &  Watch  Com- 
pany, Limited,  a  line  of  credit  not  to  exceed  forty  thousand  dollars 
($40,000.00),  upon  condition  that  Jos.  W.  Robinson  and  A.  H.  Williams 
&  Sons  go  their  security  for  that  amount. 

"We  do  further  agree  that  said  forty  thousand  dollars  ($40,000.00) 
line  of  credit  shall  extend  over  a  period  of  four  (4)  years,  with  the  un- 
derstanding that  it  be  reduced  at  the  rate  of  ten  thousand  dollars  ($10,- 
000.00)  each  year,  paid  in  quarterly  payments  of  two  thousand  five  hun- 

2  ^^^  many  (decisions  it  does  not  appear  whether  or  not  the  surety  was  aware 
of  the  disability,  yet  he  is  held  liable.  See  Ames'  Cases  on  Suretyship,  p.  110, 
note  3. 

Tli£_ilQ£trine  is  in  accord  with  the  Roman  and  civil  law.  In  the  Roman  law 
the  contract  of  suretyship  was  called  "fidejussib."  "It  is  immaterial  even 
whether  the  principal  obligation  be  civil  or  natural,  so  that  a  man  may  go 
surety  for  the  obligation  of  a  slave  either  to  a  stranger  or  to  his  master." 
Inst.  bk.  Ill,  tit.  XX. 

Code  Civil,  art.  2012:  "Le  cautionnemeut  ne  pent  exister  que  sur  une  obli- 
gation valable. — On  pent  neanmoins  cautiouner  une  obligation,  encore  qu'elle 
pent  etre  annul§e  par  une  exception  purement  personelle  a  I'obligS ;  par  ex- 
ample, dans  le  cas  de  minorite." 

Article  203G:  "La  caution  pent  opposer  au  creancier  toutes  les  exceptions 
qui  appartieunent  au  debiteur  principal,  et  qui  sont  iuherentes  a  la  dette; — 
mais  elle  ne  pent  opposer  les  exceptions  qui  sont  purement  personnelles  au 
debiteur." 

In  lhfi_lQllavi:ing  cases  the  surety  seems  to  have  been  aware  of  the  incapac- 
ity of  the  principal  and  hence  a  fortiori  the  defense  was  rejected:  Wiggins' 
Appeal  100  Pa.  155  (1SS2) ;  Yale  v.  Wheelock,  109  Mass.  502  (1S72) ;  Winn  v. 
Sanford,  14.t  Mass.  302,  14  N.  E.  119,  1  Am.  St.  Rep.  461  (1887) ;  St.  Albans. 
Bank  v.  Dillon,  30  Vt.  122,  73  Am.  Dec.  295  (1857). 


G-4  FORMATION.  (Part  1 

dred  dollars  ($2,500.00)  every  three  (3)  months.    Distribute  $2,500  on 
notes  as  they  fall  due. 

"We  further  agree  to  accept  a  note,  or  notes,  of  the  said  Philadelphia 
Optical  &  Watch  Company,  Limited,  in  payment  of  our  statement  ren- 
dered about  the  first  of  each  month  for  all  goods  bought  during  the  pre- 
ceding month,  granting  the  usual  five  per  cent,  thirty  days'  discount 
from  statement  rendered  in  consideration  of  the  fact  that  our  notes 
bear  legal  interest  (six  per  cent.). 

"We  further  agree  to  renew  and  extend  any,  or  all,  notes  that  may 
fall  due  provided  the  money  owed  us  by  The  Philadelphia  Optical  & 
Watch  Company,  Limited,  does  not  amount  to  more  than  the  forty 
thousand  dollars  ($40,000.00)  above  mentioned,  or  the  amount  it  may 
have  been  reduced  to  in  the  meantime  according  to  contract. 

"We  accede  to  above  in  consideration  of  the  subjoined  guaranty  and 
payment  for  first  bill  of  $20,000,  one  half  cash;  all  future  purchases  ex- 
ceeding the  credit  to  be  paid  for  in  cash. 

"Robbins  &  Appleton, 

"Dated  September  24,  1800.  By  F.  R.  A. 

"Having  carefully  read  above  contract,  we  guarantee  to  protect  any 
bill  the  Philadelphia  Optical  &  Watch  Company,  Limited,  may  buy  of 
Robbins  &  Appleton  to  an  amount  not  exceeding  forty  thousand  dollars 
($40,000.00),  provided  said  liability  of  the  Philadelphia  Optical  & 
Watch  Company,  Limited,  be  reduced  at  the  rate  of  ten  thousand  dol- 
lars ($10,000.00)  a  year,  so  that  for  one  year  from  signing  of  articles 
we  are  liable  to  said  Robbins  &  Appleton,  for  goods  purchased  by  the 
Philadelphia  Optical  &  Watch  Company,  Limited,  to  the  extent  of  forty 
thousand  dollars  ($40,000.00).  After  the  first  year  shall  have  elapsed 
and  from  then  on  until  the  second  year  shall  have  elapsed,  we  are  lia- 
ble only  for  thirty  thousand  dollars  ($30,000.00)  ;  after  the  second  year 
shall  have  elapsed  and  until  the  end  of  the  third  year,  we  are  liable  only 
for  twenty  thousand  dollars  ($20,000.00) ;  and  after  the  third  year  on 
until  the  fourth  year  shall  have  elapsed,  we  stand  liable  only  for  ten 
thousand  dollars  ($10,000.00),  after  which  time  we  will  not  agree  at 
present  to  hold  ourselves  responsible. 

"Jos.  W.  Robinson, 

"Arthur  H.  Williams  &  Sons." 

The  other  facts  sufficiently  appear  in  the  opinion  of  the  Supreme 
Court. 

The  court  entered  a  compulsory  nonsuit^ 

Mr.  Justice  Mitchell.  *  *  *  There  remains  one  question 
which  is  not  without  difficulty.  The  Watch  Company,  Limited,  was 
formed  under  the  act  of  June  2,  1874  (P.  L-  271),  tlie  amendment-of 

3  The  opinion  of  the  lower  court  and  the  arguments  of  counsel  are  omitted, 
as  also  the  portion  of  the  opinion  of  Mitchell,  .1..  which  deals  with  the  ques- 
tion whether  the  contract  related  only  to  the  jrivlng  of  a  note  for  the  bill,  or 
whether  the  words  "protect  any  bill"  meant  that  the  defendant  would  see  that 
the  bill  was  paid — the  latter  being  the  court's  construction  of  the  contract. 


Ch.  3)        GENERAL   ESSENTIALS  TO   CONTRACTS   OF   SURETYSHIP.  65 

May  10,.  1889  (P.  L.  183),  to  which  provides  that  no  hability  S^^^^^^^Xf^^C^' 
than  $500  shall  bind  the  association  unless  reduced  to  writings  and  ^^^LjJ^^^" 
signed  by  at  least  two  managers.    Whether  the  orders  for  goods  which  '^ 

created  the  debt  in  the  present  case  were  signed  by  two  managers  or 
not  does  not  appear  in  the  evidence ;  but  it  is  argued  for  the  appellees 
that,  the  notes  not  having  been  shown  to  have  been  so  signed,  there  was 
no  legal  liability  of  the  Watch  Company  proved,  and  therefore  no  such 
liability  on  the  part  of  the  sureties.  Very  important  questions  might 
arise  in  view  of  the  purpose  of  that  requirement  of  the  statute  being 
for  the  protection  of  the  members  of  the  limited  partnership  whether 
it  could  be  treated  as  mandatory  if  all  the  managers  did  in  fact  author- 
ize the  debt,  though  not  in  writing,  and  further  whether  any  one  but 
the  association  itself  could  raise  the  objection,  which  it  has  not  done  in 
the  present  case.  But  it  is  not  necessary  to  decide  either  of  these  ques- 
tions, as  even  conceding  them  to  the  appellees  the  latter  would  not  nec- 
essarily be  relieved  of  liability.  y^  i)  i,  l.t>4^ 

As  already  said,  the  guaranty  of  the  defendants  was  not  of  the  notes, 
but  of  "any  bill  the  Watch  Company  may  buy,"  and  its  fair  meaning 
is  that  if  the  Watch  Company  should  not  pay  the  guarantors  would. 
The  plaintiffs  showed  that  the  Watch  Company  did  buy,  did  receive 
the  goods,  and  had  not  paid.  This  made  out  a  prima  facie  case  of 
breach  of  the  warranty,  and  called  upon  the  guarantors  to  show  a  de- 
fense if  any  they  had.  It_wasjnot  essential  that  the  debtor  should  be 
legally  bound.  If  the  proposed  sale  had  been  to  an  infant,  or  a  married 
woman  prior  to  the  recent  enabling  acts,  and,  on  a  guaranty  of  any  bill 
which  either  might  buy,  the  vendors  had  parted  with  their  goods,  the 
liability  of  the  guarantors  would  be  clear,  though  there  was  no  legal 
liability  of  the  principal  debtor.  It  is  a  question  of  the  intention  of  the  ? 
parties,  and  the  language  of  the  present  guaranty,  "to  protect  any  bill 
the  Watch  Company  may  buy,"  is  broad  enough  to  cover  any  failure 
of  the  Watch  Company  to  pay,  no  matter  what  the  reason,  unless  it 
went  to  the  merits  of  the  plaintiffs'  claim. 

Judgment  reversed,  and  procedendo  awarded.* 

*  Similarly  the  lack  of  power  to  execute  an  instrument  by  one  assuming 
to  be  an  agent  has  been  regarded  as  no  defense:  "Ferguson  being  without 
authority  to  execute  the  bond  on  behalf  of  Mrs.  Foster,  the  question  then  arises 
as  to  the  effect  of  that  want  of  authority  on  the  liability  of  McManus.  *  *  * 
Here  it  must  be  held  that  as  a  matter  of  law  both  McManus  and  Brown  were 
bound  to  know  that  the  signature  of  Mrs.  Foster's  name  by  Ferguson  was 
unauthorized.  *  *  *  We  think  McManus  must  be  held  to  have  executed 
the  obligation  voluntarily  and  absolutely,  and  that  the  want  of  execution  by 
Mrs.  Foster  is  in  itself  no  defense  for  McManus."  Luce  v,  Foster,  42  Neb. 
818,  830,  60  N.  W.  1027  (1894). 

See,  however,  Ferry  v.  Burchard,  21  Conn.  597  (1852),  where  the  surety  on  a 
void  recognizance,  taken  by  a  justice  of  the  peace,  who  ordered  a  recognizance 
different  from  that  prescribed  by  statute,  was  not  liable. 

Hen. Sue. — 5 


66  FORMATION.  (Part  1 

DUTT  V.  ADMINISTRATOR-GENERAL  OF  BENGAL. 

(I'rivy  Council  on  Appeal  from  the  Eust  Indies,  190S.    L.  R.  35  Indian  App. 

Cas.  109.) 

On  appeal  from  the  High  Court  in  Beng-al.' 

The  judgment  of  their  Lordships  was  deHvered  by 

Lord  Macuaghten.    This  is  an  appeal  from  the  High  Court  of  Ju- 
dicature at  Ft.  William  in  Bengal. 

The  appellant,  Debendra  Nath  Dutt,  was  one  of  two  sureties  in  a 
bond  conditioned  for  the  due  administration  by  Ernest  HardwickeT^ow- 
ie,  a  solicitor  in  Calcutta,  of  the  estate  of  a  retired  Indian  civil  servant 
named  Craster.  Mr.  Craster  died  in  England  in  August,  1808,  leaving 
a  will  which  was  duly  proved  here  in  the  following  month  of  October. 
Part  of  the  deceased's  estate  consisted  of  shares  in  the  Bank  of  Bengal 
and  other  Indian  assets.  The  Indian  assets  escaped  the  notice  of  the 
executors  and  remained  unclaimed  and  outstanding.  On  lulv  29,  1902. 
Cowie,  who  is  stated  in  the  printed  cases  to  have  been  one  of  the  solici- 
tors  to  the  government,  and  who  certainly  was  then  in  good  credit,  ob- 
tained an  order  for  the  grant  of  letters  of  administration  to  himself  as 
attorney  for  a  fictitious  person,  represented  by  him  to  be  the  only  son 
and  sole  next  of  kin  of  the  deceased,  who  had,  as  he  pretended,  died  in- 
testate. The  letters  of  administration  were  issued  on  August  15,  1902. 
on  the  production  of  a  bond  in  the  usual  form,  executed  by  Cowfe  and 
the  two  sureties,  who  received  a  small  payment  for  their  services,  T>ut 
were  not  themselves  parties  to  the  fraud  or  cognizant  of  it.  By  these 
means  Cowie  obtained  possession  of  the  bank  shares,  sold  them  in  the 
market,  and  converted  the  proceeds  to  his  own  use.  The  fraud  was  not 
discovered  till  the  end  of  1903  or  the  beginning  of  1904.  Cowie  then 
absconded.  He  was  apprehended,  tried,  and  convicted.  The^rant  of 
administration  in  his  favor  was  canceled,  and  in  May,  1904,  letters  of 
acTministration  with  a  copy  of  the  will  annexed  were  granjed  to  the  Ad^ 
mlnistrator-General  of  Bengal.  The  bond  of  August  15,  1902,  was 
then  assigned  to  the  Administrator-General,  and  he  brought  this  suit 
against  Cowie  and  Cowie's  sureties.  Cowie  made  no  defense.  The  suit 
was  heard  by  Sale,  J.  That  learned  judge  pronounced. a_ii£;cr£e  in  fa- 
vor of  the  Administrator-General,  the  result  of  which,  so  far  as  re- 
gards the  sureties,  was  that  they  were  ordered  to  pay  to  the  adminis- 
trator a  sum  equal  to  the  amount  of  the  proceeds  of  the  bank  shares 
misappropriated  by  Cowie,  together  with  interest  and  costs.  Both  the 
sureties  appealed  to  the  High  Court.  But  that  court  in  its  appellate 
jurisdiction  by  a  majority  affirmed  the  order  of  Sale,  J.,  and  dismissed 
the  appeal,  with  costs. 
r-  The  case  of  the  appellant,  Dutt,  who  alone  has  appealed  to  hij^Ia- 
jesty,  as  presented  to  this  board,  was  that  the  letters  of  administration 
granted  to  Cowie  having  been  annulled  by  the  court  on  the  ground  of 

»  The  statement  of  facts  and  the  arguments  of  counsel  are  omitted. 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  67 

fraud,  must  be  regarded  as  a  mere  nullity  froju^the  beginning  ;_that 
Cowie,  therefore,  never  was  administrator"^  and  that  the  bond,  so  far 
as  the  sureties  were  concerned,  was  void  and  of  no  effect,  for  the  sure- 
tie's  undertook  to  be  responsible  for  a  real  administrator,  not  for  a  per- 
son assuming  to  act  in  a  capacity  which  he  never  possessed  and  which 
the  court  could  not  have  conferred  upon  him.  The  case  was  argued 
very  ably  by  the  learned  counsel  for  the  appellant,  who  said  everything 
that  could  be  said  on  his  behalf.  But  there  is  really,  no  substance  in  the 
appellant's  contention.  So  long  as  the  letters  of  administration  granted 
to  Cowie  remained  unrevolcecl,  Cowie,  although  a  rogue  and  an  impost- 
er,  was  to  all  intents  and  purposes  administrator.  He,  and  he  alone, 
represented  the  deceased  in  India.  His  receipts  were  valid  discharges 
for  all  moneys  received  by  him  as  administrator.  As  administrator  he 
collected  the  assets  belonging  to  the  deceased  in  India,  and  he  misap2rQr 
priated  the  assets  which  he  so  collected.  For  his  acts  and  defaults  as 
administrator  the  appellant  and  his  cosurety  became  and  must  remain 
responsible. 

"Their  Lordships  are  therefore  of  opinion  that  Maclean,  C.  J.,  and  the 
learned  judges  who  concurred  with  him,  were  perfectly  right,  and  they 
will  humbly  advise  his  Majesty  that  the  appeal  must  be  dismissed. 

The  appellant  will  pay  the  costs  of  thVappeal.'®^ 


SECTION  2.— THE  EFFECT  OF  FRAUD 


MARCHMAN  v.  ROBERTSON,  TAYLOR  &  CO. 
(Supreme  Court  of  Georgia,  1S8G.     77  Ga.  40.) 

Before  Judge  Carswell,  in  Jefferson  Superior  Court,  November 
Term,  1885. 

Blandford,  Justice.  The  dg fgndantg.  in  error  sought  to  foreclose  a 
mortgage  on  the  lands  of  plaintiff  in  error.  She_  appeared  and  answerecl^ 
the  rule  nisi,  and  in  her  answer  alleged  that  she  was  only  a  security  on 
the  note  which  the  mortgage  w^as  given  to  secure,  for  one  Cook,  who 
was  principal  in  the  note,  and  that  she  was  induced  to  sign  said  note 
by  reason  of  the  false  and  frauHuTent  representations  of  the  ^efend- 
afrfrlTT  error,  by  their  accredited  agent,  that  they  would  furnish  Cook 

^J  E\'en^\vh_ere_  there  is  ao  jurisdiction  wliatei'er  in  tlie  court  acpointing  the 
principal,  his  surety  has  been  held  liable,  on  the  doctrine  of  estoppel  by  deed. 
See  Hoffman  v.  Fleming.  GO  Ohio  St.  143.  64  N.  E.  63  (1902),  wherein  many 
American  authorities  in  accord  are  collected. 

Contra:     Thomas  v.  Burrus,  23  Miss.  550.  55  Am.  Dec.  154  (1852). 

The  doctrine  of  estoppel  by  deed  was  applied  to  a  recital  of  the  existence 
of  a  corporation  in  Allen  v.  Hopkins,  62  Kan.  175,  61  Pac.  754  (1900). 


68  FORMATicx.  (Part  1 

^tith_a_certain  fertilizer  to  sell  in  certain  territory  covered  by  certain 
railroads  in  this  state ;  that^ook  had  placed  two  hundred  and  fifty  tons 
of  this  fertilizer,  but  that  the  mortgagees  had  failed  and  refused  to 
furnish  Cook  with  the  saQie,  which,  if  tliey  had  done,  he  would  haye 
been  enabled  to  have  paid  the  note  and  saved  her  harmless.  Upon  de- 
murrer, the  court  struck  this  answer,  and  the  plaintiff  in  error  ex- 
'^  cegied  to  this  ruling,  and  the  same  is  assigned  here  as  error. 
^  j^\  Was  the  conduct  of  the  defendants  in  error,  as  set  forth  in  the  an- 
swer,  calculated  to  injure  the  surety  or  increase  her  risk,  or  does  it 
expose  her  to  greater  liability?  If  so,  it  will  discharge  her  as  such 
surety.    Code,  §  2154. 

If  the  allegations  contained  in  the  answer  are  true,  and  they  are  to 
be  taken  as  true  by  t)ie  demurrer,  the  failure  of  the  payees  in  thejiote 
to  furnish  Cook  with  fertilizers  deprived  him  of  the  means  whereby 
he  could  have  paid  the  note.  This  exposed  Mrs.  Alarchman  to  greater 
liability,  and  increased  her  risk,  and,  under  the  Code,  she  .was  thereby 
discharged  as  surety.  This  is  not  an  attempt  to  add  to,  contradict,  'or 
vary  a  written  contract,  but  merely  to  show  acts  and  conduct  on  the 
part  of  the  payees  which  increased  the  risk  of  the  surety,  and  which 
exposed  her  to  greater  liability,  or  to  show  fraud,  by  which  she  was 
induced  to  become  surety. 
y  If^e  w:as  induced  to  become  surety  for  Cook  by  the  false  and 
fraudulent  representations  (as  she  alleges)  of  the  defendants  in  error, 
then  this  was  a  fraud  upon  her,  and  makes  void  her  contract  of  surety- 
ship, for  fraud  vitiates  all  contracts.  In  any  view  which  we  can  take  of 
the  answer,  we  think  the  court  erred  in  sustaining  the  demurrer  there- 
to and  striking  the  same. 

Judgment  reversed. 


STONE  et  al.  v.  COMPTON. 
(Court  of  Common  Pleas,  1838.    5  Bing.  N.  C.  142.) 
TiNDAL,  C.  J.''     The  main  question  in  this  case,  and  which  arises 
^^  upon  the  first  plea  to  the  count  upon  the  promissory  note,  is  this : 

Whether  the  promissory  note  was  obtained  from  the  defendant  under 
circumstances  which  are  deemed  in  law  to  amount  to  covin  (for  there 
i^jio  suggestion  whatever  of  any  intentional  fraud  or  misrepresehfaTion 
on  the  part  of  the  plaintiffs  personally),  so  as  thereby  to  avoid  the 
validity  of  the  security  in  the  hands  of  the  plaintiff's. 

The  promissory  note  having  been  given  by  the  defendant  as  a  se- 
curity for  the  debt  of  Messrs.  Coxe  and  Chambers,  and  the  note  still 
remaining  in  the  hands  of  the  plaintiffs,  the  original  payees,  the  con- 
sideration upon  which  it  was  given  to  them,  and  the  several  circum- 
stances under  which  the  defendant  was  induced  to  enter  into  it,  are 

T  The  facts  appearing  sufficiently  clear  to  the  opinion,  the  statement  of  facts 
contained  In  the  "special  case"  has  been  omitted,  and  also  the  arguments  of 
counsel. 


Ch.  3)        GENERAL   ESSENTIALS  TO   CONTRACTS   OF   SURETYSHIP.  69 

ye-  /       ^- 

the  subject  of  inquiry  and  investigation  in  the  present  action.  And'  ^f  T 
with  respect  to  the  nature  of  such  inquiry,  and  its  bearing  and  effect  on  "'  ^^^"'^  -W^ 
the  vahdity  of  the  instrument,  we  cannot  see  any  sound  legal  distinc- 
tion^arising  from  the  form  of  the~security  itself  ;tTiat  is,  whether  such 
security  is  taken  in  the  form  of  a  promissory  note,  or  as  an  ordinary 
guaranty  for  the  payment  of  the  debt  of  a  third  person.  For  the 
liability  of  the  maker  of  the  note,  and  of  the  guarantor,  depends  pre- 
cisely on  the  same  event,  namely,  the  default  of  the  principal  debtor 
to  make  good  his  payment,  and  the  extent  of  the  surety's  liability  is  pre- 
cisely the  same  on  either  instrument;  so  that  there  seems  no  reason, 
and  no  authority  has  been  cited  to  the  effect,  that  the  validity  of  the 
two  instruments  should  not  stand  upon  precisely  the  same  footing,  so 
far  as  depends  on  the  circumstances  under  which  the  same  were  given,  y  t^      ,,    ,    , 

Now  the  principle  to  be  drawn  from  the  cases  to  which  reference  A     "'  'Jj 

has  been  made  in  the  course  of  argument  we  take  to  be  this :  That  jf, 
with  the  knowledge  or  assent  of  the  creditor,  any  material  part  of  the 
transaction  between  the  creditor  and  his  debtor  is  misrepresented  to 
the^surety,  the  misrepresentation  being  such  that,  but  for  the  same 
having  taken  place,  either  the  suretyship  would  not  have  been  entered 
into  at  all,  or,  being  entered  into,  the  extent  of  the  surety's  liability 
might  be  thereby  increased,  the  security  so  given  is  void  at  law,  on  the 
ground  of  fraud.  )<  fcJt»  '^-r' 

The  question  therefore  becomes  this:  Whether,  upon  the  facts 
stated  in  the  special  case,  there  appears  to  have  been  any  such  misrepre- 
sentation on  the  part  of  the  plaintiffs  ? 

It  is  perfectly  true,  as  urged  by  the  counsel  for  the  plaintiffs,  that 
the  agreement^betH^enJJae  plaintiffs  and  Coxe  and -Chambers,  under 
which  the  former  were  to  be  allowed  to  deduct  out  of  the  advance  of 
the  £2,600.  the  old  debt  of  £S00.,  due  from  Coxe  on  his  separate  ac- 
count, was  entered  into  before  any  application  had  been  made  to  the 
defendant  to  become  surety,  and  also  that  Coxe  and  Chambers  never 
communicated  to  the  defendant  until  long  after  the  transaction  that 
any  such  arrangement  had  been  made,  or  indeed  any  other  than  that 
the  plaintiffs  were  simply  to  lend  them  £2,600. ;  and  if  the  matter  had 
rested  here,  no  objection,  either  on  the  ground  of  suppression  or  mis- 
representation, could  have  been  urged  against  the  validity  of  the  note. 
The  plaintiffs  were  not  to  be  made  responsible  for  the  communica- 
tion, or  want  of  communication,  between  their  debtor  and  the  surety, 
unless  they  are  shown  to  be  agreeing  to  it;  and  for  anything  which 
appears,  as  to  this  part  of  the  transaction,  they  were  ignorant  that  a 
correct  statement  had  not  been  made  to  the  defendant.  But  it  appears 
from  the  special  case  that,  atjhe^Jtime_of _signing  the  note,  the  principal 
debtors,  Coxe  and  Chambers,  and  the  defendant  were  at  the'ofHce  of 
the^plamtWs'  attorney,  where  the  deed  of  the  25th  of  November 
was  read  over  in  their  presence ;  the  case  stating  expressly  "that  be- 
fofe^the  defendant  signed  the  promissory  note,  the  recitals  of  the  deed 
were  read  over  to  him,"  and  that  upon  the  same  occasion,  and  before 


70  FORMATION.  (Part  1 

the  note  was  sig^ned  by  the  defendant,  the  memorandum  was  indorsed 
upon  the  note,  stating  that  the  sum  mentioned  in  it  was  the  same  sum  as 
that  mentioned  in  the  deed. 

Now  we  think  the  construction,  and  the  only  construction,  which  can 
be  put  upon  the  recitals  in  the  deed,  is  that  tlie  former  debt  of  f&OO., 
due  to  the  plaintiflfs  from  Coxe  on  his  separate  account,  and  the  re- 
payment of  wliich  was  secured  by  Coxe's  pohcy  for  £1,500.,  had  been, 
at  that  time,  paid  by  Coxe  to  the  plaintiffs,  and  that  the  sum  agreed 
to  be  advanced  by  the  plaintiflfs  to  Coxe  and  Chambers~up6n  a  new  loaYr-^ 
was  the  full  and  entire  sum  of  £2.000.  We  cannot  consider  these  re- 
citals in  any  other  light  than  as  a  direct  representation  made  to  the  de- 
fendant before  the  note  was  signed,  not  indeed  personally  by  them- 
selves, but  by  the  agents  of  the  plaintiflfs  employed  in  carrying  the 
negotiation  for  the  loan  into  effect,  and  consequently  by  whose  acts 
the  plaintiflfs  are  bound,  and  that  this  representation  was  untrue  in  a 
material  respect,  namely,  that  the  private  debt  of  Coxe  had  not  been 
paid  at  the  time  of  the  execution  of  the  deed,  and  that  the  entire  sum 
of  £2,600.  was,  by  the  private  stipulation  between  the  parties,  not  to  be 
advanced  to,  or  placed  to  the  credit  of,  Coxe  and  Chambers,  but  only 
the  sum  of  £2,600.  minus  the  amount  of  the  debt  due  from  Coxe  to  the 
plaintiflfs. 

And  we  think  ourselves  bound,  upon  every  legal  principle  of  reason- 
ing, to  assume  that,  as  the  defendant  was  present  when  the  recitals  of 
the  deed  were  read  over  to  him,  he  must  have  signed  the  note  with  a 
full  knowledge  and  understanding  of  the  facts  therein  stated,  and 
in  the  faith  and  confidence  that  the  statement  was  true._The  recitals 
were  read  over  to  him  for  the  purpose  of  making  him  acquainted  with 
the  state  of  the  account  between  Coxe  and  Chambers  and  the  plajntifFs, 
an^d'with  the  collateral  securities  given  by  Coxe  and  ChamberSjjvhich 
he,  the  surety,  might,  if  it  became  necessary,  call  to  his  aid  and  indem- 
nity; and  his  attention  must  have  been  called  to  the  recitals  in  the 
deed  by  the  circumstance  of  the  memorandum  indorsed  on  the  note, 
which  could  be  placed  there  for  no  other  purpose  than  to  connect  the 
note  with  the  transaction  stated  in  the  deed. 
'  Then,  as  it  appears  to  us  that  the  representation  as  tojhe  rcpaynient 
of  the  debt  due  from  Coxe,  and  the  amount  of  the  new  loan  to  Coxe 
arid  Chambers,  was  untrue,  and  that  such  misrepresentation  related  to 
a 'fact  material  to  the  surety's  interest,  we  think  the  promissoryTrdte 
is  thereby  void.  And  such  being  our  opinion  on  this  point,  it  becomes 
unnecessary  to  discuss  the  second  objection  which  has  been  urged,  as 
to  the  misrepresentation  in  the  recitals  of  the  deed,  of  the  then  existing 
state  and  value  of  Coxe's  policy,  on  which  point,  however,  if  it  had  been 
necessary,  we  should  have  been  ready  to  declare  our  opinion. 

We  think,  therefore,  a  nonsuit  should  be  entered. 

Judgment  of  nonsuit.® 

8  Accord:   Pidcock  v.  Bishop.  3  L.  J.  Rep.  (K.  B.)  109  (1825);  Jackson  v.  Du- 
chaireTS  T.  R.  551  (1790) ;    Stiff  v.  Local  Board  of  Eastbourne,  19  Law  Times 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  71 

REMINGTON  SEWING  MACH.  CO.  v.  KEZERTEE  et  al. 
(Supreme  Court  of  Wisconsin,  1S80.    49  Wis.  409,  5  N.  W.  809.) 

Appeal  from  the  Circuit  Court  of  Winnebago  County.  J  cr»^P 

Lyon,  T.*  The  Jaw-i3L_that  if  a  person  who  contemplates,  becoming  ,  "  ^J  7  .  \^ 
surety  to  another  for  the  payment  of  money  or  the  performance  of  any  _a  ,  ;• 
act  by  a  third  person  applies  to  the^  creditor  or  person  to  whom  the  ^"^^pT^^'"^'^-^^  '^■ 
security  is  to  be  given  for  information  as  to  the  nature,  extent  and  risk 
of  t^e  obligation,  or  the  circumstances,  condition  or  character  of  such 
third  person,  the  creditor,  if  he  undertakes  to  give  the  information,  is 
bound  to  disclose  every  material  fact  within  his  knowledge  affecting  the 
proposed  liability.  If  the  creditor  conceal  any  fact  unknown  to  the 
proposed  surety,  which,  had  he  known  it,  would  have  deterred  him  from 
becoming  surety  (the  latter  not  having  the  present  means  of  ascer- 
taining the  fact,  or,  having  such  means,  if  artifice  be  used  to  mislead 
him  or  throw  him  off  his  guard),  it  is  a  fraud  upon  liim,  and  relieves 
him  from  his  obligation.  Especially  is  this  so  where  the  obligation  of 
suretyship  is  entered  into  at  the  request  of  the  person  to  whom  the  secu- 
rity is  given.  In  such  a  case  perfect  good  faith  is  required  of  him  who 
is  to  be  benefited  by  the  transaction,  if  he  assumes  to  give  the  informa- 
tion; and  if  that  obligation  is  not  observed  by  him  (the  surety  not  hav- 
ing other  present  means  of  information),  the  creditor  cannot  success- 
fully invoke  the  protection  of  the  maxim  "caveat  emptor"  to  shield  him 
from  the  consequences  of  his  fraud. 

If  authority  is  required  for  a  proposition  so  obviously  reasonable 
and  just,  the  cases  which  support  it  (some  of  them  in  this  court)  will 
be  found  cited  in  the  briefs  of  the  respective  counsel  for  the  defendants.  \^  ^,--  o      'j^ 
The  person  to  whom  the  security  is  proposed  to  be  given  may  refuse  to/^      .        'r. 
give  anyinf  orm'ation,  and,  if  he  so  refuses,  the  maxim  "caveat  emptor"      '.jjljj^f'^ 
applies.     The  surety  then  incurs  the  liability  at  his  own  risk.     The      ^ 
charge  of  the  learned  circuit  judge  does  not,  in  express  terms,  con- 
tain this  qualification ;   but  on  the  facts  of  the  case  the  omission  is  im- 
material, for  the  reason  that  the  uncontradicted  evidence  shows  that 
the  defendants  went  to  the  office  of  Barr  &  Konrad  for  the  express 
purpose  of  obtaining  information  from  the  agent  of  the  company  of 
their  financial  condition,  and  under  the  charge  the  jury  must  have 

(N.  S.)  408  (1868),  concealment  M,Ja£LJ:Mt-auatlier-_sui'^fiXor^wouId  act^  in 
connection  with  one  named  in  the  agreement.;  same  case  affirmed  on  ai)poiil, 
20T:awTnmeS-(N7-S:)-33g"aSG!5r;  Mrst  Nat.  Banlv  v.  Terry  (C.  C.)  IS-'j  Fed. 
621  (lOO.J) ;  Oweii  &  Gutch  v.  Homan,  4  H.  of  L.  Cases,  997,  10  Eng.  Rep.  Re- 
print, 752  (1853) ;  Ham  v.  Greve,  34  Ind.  18  (1870). 

"Tlje  mere  circumstance  of  the  parties  supposing  that  the  money  was  in- 
tended to  be  applied  to  a  particular  purpose  and  the  fact  that  it  was  intended 
to  be  so  applied  do  not  appear  to  me  to  vitiate  the  transaction  at  all.  If  there 
was  a  stipulation  that  it  was  to  be  so  applied,  and  these  were  the  conditions 
upon  which  the  money  was  advanced,  it  might  have  affected  the  transaction." 
iaamilton  v.  Watson,  12  CI.  &  Fin.  118  (184.j). 

9  Only  the  opinion  of  the  court  hag  been  printed. 


72  FORMATION.  (Part  1 

found  that  the  agent  assumed  to  give  them  such  information.  In  all 
other  respects  the  charge  seems  to  be  in  strict  accord  with  the  piinciples 
above  stated,  as  also  are  the  refusals  to  give  certain  instructions  pro- 

V  posed  on  behalf  of  the  plaintiflf. 

'  It  was  claimed  in  argument  that  the  testimony  tended  to  show  that 
the  books  of  Barr  &  Konrad  showed  that  they  had  indorsed  or 
guaranteed  the  notes  of  the  company  theretofore  taken  by  them  for 
machines,  and  hence  that  the  defendants  had  the  present  means  of 
knowing  the  fact.  That  question  was  submitted  to  the  jury,  and  there 
is  sufficient  evidence  to  warrant  a  finding  that  the  books  did  not  show 
such  liability.  The  defendants  both  testified  that  had  they  known  of 
that  liability  they  would  not  have  signed  the  guaranty.  This  was  com- 
petent testimony  to  go  to  the  jury.  Assuming  the  defendants  to  be  men 
of  ordinary  caution  and  prudence,  it  is  easy  to  believe  that  they  testified 
truly.  Upon  the  whole  case  we  are  impelled  to  the  conclusion  that  the 
judgment  should  not  be  disturbed. 

By  The  Court.    Judgment  affirmed.^** 

tyto/iif^  fL  10  Fraud  may  consist  of  concealment  of  material  facts  from  the  prospective 

.  .f  fv-  surety  by  the  prospective  creditor;  but  such  facts  are  practically  limited -to 
^"]  ^j-^'-y^'^  t\e  priiicipal's  dishonesty.  Smith  v.  Bank  of  Scotland,  1  Dow.  272  (1813) ;  Rail- 
^-^  .    r    '  ton  V.  Mathews.  10  CI.  &  Fin.  934  (1844):  United  States  Life  Ins.  Co.  v.  Sal- 

mon. 91  Hun.  535.  36  N.  Y.  Supp.  830  (1895) ;  Belleview.  etc..  Ass'n  v.  Jeckel. 
104  Ky.  159,  46  S.  W.  482  (1898) ;  Wilson  v.  Town  of  Monticello,  85  Ind.  10 
(1SS2) ;  Guardian,  etc.,  Co.  v.  Thompson,  68  Cal.  208,  9  Pac.  1  (1885) ;  Franklin 
Bank  v.  Cooper,  36  Me.  179  (1853). 

As  to  many  facts  which  might  influence  the  surety,  there  is  no  duty  ol^dis- 
closure — ^.  s.,  insolvency  of  principal,  Bank  of  Monroe  v.  Anderson  Bros..  05 
Iowa.  092,  22  N7W.  929  (1SS5) ;  Ham  v.  Greve,  34  Ind.  IS  (1870).  North  Brit. 
Ins.  Co.  V.  Lloyd.  10  Exch.  523 :  or  a  prior  indebtedness  of  the  principal  to  the 
creditor.  Hamilton  v.  Watson,  12  CI.  &  Fin,  102  (1845) ;  Palatine  Ins.  Co.  v. 
Crittenden.  IS  Mont.  413,  45  Pac.  555  (1890) ;  Farmers',  etc..  Bank  v.  Braden, 
145  Pa.  473,  22  Atl.  1045  (1891) ;  or  that  the  principal  engaged  in  gambling  un- 
connected with  hi3  employment.  Atlas  Bank  v.  Brownell.  9  R.  I.  168.  lT~Am. 
Rep.  231  (1809) — unless  asked  in  regard  to  such  facts ;  but.  if  asked  by  the 
surety,  the  creditor  should  fully  disclose  his  knowledge  upon  everything  in- 
quired about  likely  to  influence  the  prospective  surety's  action.  Remington 
Sewing  Machine  Co.  v.  Kezertee,  49  Wis.  409;  5  N.  W.  809  (1880),  supra. 

A  duty  to  speak  may  also  exist  where  the  prospective  guarantee  has  stated 
a  fact  or  an  intention  as  existing,  and  subsequently  knows  that  such  fact  or 
intention  no  longer  exists.  Davies  v.  London,  etc..  Co..  8  Ch.  Div.  4C9  (1878). 
In  Smith  v.  Josselyn,  40  Ohio  St.  409  (1SS4),  "culpable  carelessness"  of  the 
principal  in  losing  moneys  while  previously  in  the  creditor's  employ  imposed  a 
duty  of  disclosure. 

Tli£_S-Uh.iect  of  fraud  in  its  relation  to  the  contract  of  suretyship  has-been 
clearly  stated  by  Fry,  J.,  in  Davies  v.  London,  etc.,  Co.,  8  Ch.  Div.  409  (1878), 
ar follows:  "Where jiarties  ai-e  contraetii>g  urith  one  another,  each  may.  un- 
les^s  there  be  a  duty  to  disclose,  observe  silence  even  in  regard  to  facts  whjch 
he'believes  would  be  operative  upon  the  mind  of  the  other,  and  it  rests  upon 
thbs6  who  say  that  there  was  a  duty  to  disclose  to  show  that  the  duty  existed. 
Now  undoubtedly  that  duty  does  in  many  cases  exist/ 1) Iil  the  first ^ghice.  if 
there  he  a  pre-existing  relationship  between  the  partiei,  such  as  that  o?  agent 
and  principal,  solicitor  and  client,  guardian  and  ward,  trustee  and  cestui  que 
trust,  then,  if  the  parties  can  contract  at  all,  they  can  only  contract  after 
the  most  ample  disclosure  of  everything  by  the  agent,  by  the  solicitor,  by  the 
guardian,  or  by  the  trustee.  The  pre-existing  relationship  involves  the  duty 
of  entire  disclosure^-?.  In  the  next  place,  there  are  certain  contracts,  which  have 
been  called  'contracts  "uDerrTniie  fidei' -where,  from  their  nature,  the  court  re- 


Ch.  3)       GENERAL  ESSENTIALS  TO   CONTRACTS  OF  SURETYSHIP.  73 

WILMINGTON,  C.  &  A.  R.  CO.  v.  LING  et  al. 
(Supreme  Court  of  South  Carolina,  1882.    18  S.  C.  116.) 

Before  Wallace,  J.,  at  Darlington,  September,  1881. 

An  action  by  the  plaintiffs  against  Joseph  J.  Ling,  Isaiah  L.  Wright, 
James  M.  Hunter,  and  Ira  M.  Harrell,  commenced  August  20,  1878. 
The  opinion  states  the  case. 

The  opinion  of  the  court  was  delivered  by  Mr.  Chief  Justice  Simpson. 

The  plaintiff,  appellant,  a  railroad  corporation  under  the  laws  of 
this  state,  employed  the  defendant,  Joseph  J.  Ling,  to  act  as  their 
agent  at  Timmonsville,  in  the  county  of  Darlington.  Some  four  months 
after  the  said  Ling  had  been  acting  as  such  agent,  to  wit,  on  May  1, 
1870,  he  executed  and  delivered  to  the  plaintiff  a  bond  with  the  other 
parties  named  as  his  sureties,  conditioned  generally  for  the  faithful 
discharge  of  his  duties,  and  especially  that  he  would  well  and  truly 
account  for  and  pay  over  to  the  said  company  all  moneys  that  might 

quires  disclosure  from  one  of  the  contracting  parties.  Of  that  description 
there  are  well-known  instances  to  be  found.  One  is  a  contract  of  partnership, 
which  requires  that  one  of  the  partners  should  disclose  to  the  other  all  ma- 
terial facts.  So  in  the  case  of  marine  insurance,  the  person  who  proposes  to 
insure  a  ship  or  goods  must  make  an  entire  disclosure  of  everything  material 
to  the  contract/^; "Again,  in  ordinary  contracts  the  duty  may  arise  from  cir- 
cumstances which  occur  during  the  negotiation.  Thus,  for  instance,  if  one  of 
the  negotiating  parties  had  made  a  statement  which  is  false  in  fact,  but  which 
he  believes  to  be  true,  and  which  is  material  to  the  contract,  and  during 
the  course  of  the  negotiation  he  discovers  the  falsity  of  that  statement,  he  is 
under  an  obligation  to  correct  his  erroneous  statement,  although,  if  he  had 
said  nothing,  he  very  likely  might  have  been  entitled  to  hold  his  tongue 
throughout U-iSo,  again,  if  a  statement  has  been  made  which  is  true  at  the 
time,  but  whRrtnJrrrttrg  the  course  of  negotiations  becomes  untrue,  then  the 
person  who  knows  that  it  has  become  untrue  is  under  an  obligation  to  disclose 
to  the  other  the  change  of  circumstances^  It  has  been  argued  here  that  the 
contract  between  the  surety  (for  in  fact  Davies~wIIs  a  surety  for  Evans)  and 
tliFTreditOr  is  one  of  those  contracts  which  I  have  spoken  of  as  being  uberri- 
mse  iSdei,  and  it  has  been  said  that  such  a  contract  can  only  be  upheld  in  the 
case  of  there  being  the  fullest  disclosure  by  the  intending  creditor.  I  do  not 
thmk  that  that  proposition  is  sound  in  law.  I  think  that^on  the  contra ry^^Jhat 
coHfract  is  one  in  which  there  is  no  universal  o^ITgalion~Tbinake  disclosure. 
^-^f--*  Very  little  said  which  ought  not  to  have  been  said,  and  very  little 
not  said  which  ought  to  have  been  said,  would  be  sufficient  to  prevent  the 
contract  being  valid." 

In  Hamilton  v.  Watson,  12  CI.  &  Fin.  117  (1845),  Lord  Campbell  said:  "I 
will  venture  to  say,  if  your  Lordships  were  to  adopt  the  principles  laid  down 
and  contended  for  by  the  appellant's  counsel  here,  that  you  would  entirely 
knock  up  those  transactions  in  Scotland  of  giving  security  upon  a  cash  ac- 
count, because  no  bankers  would  rest  satisfied  that  they  had  a  security  for 
the  advance  they  made,  if,  as  it  is  contended,  it  is  essentially  necessary  that 
everything  should  be  disclosed  by  the  creditor  that  is  material  for  the  surety 
to  know.  If  such  was  the  rule,  it  would  be  indispensably  necessary  for  the 
bankers  to  whom  the  security  is  to  be  given  to  state  how  the  account  has  been 
kept,  whether  the  debtor  was  in  the  habit  of  overdrawing,  whether  he  was 
punctual  in  his  dealings,  whether  he  performed  his  promises  in  an  honor- 
able manner;  for  all  these  things  are  extremely  material  for  the  surety  to 
know.  But-uatess^-questions  be  particularly  put  by  the  surety  to  gain  this 
information,  I  hold  that  it  is  quite  imnecessary  for  the  creditor,  to  whom  the 
Bufetyship  is  to  be  given,  to  make  any  such  disclosure ;  and  I  should  think 


74  FORMATION.  (Part  1 

come  into  his  hands,  or  for  which  he  might  be  accountable  by  reason 
of  his  appointment. 

At  the  time  this  bond  was  given  Ling  was  behind  some  $197.40.  The 
testimony  does  not  show  whether  the  sureties  were  aware  of  this  fact, 
or  not,  when  they  executed  the  bond.  Ling  continued  in  office  until 
February  17,  18T3,  when  he  was  dismissed,  at  which  time  he  was  a 
defaulter  to  the  amount  of  $1,737.48,  which  sum  was  afterwards  re- 
duced by  certain  cash  receipts  to  $1,526.57.  The  account  between  Ling 
and  the  company,  introduced  in  evidence,  embracing  his  monthly 
standing,  showed  that  he  was  frequently  behind  from  the  beginning  of 
his  agency.  These  sums  had  been  carried  forward  until  finally,  upon 
his  dismissal,  after  the  credits  above  referred  to  had  been  allowed,  the 
balance  against  him  amounted  to  $1,526.57.  For  this  balance  the  ac- 
tion below  was  brought  on  the  bond  of  indemnity. 

Wright,  one  of  the  sureties,  was  never  made  a  party,  and  Ling  died 
before  the  trial,  so  that  at  the  trial  the  action  stood_against  the  two 
isureties,  Hunter  and  Harrell.  These  defendants  relied  upon  two 
deTenses :  First.  "That  Ling,  before  the  execution  of  the  bond  sued 
on,'having  been  agent  of  the  appellants  at  Timmonsville,  had  committed 
default  by  failing  to  pay  over  moneys  collected,  and  was  indebted,  when 
the  bond  was  executed,  in  a  considerable  sum  by  reason  of  said  default : 
that  the  appellants,  knowing  these  facts,  concealed  the  same  from  the 
defendants  Hunter  and  Harrell,  and  impliedly  held  out  Ling  as  a  trust- 
worthy person  and  competent  agent,  when  they  knew  or  had  reason  to 
believe  the  contrary."  Secondly.  "That  shortly  after  the  execution  of 
the  bond  Ling  made  default  as  agent,  and  thereafter  continued  to 
make  defaults  by  failing  to  pay  over  money  collected  by  him ;  that 
these  facts  were  known  to  the  appellants,  but,  instead  of  dismissing 
Ling  from  their  employment,  they  gave  no  notice  to  his  sureties,  con- 
doned his  faults,  connived  at  the  same,  and  continued  him  in  their  em- 
ployment as  agent."  The  defendants  claimed  that,  on  the  first  ground, 
the  bond  was  void  as  to  them,  and,  on  the  second  ground,  that  if  ever 
liable  on  the  bond  they  had  been  discharged  from  that  liability  by  the 
fraudulent  conduct  of  the  appellants.  The  action  was  submitted  to  a 
jury  under  the  charge  of  the  presiding  judge,  and  the  verdict  was  for 
the  defendants.  '  r 

His  Ho.riorr  Judge  Wallace,  charged  the  jury'-  that  if  the  plaintiffs 
knew,  when  the  bond  was  given,  that  Ling  was  in  default  and  indebted 

that  this  might  be  considered  as  the  criterion  whether  the  disclosure  ouglit 
to  he  made  voluntarily,  namely,  whether  there  is  anything  that  might  not 
naturally  be  expected  to  take  place  between  the  parties  who  are  concerned  in 
the  transaction.  «  *  *  There  is,  therefore,  neither  allegation  nor  proof, 
and  what,  then,  does  the  case  rest  upon?  It  rests  merely  upon  this:  That  at 
most  there  was  a  concealment  by  the  bankers  of  the  former  debt,  and  of  their 
expectation  that,  if  this  new  surety  was  given,  it  was  probable  that  that  debt 
would  be  paid  off.  It  rests  merely  upon  nondisclosure  or  concealment  of  a 
probable  expectation.  And  if  you  were  to  say  that  such  a  concealment  would 
vitiate  the  suretyship  given  on  that  account,  your  Lordships  would  utterly 
de!^troy   that  most  beneficial  mode  of  dealing  with  accoujits  in  Scotland." 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS  OF  SURETYSHIP.  75 

to  them  in  his  pre-existing  agency,  and  yet  concealed  this  fact,  and  held 
him  out  to  them  as  trustworthy  either  expressly  or  impliedly,  such 
conduct  would  be  a  fraud  upon  the  sureties,  and  would  make  void  the 
bond!  as  to  them ;"  and,Hecondly,  "that  each  default  of  Ling,  after  the 
bond  was  given,  in  failing  to  pay  over  to  the  company  the  money  col- 
lected by  him  as  their  agent,  was  a  breach  of  his  duty  and  obligation, 
and  gave  the  plaintiffs  the  right  to  dismiss  him ;  that  if,  knowing  of 
these  defaults,  the  plaintitis  condoned  his  fault  and  continued  him  in 
his  agency  without  notice  to  his  sureties  of  his  misconduct,  such  con- 
duct would  be  prejudicial  to  the  interest  of  the  sureties,  and  would 
discharge  them."  ^  j^^. 

He  declined  to^ charge  the  following  requests  of  the  plaintiffs:  (1)  v^'^Y^'^  "  '  ^ 
"That,,  as  matter  of  law,  it  was  no  fraud  upon  the  sureties  to  the  boncT 
in  suit  that  the  principal  was  behind  in  his  accounts  at  the  time  the  bond 
was  given,  and  no  notice  was  given  to  the  sureties.  (2)  That  the 
plaintiffs  were  not  bound  to  notify  the  sureties  of  each  or  any  default 
of  the  principal  agent,  and  that  the  sureties  were  not  discharged!  by 
failure  on  their  part  to  do  so.  _(3),That  there  is  no  proof  whatever 
that  the  plaintiffs  held  out  Ling  as  competent  and  trustworthy,  or  in 
any  way  imposed  upon  the  sureties,  and  that  in  law  the  railroad  com- 
pany did)  nothing  that  would  discharge  the  sureties,  (-i)  That  there 
is  no  fact  for  the  jury  to  find  but  the  default  and  tBe" amount  of 
the  default,  and  there  is  no  law  in  the  case  to  prevent  the  recovery  by 
the  plaintiff  of  the  amount  proven."  i 

The  appeal  is  founded  upon  the  charge,  and  the  refusal  to  charge,  as  (J   -^'^'^^^ 
hereinabove.  V 

The  charge  of  the  judge  so  far  as  reported,  seems  to  have  been  f^^^  Ly:,^ 
directly  upon  the  two  grounds  of  defense  relied  upon  by  the  defendants  ^^JiuX^  t^ljhn 
and  set  up  in  their  answer.    It  was  nothing  more  than  a  declaration  by  ^/^  ^f.         '^ 
the  judge,  that,  if  the  evidence  in  the  ca&e  sustained  the  averments  in 
the  answer  as  to  matters  therein  alleged  as  a  defense,  in  law  the  de- 
fendants had  a  good  defense.     Subject -to-4he  modification  hereinafter 
suggested,. we  think  the  principles  laid  down  were  sound.    JTi!.e_law 
requires  good  faith  in  parties  contracting  with  each  other;    and  the 
high    moral    principle,    that   misrepresentation    or    concealment   of    a 
material  fact  in  reference  to  the  matter  contracted  about,  or  any  de- 
vice by  the  one  to  prevent  the  other  from  being  fully  informed,  will 
vitiate  the  contract,  is  found  in  all  textwriters  upon  the  subject  of  con- 
tracts, and  is  sustained  by  numerous  decisions,  not  only  in  this  state, 
but  in  all  the  courts  where  the  English  law  prevails. 

This  principle  applies  in  its  fullest  force  to  contracts  on  suretyship. 
Judge  Story  (1  Eq.  Jur.  §  324)  says:  "The  contract  of  suretyship 
imports  entire  good  faith  and  confidence  between  the  parties  in  regard 
to  the  whole  transaction.  Any  concealment  of  material  facts,  or  any 
express  or  implied  misrepresentation  of  such  facts,  or  any  undue  ad- 
vantage,' information  or  surprise  taken  of  the  surety  by  the  creditor, 
will  undoubtedly   furnish  a  sufficient  ground   to  invalidate    the  con- 


76  FORMATION.  (Part  1 

tract."  See,  also,  Ad.  Eq.  *179,  where  the  same  doctrine  is  announced. 
.. ,  \(i  The  propositions  of  law,  charged  by  the  judge,  were  in  accordance 
*  ■"  'T  with  these  principles,  except  that  he  went  too  far  in  holding,  in  the 
second  proposition,  that  if  the  appellants  knew  of  Ling's  default  ac- 
cruing after  the  execution  of  his  bond,  and  yet,  notwithstanding  this^ 
they  continued  to  employ  him,  condoning  his  default,  and  giving  no 
notice  to  his  sureties  of  his  misconduct,  that  this  would  discharge  the 
sureties  entirely.  This,  no  doubt,  was  good  law,  so  far  as  it  warranted 
the  discharge  of  the  sureties  from  the  culpable  defaults  occurring  sub- 
sequent to  the  first  default,  after  the  execution  of  the  bond ;  but  it  was 
error  to  hold  that  the  sureties  would  be  entirely  discharged  thereby, 
even  though  there  had  been  fraudulent  concealment  of  the  first  default. 
Because,  in  any  event,  the  first  default  was  a  breach  of  the  bond,  and 
against  this  the -fraudulent  continuation  of  the  employment  of  the 
agent  afterwards  was  no  defense.  The  judge  should  have  limited  the 
discharge,  even  upon  the  facts  supposed,  to  the  defaults  occurring  after 
,       the  first._  _ 

*  We  think  the  judge  was  in  error,  too,  in  refusing  to  charge  to  two 
first  requests  of  the  appellants.  We  have  carefully  examined  the  cases 
referred  to  by  counsel  on  both  sides,  and,  although  there  is  some  con- 
flict in  the  decisions,  we  think  the  weight  of  the  argument  is  in  favor 
of  the  position  that  there  must  be  some  positive  act  of  concealment  or 
misrepresentation  on  the  part  of  the  obligee,  in  cases  like  this  before, 
the  court,  as  to  some  fact  which  it  was  his  duty  to  discharge,  before- 
the  sureties  can  be  relieved.  Silence  merely,  especially  as  to  facts 
within  the  reach  of  proper  inquiry  by  the  sureties,  will  not  be  suffi- 
cient. The  law  stands  between  the  parties  perfectly  impartial,  ready 
to  rebuke  fraud,  concealment,  or  misrepresentation  on  the  part  of 
either,  but  carelessness  and  want  of  proper  vigilance  are  left  to  their 
own  fruits.  There  must  be  an  intent  to  deceive,  not  a  mere  passive 
omission  to  state  everything  within  the  knowledge  of  the  creditor. 
The  intent  is  the  gist  of  the  fraud,  and  this  should  be  made  to  appear. 
Stafford  v.  Newsom,  31  N.  C.  507;  De  Colyar  on  Prin.  and  Sur.  367; 
Atlas  Bank  v.  Brownell,  9  R.  I.  1G8,  11  Am.  Rep.  231;  Roper  v. 
Sangamon  Lodge,  91  111.  518,  33  Am.  Rep.  60. 

We  were  at  first  inclined  to  think  that  the  presiding  judge,  in  his 
charge,  had  laid  down  the  law  applicable  to  such  cases  in  its  fullest 
extent,  subject  to  the  modification  hereinabove.  He  required  actual 
concealment  or  misrepresentation  to  be  found  as  a  fact  by  the  jury  be- 
fore relieving  the  sureties.  This  seemed  to  be  all  that  the  plaintiffs 
could  claim.  But  upon  examination  of  the  cases  where  the  question  has 
been  discussed,  while  we  do  not  find  any  legal  adjudication  of  what  will 
constitute  concealment  or  misrepresentation  in  such  form  as  to  be 
applied  as  a  test  in  every  case  where  the  question  is  presented,  yet  we 
find  several  decisions  in  other  states  where  certain  facts  have  been  hel(i_ 
not  to  amount  to  such  concealment.  For  instance,  it  has  been  held  as  a 
matter  of  law  that  it  was  no  fraud'  upon  the  sureties  that  the  principal 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  77 

was  behind  in  his  accounts  at  the  time  he  gave  his  bond  of  indemnity 
and  no  notice  given  to  the  sureties,  and  also  that  the  obhgee  was  not 
legally  bound  to  notify  the  sureties  of  each  and  every  default  of  the 
principal.  See  Guardian  of  the  Stakely  Union  v.  Stratter,  22  L.  T. 
Eng.  84;  Roper  v.  Sangamon  Lodge,  91  111.  518,  33  Am.  Rep.  60; 
Pittsburg,  Ft.  Wayne  &  Chicago  Railroad  Co.  v.  Shaefifer  et  al.,  59 
Pa.  350 ;  Watertown  Ins.  Co.  v.  Simmons,  131  Mass.  85,  41  Am.  Rep. 
196;  Taft  v.  Gifford,  13  Mete.  (Mass.)  187. 

It  is  the  business  of  the  surety  to  see  for  himself  that  his  principal 
performs  the  duty  which  he  has  guaranteed.  The  surety  is  bound  to 
inquire  for  himself,  and!  cannot  complain  that  the  creditor  does  not 
notify  him  of  the  state  of  the  accounts.  Now  the  principle,  as  laid 
down  in  these  cases  referred  to  above,  is  precisely  what  the  appellant 


requested  tne  judge  to  charge  m  nis  two  nrst  requests,  and  wnicn,    . 

being  refused,  is  made  grounds  of  exception.  7^     -Lr^jjju  i 

The  strongest  adverse  case  is  the  case  of  Phillips  v.  Foxall,  3  Moak's  '^-'^fJ  ^J^'LrSir 
Eng.  R.  264.  But  that  case,  when  analyzed,  does  not  conflict  with  the  j^^  l^X/ 
principles  above.  That  case  turned  upon  a  demurrer.  The  defendant  ,  -  ^l'^^, 
set  up  the  defense  that  the  plaintiff  had  condoned  the  default  of  the 
servant  in  not  paying  over  money  collected,  which  the  defense  direct- 
ly charged  had  been  embezzled  by  the  servant,  and  which  fact  was 
known  to  the  employer,  and,  notwithstanding  this,  he  had  continued 
the  servant  in  his  employment  without  notice  to  the  sureties  of  the  em- 
bezzlement. The  plaintiff  demurred  to  this  plea.  The  court  overruled 
the  demurrer  and  sustained  the  plea.  The  court  said :  "We  think  that 
in  a  continuing  guarantee  for  the  honesty  of  the  servant,  if  the  master 
discovers  that  the  servant  has  been  guilty  of  acts  of  dishonesty  in  the 
course  of  the  service  to  which  the  guarantee  relates,  and  instead 
of  dismissing  the  servant,  as  he  may  do  at  once,  and  without  notice, 
he  chooses  to  continue  in  his  employ  a  dishonest  servant,  without 
the  knowledge  and  consent  of  the  surety,  express  or  implied,  he  cannot 
afterwards  have  recourse  to  the  surety  to  make  good)  any  loss  which 
may  arise  from  the  dishonesty  of  the  servant  during  the  subsequent 
service."  The  ground  of  the  defense  in  that  case  was  the  dishonest 
act  of  the  servant — embezzlement — known  to  the  plaintiff.  The  ruling 
of  the  court  on  the  demurrer,  which  admitted  the  truth  of  the  charge 
against  the  servant,  was  right,  and  the  defense  was  properly  admitted. 

But  there  is  a  broad  distinction  between  a  case  of  that  kind  and. a 
case  where  it  simply  appears  that  the  agent  is  behind  in  his  accounts. 
Knowledge  on  the  part  of  the  employer  of  dishonesty  and  corruption 
in  his  agent,  without  disclosure,  would  amount  to  a  fraudulent  conceal- 
ment ;  but  a  falling  behind  in  current  accounts  by  an  agent  is  not 
^ah\;ays  the  result  of  dishonesty.  We  do  not  think  that  simply  the 
failure  on  the  part  of  the  employer  to  give  notice  to  the  sureties  that 
the  agent  is  behind  in  his  accounts  at  the  time  he  executes  the  bond, 
or  that  he  has  fallen  behind  since  the  execution  of  the  bond,  is  such  a 
fraudulent  concealment  of  material  facts  as  in  itself,  without  more. 


78  FORMATION.  (Part  1 

should  discharge  the  sureties.  These  facts  might  properly  go  to  the 
jury  with  other  facts  bearing  upon  the  question  of  fraudulent  con- 
cealment, and  have  such  weight  as  would  be  proper ;  but,  standing 
alone,  they  would  not  be  sufficient  to  discharge  the  sureties. 

We  think  the  appellant  was  entitled  to  the  charge  requested  in  the 
two  first'^fequests.  "  The  other  requests  of  appellant  were  properly  re- 
fused',Tnvolving,  as  they  did,  questions  of  fact  mostly. 

"It  is  the  judgment  of  this  court  that  the  judgment  of  the  circuit 
court  be  reversed,  and  the  case  be  remanded  for  a  new  trial. 


MACEY.  HENDERSON  &  CO.,  Limited,  v.  HEGER  et  al. 
(Supreme  Court  of  Peimsylvauia,  1900.     195  Pa.  125,  45  Atl.  GT5.) 

Argued  January  23,  1900.    Appeal.  No.  381,  January  Term,  1899,%^ 
plaintiff,  frojp  order„pf  Common  Pleas  No.  2,  Philadelphia  County, 
June  Term,  1899,  No.  75,  discharging  rule  fpr^judgment  for  want  of  a 
sufficient  affidavit  of  defense.     Before  McCollum,  Mitchell,  Eell. 
Brown-,  and  Mestrezat,  J  J.    Affirmed. 

Assumpsit  upon  k  bond  of  indemnity. 

The  material  averments  of  the  affidavit  of  defense  are  set  forth  in 
the  opinion  of  the  Supreme  Court. 
A-..      (     Error  assigned  was  in  discharging  rule  for  judgment  for  want  of 
/a  sufficient  affidavit  of  defense.^^ 

Mr.  Justice  Fell.  The  affidavit  of  defense  filed  in  this  case  was 
clearly  sufficient  to  prevent  judgment.  The  action  was  on  a  bond  of  in- 
d_emnity  conditioned  for  the  faithful  performance  by  one  of  the  defend- 
ants, T.  A.  Heger,  of  his  contract  for  the  excavating,  grading  and  con- 
crete work  necessary  in  the  building  of  a  storehouse. 

Yhe  substance  of  the  material  averments  of  the  affidavit  is  that  Jhe- 
defendant  was  a  subcontractor  for  work  to  be  done  by  the  plaintiff 
for  the  United  States  government,  and  that  at  the  jime  of  entering 
mto  the  contract  he  was  told  by  the  president  of  the  plaintiff  colripany, 
which  had  the  contract  for  the  whole  work,  that  the  specifications 
could  not  then  be  shown  him ;  that  the  president  stated  to  him  the 
amount  of  excavation  and  concrete  work  required  by  the  specificatioTis, 
and  assured  him  that  his  statement  was  correct  and  would  be  verified  by 
the  specifications ;  that  fully  believing  the  representations  made,  and 
relying  on  them,  he  signed  the  agreement  and  began  the  work ;  that 
upon_ discovering  that  the  statement  made  to  him  was  incorrect  and 
untrue,  and  that  a  much  greater  amount  of  work  would  be  required,  he 
requested  a  reformation  of  the  contract,  and  upon  tlie  refusal  of  the 
plaintiff,  he  quit  work. 
I  The  facts  averred,  if  established  by  proof,  would  be  a  complete  de- 
fense in  an  action  by  the  plaintiff  to  recover  damages  for  a  breach  of 

11  Citations  of  counsel  are  omitted. 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  79 

the^contract  by  the  defendant,  and  it  follows  that  they  are  equally  ef-, 
fective  in  an  action  on  a  bond  given  to  secure  the  performance  of  the 
contract. 
The  judgment  is  affirmed.^* 


rX^s 


HENRY  V.  DALEY. 
(Supreme  Court  of  New  York,  1S79.     17  Hun,  210.) 

Appeal  Jrom.a-judgment  in  favor  of  the  plaintiff,  entered  upon  the 
verdict  of  a  jury. 

The  action  was  brought  to  recover  the  amnnnt  ap;re^d  to  he  paid 
for  the  transfer  by  the  plaintiff's  assignor  to  one  Bloomer  (for  whom 
the  defendant  was  surety)  of  a  certain  milk  business  in  the  city  of 
Poughkeepsie.  Among^  other  defenses  the  defendant  set  up  that  the 
plaintiff's  assignor  induced  said  Bloomer  to  enter  into  the  contract 
by  making  certain  false  representations  as  to  the  extent  of  the  business, 
and  also  alleged  that  the  plaintiff's  assignor  had  made  a  certain  war- 
ranty as  to  the  extent  of  such  business,  which  was  false.  ^ 

Gilbert,  J.  On  the  4th  of  April,  1878,  one  Bloomer  and  the  assignor  r^t^ 
;e  plaintiff  entered  into  a  mutual  contract  under  seal,  whereby  the 
(fomierisold  to  the  latter  "a  milk  route"  in  Poughkeepsie,  with  the  good 
will  thereof,  and  certain  chattels  connected  therewith,  and  guaranteed 
that  on  said  milk  route  he  had  been  and  was  selling  150  quarts  of  milk 
per  day,  and  he  agreed  not  to  sell  or  be  interested  in  selling  sweet 
milk  in  Poughkeepsie  while  Bloomer  remained  in  business.  In  con- 
sideration thereof  Bloomer  agreed  to  purchase  said  property,  and  to 
pay  $100  in  cash  on  the  2oth  of  said  April,  and  $100  by  a  good  indorsed 
note,  payable  in  three  months.  Tlie_._deiendant  on  said  4th  of  April 
became  surety  for  the  faithful  performance  of  Bloomer's  covenant. 
Thereupon  the  contract  was  executed  by  the  plaintiff's  assignor  "by 
turning  over  to  Bloomer  the  milk  route  and  chattels  sold,  so  far  as 
appears,  and  he  has  remained  in  the  enjoyment  thereof  ever  since. 

The  defendant  sets  up  as  a  defense  certain  items  which  might  con- 
stitute a  set-off  in  favor  of  Bloomer,  and  also  that  Bloomer  was 
induced  to  enter  into  the  contract  by  the  fraudulent  representation 
of  the  plaintiff's  assignor  that  150  quarts  of  milk  per  day  were  sold  on 
said  milk  route,  and  by  deceit  practiced  by  said  assignor  to  make  him 

12  Accord:    Putnam  v.  Schuyler.  4  Hun  (X.  Y.)  IC.r.  (1S75). 

As  the  sureti^'s  defense, Jf  based  on  that  of  hi&  principal,  is  strictly  limited 
to  the  defense  available  to  his  princi])al.  an  untrue  represmitatidu  \j!.QliM  not 
ajmL  fire"surery,~TF~'made  to  the  prliKiiial  without  knowledge  of  its  falsify. 
Bryant  v.  CroshyVSCMe.  570,  58  Am.  Dec.  7G7  (1.8.5.3). 

The  equitable  doctrine  of  misrepresentation,  which  permits  rescission  whe^e 
no  scienter  is  alleged,  would,  however,  lead  to  a  contrary  conclusion  in  the 
last-Clted  case.    See  Anson  oq  Contracts  (Huffcut's  Ed.)  pp.  179  to  203.    Courts  « 
of_lajf  have  only  in  a..few  in.staiiceii  adojited  this  equitable  doctrine.    Chatham  ,■ 
Furnace  Co.  v.  Moffatt,  147  Mass.  403,  IS  N.  E.  168,  9  Am.  St.  Rep.  727  (1888). 


80  FORMATION.  (Part  1 

believe  that  said  representation  was  true.     The  question  is  whether 
H^ the  defense  is  available  to  the  defendant.     I  always  supposed,  and  I 

'^•*^^*-~^am  still  of  opinion,  that  such  a  defense  is  personal  to  the  principal, 
an'3"that  it  is  not  available  in  behalf  of  the  surety.  Comstock  v.  Ames, 
*-l2  N.  Y.  357.  Fraud  does  not  render  the  contract  void,  but  it  is 
voidable  only  at  tlie  election  of  the  party  defrauded.  If  he  elects  to 
avoid  the  contract,  he  can  do  so  only  on  the  condition  of  returning 
whatever  he  has  received  under  it.  If  he  elects  not  to  avoid  it,  he  may 
sue  for  his  damages  occasioned  by  the  fraud.  Lindsley  v.  Ferguson, 
40  N.  Y.  623.  In  this  case  it  is  not  averred  that  either  Bloomer  or  the 
defendant  has  returned  or  offered  to  return  anything  which  the  former 
received  under  the  contract,  or  that  Bloomer  has  made  any  claim  for 
damages  on  account  of  the  fraud.  The  defendant  cannot  do  either. 
The  property  received  by  Bloomer  belongs  to  him,  and  not  to  the  de- 
fendant; nor  could  the  latter  maintain  an  action  for  the  damages 
occasioned  by  the  fraud,  for  the  reason  that  he  is  not  the  party  defraud- 
ed. *42  N.  Y.,  supra.  The  damages  are  not  due  to  him.  Bloomer's 
damages  may  be  greatly  in  excess  of  the  defendant's  liability.  The 
defendant  could  be  allowed  them  as  a  defense  or  a  counter-claim,  only 
upon  some  principle  that  would  make  the  recovery  of  them  by  him  a  bar 
to  any  future  action  or  counter-claim  by  Bloomer  for  such  damages. 
The  defendant  might  thus  bar  a  large  claim  in  favor  of  Bloomer  by 
canceling  a  small  one  against  himself.  These  considerations,  I  think, 
show  that  this  defense  was  properly  excluded,  and  that  the  presence  of 
Bloomer,  as  a  party,  would  be  necessary  in  any  action  to  make  it  avail- 
y  aSle  to  the  defendant.  The  same  principle  would  be  applicable  if  the 
defense  should  be  regarded  as  a  counter-claim  for  damages,  occasioned 
by  the  breach  of  the  vendor's  warranty.  Indeed,  no  counter-claim 
exists,  except  it  be  for  damages  due  to  the  defendant.  Code  Civ. 
Proc.  §  501  et  seq.  The  cases  when  the  surety  has  been  permitted  to 
set  up  as  a  defense  matters  personal  to  his  principals  are  such  as  show 
that  the  contract  never  had  a  valid  existence,  or  that  the  liability 
created  by  it  has  been  extinguished  in  whole  or  in  part.  Gillespie  v. 
forrance,  25  N.  Y.  306,  82  Am.  Dec.  355  ;  Lasher  v.  Williamson,  55  N. 
Y.  619  ;  Putnam  v.  Schuyler,  4  Hun,  166. 
f"  The  defenses  not  based  on  fraud  were,  I  think,  causes  of  action  in 
favor  of  the  plaintiff,  which  arose  independently  of  the  contract. 
If  so,  they  are  not  a  legal  defense  in  favor  of  the  defendant 

J^,  The  judgment  must  be  affirmed,  with  costs. 

Dykm.\x,  J.,  concurred.    Barnard,  P.  J.,  not  sitting. 
Judgment  affirmed,  with  costs. ^' 

13  Record:  Brown  v.  Wright.  7  T.  B.  Mon.  (Kv.)  397,  18  Am.  Dec.  190 
(182S) :    Walker  v.  Gilbert.  1.5  Miss.  4.'5G  (1846). 

In  Hazard  v.  Irwin.  18  Pick.  (Mass.)  95  (1836),  the^principal  rescinded  on 
tUe  grovind  of  fraud.  .This  defense  was  permitted  to  the  surety.  Shaw,  C.  J., 
said:  "Fraud  in  the  terms  of  a  contract  of  sale  renders  It,  not  absolutely  void, 
but  voidable  at  the  election  of  the  party  defrauded.  The  rule  is  designed  for 
his  security  and  protection.     If  he  is  desirous  to  retain  the  commodity  and 


Ch.  3)        GENERAL   ESSENTIALS  TO   CONTRACTS  OF  SURETYSHIP.  81 

LADD  et  al.  v.  BOARD  OF  TRUSTEES  OF  TOWN  41  N.,  R.  14. 
(Supreme  Court  of  Illinois,  1875.     80  111.  233.) 

Appeal  from  the  Superior  Court  of  Cook  County;  Hon.  Joseph  E. 
Gary,  Judg^e,  Presiding. 

Mr.  Justice  Scholfield  delivered  the  opinion  of  the  court. 

Appellants_are  sued  on  the  bond  of  Samuel  Greene  as  township 
treasurer  of  township  41,  in  Cook  county,  upon  which  they  are  sure- 
ties! It  appears,  from  the  record  of  the  board  of  trustees  of  that  town- 
ship, that  at  their  reg-ular  semi-annual  meeting,  held  at  Evanston  on  the 
2d  day  of  October,  A.  D.  1871,  the  following  order  was  made:  "The 
term  of  the  treasurer's  office  having  expired,  upon  motion  of  Mr. 
Greenleaf,  Samuel  Greene  was  reappointed  treasurer  for  the  ensuing 
two  years."  The  bond  in  suit  is  dated  October  30,  A.  D.  1871,  is  in- 
dorsed, "Approved  and  accepted  by  E.  R.  Paul  and  L.  L.  Greenleaf, 
trustees,"  and  filed  by  the  county  superintendent  on  the  9th  of  No- 
vember, 1871.  On  the  14th  of  October,  1873,  Eli  A.  Gage  was  elected 
township  treasurer,  as  the  record  of  the  board  of  trustees  shows,  "in 
the  place  of  Samuel  Greene,  whose  term  of  office  had  expired." 

The  breaches  claimed  are  in  the  failure  of  Greene  to  pay  over  to 
Gage,  as  his  successor  in  office,  certain  moneys  in  his  hands,  which  he 
had  received  and  held  as  treasurer. 

The  first  point  made  by  appellants  is  that  Greene  was  appointed 
treasurer  in  October,  1870,  for  two  years,  and  gave  a  bond  which, 
being  destroyed  by  the  great  fire  of  Chicago  of  the  Sth  and  9th  of 
October,  1871,  he  was  required  by  the  county  superintendent  to  re- 
place; and  the  bond  in  suit  was  executed  for  that  purpose  only,  and. 
corisequently,  binds  them  for  the  acts  of  Greene  until  the  expiration  of 
the  two  years  for  which  he  was  appointed  in  October,  1870,  and  no 
farther.  ■       "'^  -j^^  cr^ 

~We  do^not  consider  tlie  point  well  t^ken.  The  office  of  treasurer  was  j^^  (^^, 
fixed  by  the  school  act  of  1865  to  commence  at  the  semi-annual  meeting 
of  the  board  of  trustees  in  October  of  that  year,  and  the  term  was  two 
years.  Thus  the  terms  would  expire  and  new  terms  commence,  re- 
spectively, in  October,  1867,  October,  1869,  and  October,  1871;  and 
so,  if  Greene  was  appointed  treasurer  in  October,  1870,  it  is  to  be 
presumed  it  was  for  the  residue  of  a  term,  expiring  in  October,  1871, 

carry  the  contract  into  effect,  although  he  has  been  imposed  upon  and  cheated 
in  the  terms  of  it,  he  undoubtedly  has  a  right  so  to  do.  He  may  be  so  sit- 
uated that  although  conscious  that  he  has  been  grossly  defrauded,  yet  so 
urgent  may  be  his  necessity  for  the  immediate  use  of  the  article  purchased 
that  he  would  rather  submit  to  the  imposition  than  repudiate  the  contract. 
In  such  case,  neither  the  other  contracting  party  nor  a  stranger  can  avoid 
the  contract  on  that  ground.  But  we  think  this  argument  is  not  warranted 
by  the  pleas ;  but  the  pleas  do  state,  not  perhaps  in  the  most  precise  and 
formal  manner,  but  with  a  certainty  sufficient  after  verdict,  that  the  principal. 
Penman,  did  repudiate  and  rescind  this  contract" 

Hen. Sue. — 6 


S2  FORMATION.  (Part  1 

and  the  record  of  his  appointment  would  seem  to  be  conclusive-.that, 
when  appointed  on  the  2d  day  of  October,  1871,  it  was  for  the  period 
of  two  years.  Besides  this,  the  bond  is  in  the  precise  form  required  by 
the  statute,  when  a  treasurer  is  appointed  for  a  full  term.  It  does 
not  profess  to  have  been  executed  as  a  substitute  for  a  former  bond,  or 
yto  have  any  retroactive  effect. 

What  Greene  may  have  said  as  to  the  purpose  of  the  bond  is  im- 
material. The  trustees  were  invested  with  authority  to  appoint  ihe 
treasurer,  and  the  bond  had  to  be  made  to  and  approved  by  them.  If 
appellants  were  content  to  take  Greene's  word  as  to  the  purpose^Df 
the~  bond,  rather  than  go  to  the  trustees  and  ascertain  from  them  why 
it  was  to  be  executed,  they  cannot  complain  that  they  trusted  unwisely. 
.  It  was  their  own  folly.  Npr  do  we  regard  it  of  any  consequence  what 
the  county  superintendent  may  have  safd  In  ThTsjrespect.  The  TawTixed 
the  term  of  office  of  the  treasurer,  and  it  gave  the  power  of  appointment 
andjemoval  to  the  trustees  alone,  and  not  to  the  county  superintendent 
in  any  event,  and  his  only  duty  in  regard  to  the  treasurers  bond  Ttas, 
afterTt  was  approved  by  the  trustees  and  delivered  to  him,  to  carefully 
examine  it,  and  if  found  to  be  in  all  respects  according  to  law,  and  the 
securities  good  and  sufficient,  indorse  his  approval  thereon,  and  file  it 
with  the  papers  of  his  office,  but  if  in  any  respect  defective  to  return 
it  for  correction.  Gross'  St.  1869,  p.  688,  §  15.  Had  appellants  gone, 
as  they  should,  to  the  trustees,  or  examined  their  records,  before 
.signing  the  bond,  they  would  have  been  fully  advised  of  the  purpose 
for  which  it  was  required.    *    *    *  i* 

We  see  no  cause  to  disturb  the  judgment,  and  it  will  be  affirmed. 

Judgment  affirmed.^' 


PAGE  V.  KREKEY. 

<Court  of  Appeals  of  New  York.  1S93.    137  N.  Y.  307,  33  N.  E.  311.  21  L.  R.  A. 
409,  33  Am.  St.  Rep.  731.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  First  Judicial  Department,  entered  upon  an  order  made  February 
26,  1892,  which  affirmed  a  judgment  in  favor  of  plaintiff  entered  upon 
a  verdict  and  affirmed  an  order  denying  a  motion  for  a  new  trial. 

This  \vas  an  action  upon  a  guaranty  set  forth  in  the  opinion,  which 
also  states  the  facts,  so  far  as  material.  ^^ 

O'Brien,  J.    The  judgment  from  w^hich  this  appeal  is  taken  was  re- 
covered upon  a  guaranty,  signed  by  the  defendant  and  sent  to  the  plain- 
ly Only  that  portion  of  the  opinion  is  printed  that  deals  with  the  subject  of 
<'raiul  in  relation  to  suretyship. 

i54ccord:  Johnston  v.  Patterson,  114  Pa.  398,  6  Atl.  746  (1886);    Wallace 

V.  Wilder"  (C.  C.)  13  Fed.  707  (1SS2) ;  Martin  v.  Campbell.  120  Mass.  126  (1S7G) : 

Stone  V.  Conipton.  ^  Rins.  rX.  C.)  142  (1838).  ante.  p.  68:    Graves  v.  Tucker, 

10  Smedes  &  M.  (Miss.)  9  (1848) ;  Spencer  v.  Handley,  5  Scott  (N.  R.)  54G  (1842). 

16  The  argument  of  counsel  is  omitted. 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS  OF   SURETYSHIP.  83 

tiff ,_a^resident__oiJ^ermcmtr  by  mail.  The  plaintiff  had  business  trans- 
actions with  one  Bernard  Thinnes  prior  to  the  guaranty.  The  latter 
was  a  tanner  in  Brooklyn,  and  the  plaintiff,  a  dealer  in  green  calfskins, 
had  shipped  to  him  skins  at  various  times  to  tan,  and,  unless  he  elected 
to  buy  them  at  a  certain  price,  then  to  return  them,  so  tanned,  to  the 
plaintiff,  or  deliver  them  according  to  his  order.  The  following  is  the 
instrument  upon  which  the  action_was-brought : 
~'^  "^  "Brooklyn,  N.  Y.,  March  14,  1889. 

"Mr.  C.  S.  Page,  Hyde  Park,  Vt. :  I  am  well  acquainted  with  B.  A. 
Thinnes,  tanner,  of  this  place.  I  believe  him  to  be  a  good  tanner,  hon- 
orable and  straightforward  in  his  dealings  and  attentive  to  business, 
and  if  you  will  from  time  to  time  send  hides  and  skins  to  him,  I  hereby 
guarantee  that  he  will  not  convert  or  misappropriate  them,  but  will 
well  and  faithfully  tan  them,  and,  if  he  does  not  buy  and  pay  you  for 
them  within  the  time  agreed  upon  between  you,  I  agree  that  he  shal' 
deliver  them  at  Rose,  McAlpine  &  Co.,  New  York  City,  N.  Y. 

"Notice  of  your  acceptance  is  hereby  waived. 
"Joseph  Krekey, 

"P.  O.  Address,  248  Freeman  St." 

It  was  shown  at  the  trial  that  the  defendant  was  an  illiterate  man, 
who  could  not  read  nor  write,  except  possibly  to  sign  his  name ;  that 
he  signed  the  paper  at  the  request  of  Thinnes  when  in  a  state  of  in- 
toxication, and  under  the  false  representation  that  it  was  an  applica- 
tion for  a  license  under  the  excise  law.  The  principal  part  of  the  in- 
strument was  in  print,  probably  prepared  by  the  plaintiff,  or  under  his 
direction.  At  all  events  it  was  presented  to  the  defendant  by  Thinnes, 
the  representations  as  to  its  character  were  made  by  him,  and  when 
he  procured  the  defendant's  signature  he  sent  it  to  the  plaintiff,  who, 
so  far  as  appears,  never  met  or  had  any  personal  transaction  with  the 
defendant.  The  plaintiff's  claim  against  Thinnes,  exclusive  of  interest, 
was  $3,123.79  for  skins  shipped  to  him  under  six  written  contracts, 
bearing  various  dates  between  May  1,  1889,  and  July  1,  1889.  AILp^ 
these  contracts  provided  that  in  case  of  failure  to  pay  for  tlie  goods 
they  should  be  delivered  to  the  firm  of  Myers  &  Gordon.  The  only 
question  submitted  to  the  jury  was  whether  the  defendant,  in  signing 
the  paper,  observed  proper  care  and  caution,  or  was  chargeable  with 
negligence.  In  determining  the  legal  effect  of  this  paper,  and  the  ob- 
ligation thereby  created  against  the  defendant,  we  must  assume  that  he 
signed  it  when  intoxicated,  that  he  was  unable  to  read  it,  that  he  was 
ignorant  of  its  contents,  and  that  he  fixed  his  signature  to  it  upon  the 
false  representation  that  it  was  an  application  for  a  license. 

There  can  be  no  doubt  that,  as  between  the  parties  to  this  transac- 
tion, the  instrument  was  void.    It  was  also  invalid  in  the  hands  of  any 
person  who  received  it  with  knowledge  or  notice  of  the  circumstances 
under  which  the  defendant's  signature  was  obtained.     Sometimes  re-/  zi?^^^  ''</■ 
leases,  discharges  and  other  instruments  are  procured  by  the  fraud  of   f  ."•^^- ■'/ J»<^ 
a  third  person  without  the  knowledge  or  participation  in  the  fraud  of    fVv*W<>^^ 


S4  FORMATION.  (Part  1 

the  party  to  be  benefited,  who,  nevertheless,  will  not  be  permitted  to 
reap  the  benefit  of  a  fraud,  though  he  was  himself  innocent.  The  case 
of  Bedell  v.  Bedell,  37  Hun,  419,  is  an  example  of  this  class  of  cases. 
The  decisions  in  these  cases  rest  upon  principles  obviously  just  and 
reasonable.  When  the  fraudulent  act  is  not  imputable  to  the  person 
claiming  the  benefit  of  the  instrument,  upon  the  principle  of  agency,  he 
is  generally  debarred  from  enforcing  it  upon  the  ground  of  the  fraud- 
ulent origin  of  the  paper  and  the  fact  that  he  has  lost  nothing  upon 

v/the  faith  of  it.    Without  examining  all  the  cases  cited  by  the  learned 

/^counsel  for  the  defendant,  it  may  be  assumed  that  in  otlier  jurisdictions 
the  courts  have  held  that  in  a  case  like  this  the  instrument  could  not 
be  enforced  any  more  than  if  the  signature  of  the  defendant  had  been 
forged.  That  is  the  principle  which  is  invoked  in  behalf  of  the  defend- 
ant to  relieve  him  from  all  liability,  but  it  has  not  received  the  sanction 
of  the  courts  in  this  state, 

'  While  it  has  been  quite  uniformly  held  here  that  an  instrument  pro- 
cured by  fraud,  trick  or  artifice,  or  executed  by  a  party  in  such  a  state 
of  intoxication  as  to  be  incapable  of  consenting  or  contracting,  is  in- 
valid as  between  the  parties  to  the  transaction,  these  facts  do  not  always 
constitute  a  defense  as  against  an  innocent  person,  who  is  himself 
free  from  any  fraud  or  negligence,  and  who  has  advanced  money  or 
property  to  another  upon  the  credit  afforded  by  an  instrument  like  this. 
But,  even  in  such  a  case,  the  person  who  lias  signed  the  paper  is  not 
liable  upon  it,  unless  it  is  found  that  he  failed  to  observe  proper  care_ 
arid  caution  and  was  chargeable  with  negligence  in  attaching  his  sig- 
nature. If  he  actually  signed  the  paper,  though  procured  to  do  it  by 
fraud,  and  is  chargeable  with  negligence,  he  is  liable  to  an  innocent 
party  who  acted  to  his  prejudice  upon  the  faith  of  the  instrument. 
Such  cases  are  not  governed  by  the  rules  applicable  to  the  bona  fide 
holder  of  negotiable  paper  procured  by  fraud,  but  by  the  equitable  rule 
that,  where  one  of  two  innocent  parties  must  suffer,  he  who  has  put- 
it  in  the  power  of  a  third  person  to  commit  the  fraud  must  sustain  the 
loss.  If  the  defendant  is  to  be  held  liable  in  this  case,  it  must  be  upon^ 
the. principle  that  by  his  misplaced  confidence  in  Thinnes  he  enabled  hijn 
to  obtain  property  from  the  plaintiff,  who  is  an  innocent  third  party. 
McWilliams  v.  ^lason,  31  N.  Y.  294 ;  Western  N.  Y.  L.  I.  Co.  v.  Clin- 
ton, G6  N.  Y.  326 ;  Powers  v.  Clarke,  127  N.  Y.  417,  28  N.  E.  402 ; 
Casoni  v.  Jerome,  58  N.  Y.  315;  Baylies  on  Sureties  &  Guarantors, 
214;  Burge  on  Suretyship,  218. 

If  this  instrument  had  been  a  negotiable  promissory  note,  the  defend- 
ant's liability  to  the  plaintiff  would  depend  upon  the  question  of  negli- 
gence, and  there  does  not  appear  to  be  any  sound  reason  for  a" differ- 
ent rule  in  this  case.  Chapman  v.  Rose,  56  N.  Y.  137, 15  Am.  Rep.  401 ; 
Whitney  v.  Snyder,  2  Lans.  477 ;  National  Exchange  Bank  v.  Vene- 
man.  43  Hun,  241 ;  Fenton  v.  Robinson,  4  Hun,  252. 

The  general  principle  of  law  upon  which  the  case  was  disf)osed  of  at 

^  the  trial,  and  upon  review  at  General  Term,  was,  in  this  respect,  favor- 


Ch.  3)        GENERAL  ESSENTIALS   TO   CONTRACTS   OP   SURETYSHIP.  85 

able  enough  to  the  defendant.  The  guaranty  contemplated  a  contract  A  JJ  ^^  Ly^ 
between  the  plaintiff  and  defendant's  principal.  All  the  goods  sent  to  ^CyCu^  riwfe; 
Thinnes  were  in  pursuance  of  contracts  in  writing.  The  instrument  l^L^  .^  J^ 
which  the  defendant  signed  guaranteed  the  performance  of  these  con-  /J^^^4,,<vvJ^t^ 
tracts  only  in  case  they  were  drawn  in  accordance  with  its  terms. 
It  was  contemplated  that  there  should  be  a  contract  between  plaintiff 
and  the  defendant's  principal,  but  not  a  contract  that  in  any  respect 
differed  from  the  terms  of  the  guaranty.  After  the  defendant  became 
surety  the  terms  of  the  obligation  the  performance  of  which  he  guar- 
anteed were  changed  by  the  contract  between  the  plaintiff  and  the  prin- 
cipal. The  defendant's  undertaking. was  that,  if  his  principal  did  not 
buy  the  skins  and  pay  for  them,-  he  would  deliver  them  to  Rose,  Mc- 
Alpine  &  Co.  The  contract  subsequently  executed  and  to  which  it  ap- 
plied bound  the  principal  to  deliver  them  to  Myers  &  Gordon,  another 
party,  and  at  another  place.  The  question  is  whether  the  contract 
guaranteed  has  not  been  so  changed  as  to  discharge  the  surety.  Sup- 
pose that  the  contracts  had  been  drawn  and  in  existence  when  the  de- 
fendant signed  the  paper,  then,  of  course,  the  legal  effect  of  the  guaran- 
ty would  be  that  the  principal  would  perform  the  contracts.  But  if  the 
plaintiff  and  the  principal  subsequently  changed  them  by  substituting 
Myers  &  Gordon  for  Rose,  McAlpine  &  Co.,  tLen  we  would  have  a  plain 
case  of  a  guaranty  by  the  defendant  of  a  contract  to  deliver,  at  a  cer- 
tain place,  changed  by  the  parties  to  it  by  providing  for  delivery  at 
another  and  different  place.  It  seems  to  me  that  such  a  change  of  the 
obligation,  to  which  the  guaranty  applied,  would  discharge  the  surety. 
What  the  defendant,  by  the  paper,  said  to  the  plaintiff  was  that,  if  you 
will  make  a  contract  with  my  principal  to  send  him  hides  and  skins  to 
tan,  providing  that  he  will  tan  them,  with  an  option  to  buy,  and,  if  not, 
then  to  deliver  to  Rose,  McAlpine  &  Co.,  I  will  be  bound  for  the  faith- 
ful performance  of  that  contract,  not  for  the  performance  of  a  con- 
tract to  deliver  at  another  place. 

Suppose  that  the  contracts  as  made  provided  for  sending  to  defend- 
ant's principal  different  property  than  hides  or  skins,  or  property  in 
addition  to  them;  would  the  defendant  be  responsible  for  default  in 
its  performance?  It  seems  to  me  that  where  a  party,  intending  to  enter 
into  a  contract  with  another,  prior  to  its  execution  secures  from  the 
otTier  a  guaranty  of  the  performance  of  such  contemplated  contract,  in 
which  the  terms  upon  which  the  surety  is  to  be  bound  are  specified, 
and  the  contract,  when  drawn,  does  not  correspond  to  the  terms  of 
the  guaranty,  the  surety  will  be  discharged  from  liability  for  default 
in  the  contract  as  made.  In  suc.h  a  .case  the  obligation  of  the  principal 
is  different  from  that  for  which  the  surety  became  bound.  This  ques- 
tion seems  to  have  been  disposed  of  in  the  court  below  on  the  ground 
that  the  change  was  not  material.  But  the  answer  to  that  is  that  the 
defendant's  obligation  is  strictissimi  juris,  and  he  is  discharged  by  any 
alteration  of  the  contract,  to  which  his  guaranty  applied,  whether  ma- 
terial or  not,  and  the  courts  will  not  inquire  whether  it  is  or  is  not  to 


86  FORMATION.  (Part  1 

his  injury.  Paine  v.  Jones.  76  N.  Y.  278 ;  Grant  v.  Smith,  46  N.  Y.  OS  ; 
National  M.  Bank  v.  Conkling,  90  N.  Y.  116,  43  Am.  Rep.  146 ;  Bangs 
V.  Strong,  7  Hill,  250,  42  Am.  Dec.  64;  Henderson  v.  Marvin,  31  Barb. 
297.     *     *     *  17 

For  these  reasons,  the  judgment  should  be  reversed,  and  a  new  trial 
granted ;  costs  to  abide  the  event.  All  concur  (Andrews,  C.  J.,  and 
Gray,  J.,  on  second  ground  in  respect  to  error  in  excluding  evidence) ; 
Earl,  J.,  not  voting. 

Judgment  reversed.  ^' 


SECTION  3.— LEGALITY— EFFECT  OF  ILLEGALITY. 


DENISON  v.  GIBSON  et  al. 

(Supreme  Court  of  Michigan,  1872.    24  Mich.  187.) 

Appeal  in  Chancery  from  Bay  Circuit. 

This  bill  was  filed  by  Elizabeth  F.  Denison  against  Chauncey  W. 
Gibson,  Sanford  M.  Green,  William  C.  Green,  and  Elias  B.  Denison, 
complainant's  husband,  to  set  aside  and  cancel  a  mortgage  giverL  by 
her,  on  her  separate  property,  to  secure  the  payment  of  several  notes 
which  she  liad  signed  as  surety  with  the  defendants,  Green  and  Deni- 
son, and  which  were  given  by  the  latter  to  defendant  Gibson  for  parj: 
oT  the  purchase  price  of  stock  of  the  First  National  Bank  of  Bay  City, 
and  also  to  cancel  her  contract  relation  on  said  notes.  No  defense  was 
made  except  by  defendant  Gibson.  Tlie  case  was  heard  on  pleadings 
ami  proof s^  and  the^court  below  granted  the  relief  prayed.  The  de- 
feadant  Gibson  appealed  to  this  cour^. 

Graves,  J.  ^^  *  *  *  On  the  10th  of  January,  1868,  the  com- 
plainant filed  this  bill  to  set  aside  and  cancel  the  before-mentioned 
mortgage  and  her  contract  relation  on  the  several  notes  she  had  signed. 
No  defense  was  interposed  except  by  the  defendant  Gibson,  and,  the 
court  below  having  granted  the  relief  prayed,  he  appealed  to  this 
court. 
./>^  The  complainant  founds  her  eqiiity  upon  two  grounds:     First,  that 

in  obtaining  her  accession  to  the  arrangement  a  private  fraud  was  prac- 

iT  Only  that  portion  of  the  opinion  is  printed  that  deals  with  the  subject 
of  suretyship.  A  portion  is  here  omitted  dealing  with  the  exclusion  of  the 
defendants  own  testimony  that  he  was  unable  to  write  and  holding  that  such 
exclusion  was  error. 

18  On  the  second  point  decided  by  this  case,  see  Part  III,  chapter  VIII,  sec- 
tion 3. 

19  A  portion  of  the  statement  of  facts  in  the  opinion  has  been  omitted,  and 
likewise  the  concurring  opinion  of  Cooley,  J. 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF  SURETYSHIP.  87 

ticed  upon  her  in  respect  to  the  actual  circumstances  and  condition  of 
the  First  National  Bank  of  Bay  City,  and  the  real  standing,  resources 
and  pecuniary  ability  of  W.  C.  Green  &  Co. ;  and,  second,  that  material 
parts  of  the  arrangement  for  the  disposition  of  the  bank  and  its  ofificial 
agencies,  as  made  and  carried  out,  were  illegal,  opposed  to  public  poli- 
cy, a  fraud  upon  the  bank  and  upon  her.  In  jthe-view-iaken.  in-this 
opinion  it_  is  unnecessary  to  examine  the  first  ground,  because  it  is 
coas^idered  that  the  circumstances  warrant  the  relief  sought  upon  the 
second.  r^ 

In  the  able  arguments  from  the  bar  on  the  part  of  Gibson,  it  was  not    0^.^yJ-Xj  £4t 
only  conceded,  but  affirmed,  that  the  position  of  complainant  in  the  ' 

business  was  that  of  a  mere  surety  for  Denison  and  the  Greens,  and  no 
one  attempted  to  controvert  the  position  that  the  plan  contrived  and 
executed  to  work  a  transfer  of  the  bank  stock  and  management,  and 
to  payHand  secure  Gibson,  was  a  clear  violation  of  the  letter  and  spirit 
of  the  currency  act,  and  of  a  nature  to  be  detrimental  to  the  standing 
and  working  ability  of  the  bank.     *     *     * 

The  stipulations,  which  were  carried  out,  for  the  continuance  of(  >j 
Clark  and  Gibson  as  directors  after  the  sale,  are  seen  to  be  plain  viola- 
tions, of  the  law.  The  former  was  not  to  own,  and  did  not  own,  any 
sjock,  and  the  latter  was  not  to  hold  any,  and  did  not  hold  any,  except 
by  way  of  pledge  as  security.  The_plan  adopted  and  executed  to  work(  ^J 
oiit^  a  payment  to  Gibson,  through  the  discount  by  the  bank  of  more 
than  $39,000  of  the  paper  presented  by  W.  C.  Green  &  Co.,  was  a 
violation  of  the  law.  That  .paper  was  not  bona  fide  bills  of  exchange 
drawn  against  existing  values,  nor  was  it  in  any  just  sense  commercial 
or  business  paper  owned  by  W.  C.  Green  &  Co.,  nor  was  it  understood 
to  be.  The  transaction  was  not  within  the  proviso  of  the  twenty-ninth 
section.  But  it^yas  in  substance  and  effect  a  mere  colorable  operation 
designed  to  make  Gibson  a  creditor  of  the  bank  through  a  delusive  dis- 
count thereat  to  W.  C.  Green  &  Co.,  and  was  in  contravention  of  the 
real  meaning  and  intent  of  the  body  of  that  section.  The  credit  to  Gib-  (^^}  ,■> 
son  at  the  bank  for  more  than  $17,000  upon  the  bare  check  of  W.  C. 
Green  &  Co.,  when  the  law  expressly  forbade  the  creation  of  any  such 
liability  for  more  than  $10,000  at  the  outside,  requires  no  comment.  V      .     . 

When  we  observe  the  positions  of  the  parties  and  the  related  circum-    '(^  j^i^Ujj 
stances,  it  is  impossible  to  regard  the  illegalities  which  occurred  as  jx.y^>jL  „  /, 
mere  irregularities  connected  with  the  purchase  of  the  bank  and  not    ft,  l)-nl'^ -^ 
the  subject  of  complaint  by  Mrs.  Denison.    She  has  peculiar  claims  up-  A^^./.^^ 
on  the  wakeful  solicitude  of  a  court  of  equity.    She  is  a  married  woman   ^}^  j  /^i+^ 
seeking  to  preserve  her  separate  estate  from  the  wrongs  and  folly  of  ^^^^^  ]^ 
others.    She  is  a  surety,  and  asks  to  be  relieved  from  her  engagements      ^,    w   , 
as  such,  in_a  case  where  they  were  made  to  enable  her  promisee  to  sell     '    **' 
and_her  principals  to  purchase  a  banking  institution,  and  where  upon 
thelale  the  promisee  and  her  principals,  without  her  knowledge,  united 
injljcgal  arrangements  which  reached  forward  and  contributed  to  de- 
prive it  of  all  strength  and  vigor  in  the  hands  of  her  principals,  to  make 


V\Aj    A^* 


88  FORMATION.  (Part  1 

it  nearly  if  not  quite  barren  as  a  means  to  assist  in  paying  the  debt,  and 
to  render  it  subject  to  be  deprived  of  its  franchises  at  the  instance  of 
the  official  agency  at  Washington.  The  subject  and  object  of  the 
treaty,  and  her  situation  and  the  nature  of  her  undertaking,  with  its 
liabilities,  rights  and  incidents,  closely  connected  her,  in  the  relation 
she  assumed,  with  the  body  of  the  arrangement,  and  especially  with 
that  part  of  the  plan  which  turned  the  mode  of  payment  by  her  prin- 
cipals into  a  vital  disparagement  of  the  subject  they  were  buying.  Be- 
ing^ mere  surety:  in  regard  to  the  purchase,  she  was  entitled  to  look  to 
the  bank  to  be  acquired,  and  the  benefits  and  advantages  TTcould  yield 
in  the  state  in  which  it  was  before  the  trade,  as  constitutrng~something 
which,  in  the  hands  of  her  principals,  could  be  subjected  and  made  sub- 
servient to  her  interests,  and  definitely  conducive  to  her  protection. 
And  being  aware  that  all  the  defendants  had  knowledge  that  Dciiison 
and  the  Greens  would  not  havje  ability  to  pay  except  as  made  able 
through  the  worth  and  productive  capacity  of  the  property  in  treaty, 
she  had  the  right  to  imply  that  Gibson  as  seller,  and  her  principals  as 
buyers,  were  not  involving  her  as  surety  to  complete  and  carry  out  an 
agreement  containing  conditions  which  were  not  only  illegal,  but  by 
then-  very  nature  such  as  must  conduce  to  despoil  the  bank  of  its  appar- 
ent and  special  value,  seriously  impair  its  earning  capacity  and  endan- 
gerjts^  existence. 

That  the^bjectionable  proceedings  which  have  been  named  crippled 
and  debased  the  bank,  that  tliey  exposed  it  to  a  forfeiture  of  its  fran- 
chises, and  much  contributed  to  the  final  catastrophe  which  happened 
in  little  less  than  six  months  after  the  sale,  cannot  be  doubted,  and  in 
my  judgment,  they  afforded  the  complainant  proper  ground  for  relief? 
Wn  Indeed,  it  may  be  deduced  from  settled  principles  in  this  country  and 
in  England,  in  accordance  with  what  is  distinctly  affirmed  in  the  civil 
law,  that  the  agreement  of  the  surety  is  not  binding  where  the  bargain 
between  the  primary  parties  out  of  which  it  springs  is  contaminated  by 
positive  illegalities.  Domat  says :  "If  in  the  principal  obligation  there 
is  any  essential  vice  which  may  annul  it,  as  if  *  *  *  it  is  contrary 
to  law,  the  obligation  of  the  surety  is  likewise  annulled.  For  no  one 
can  take  surety  for  validating  engagements  that  are  vicious  in  them- 
selves." Article  1.  And  again :  "Where  the  [primary]  obligation  has 
for  its  cause  some  commerce  or  some  disposition  prohibited  by  law, 
the  obligation  of  the  surety  will  be  without  effect  as  well  as  that  of  the 
principal  debtor."  Article  4,  pt.  1,  b.  3,  t.  4  (section  5,  Cush'g  Ed.). 
See,  also,  Swift  v.  Beers,  3  Denio  (N.  Y.)  70;  Dedham  Bank  v.  Chick- 
ering,  4  Pick.  (Mass.)  314,  and  cases;  Boston  Hat  Manufactory  v. 
Messinger,  2  Pick.  (Mass.)  223,  and  cases;  Levy  v.  Wise,  15  La.  Ann. 
38 ;  Kimball  v.  Newell,  7  Hill  (N.  Y.)  116.  The  instances  in  which  the 
surety  will  be  held,  notwithstanding  the  bare  invalidity  of  the  principal 
undertaking,  in  consequence  of  the  incapacity  of  the  principal  and  the 
like,  are  noticed  in  Domat,  and  also  in  Kimball  v.  Newell.  But  the  rule 
governing  these  cases  has,  of  course,  no  application  here. 


Ch.  3)        GENERAL  ESSENTIALS   TO  CONTRACTS  OF  SURETYSHIP.  89 

It  is-qttite  true  that  the  principals  of  IMrs.  Denison  have  not  essayed  p^  V^py^'^ 
to  rescind  the  arrangement,  and  have  not  restored  anything-  to  Gibson. '^-,;l;w>>^.>*^';''^^'''' 
BuLthis^  cjrcumsjtance  can  be  of  no  avail  against  her.     Whether  her  w'-'"!<^  .,  ..*vw» 
principals  were,  or  believed  they  were, "not  in  a  pT^sitiOn  in  which  they 
could  compel  revocation,  or  whether  they  did  or  did  not  desire  to  recede, 
is  not  material.     Her  rights  are  not  foreclosed  by  the  passiveness  of 
those  who  were  parties  to  the  illegalities.    Having  been  induced  to  be- 
come surety  in  the  purchase  of  a  bank,  when  her  principals  and  the  sell- 
er, without  her  knowledge,  adopted  terms  and  conditions  which  were 
illegal,  greatly  injurious  to  the  bank,  prejudicial  to  her  interests,  and 
serving  to  impair  her  chance  of  protection  and  indemnification,  she 
ought  not,  on  applying  for  relief  from  her  undertaking,  to  have  the 
doors  of  the  court  closed  against  her  upon  the  objection  that  the  seller 
and  her  principals  have  allowed  the  matter  to  stand 

The  defendant  Gibson  can  no  more  rely  upon  this  as  an  answer  to  her 
than  a  complainant,  who  seeks  the  aid  of  the  court  for  the  execution 
of  a  contract  he  has  performed,  can  repel  the  defense  of  illegality,  as- 
serted by  his  adversary,  by  insisting  that  the  allowance  of  the  defense 
will  enable  the  defendant  to  retain  the  consideration.  The  court  will 
not  refuse  to  relieve  the  innocent  surety  because  the  creditor  is  unable 
to  extricate  himself  from  the  consequences  and  entanglements  of  his  il- 
legal agreement,  out  of  which  the  engagements  of  suretyship  arose.       Xf^t  ^^^^^ 

And  complainant's  equity  is  not  subverted  or  impaired  by  the  cir-  k^.^ ,  ,jL..|^^  /- 
cum  stance"  that  one  of  the  parties  for  whom  she  became  surety  was  i^^o  A>i--v>*C<>. 
and  is  her  husband,  who  may,  in  consequence  of  that  relatiow,  reap 
some  benefit  from  her  success.  A  mere  moral  incident  of  that  kind, 
however  likely  to  occur,  can  have  no  legal  influence.  Her  rights  are 
no  less  than  they  would  be  if  a  separation  had  been  caused  by  divorce 
or  death.  "  / 

The_,rule  in  these  cases  for  cancellation  may  be  different  where  the  [^Li 

ground  of  relief  is  a  mere  private  fraud  practiced  upon  the  principal  ^  ,       , 

aloneT^nd  where  no  question  of  absolute  illegality  or  of  public  policy  p"^'=- //"•'^f 
is  involved.  But  this  is  not  such  a  case,  and  that  point  does  not  demand 
examination,  and  is  not  considered.  PJ.ere  we  have  positive  illegality,  a 
violation  of  public  policy,  and  a  fraud  of  a  public  nature,  which  was 
adapted  to  operate,  and  did  operate,  against  complainant  with  all  the 
severity  and  mischief  of  a  direct  and  immediate  fraud  upon  her.  She 
seems  to  have  been  unaware  of  these  objectionable  doings,  and  was  un- 
der no  duty  to  watch  for  them.  She  was  justified  in  assuming  that 
the  other  parties  were  conforming  to  the  law  of  the  land,  and  were 
not  impairing  the  property  which  formed  the  subject  of  the  purchase, 
by  illegal  conditions  in  the  bargain.  A  passage  in  Lord  Hardwicke's 
judgment  in  Chesterfield  v.  Janssen  is  noteworthy  in  this  connection: 
"Particular  persons,  in  contracts,  shall  not  only  transact  bona  fide  be- 
tween themselves,  but  shall  not  transact  mala  fide  in  respect  of  other 
persons  who  stand  in  such  relation  to  either  as  to  be  afifected  by  the 
contract  or  the  consequences  of  it ;  and  as  the  rest  of  mankind  besides 


90  FouMATioN.  (Part  1 

the  parties  contracting  are  concerned,  it  is  properly  said  to  be  governed 
on  public  utility."  2  Ves.  Sr.  125-156.  See,  also,  Egerton  v.  Earl 
Brownlow,  4  House  of  Lords  Cases,  140  to  152,  160  to  164,  173  to  177, 
195  to  197,  238  to  246. 

f'  The  position  that  the  bill  is  insufficient  to  permit  relief  on  the  ground 
mentioned  is  not  maintainable.  The  terms  of  the  bargain,  as  settled 
and  carried  out,  are  quite  fully  given,  and  they  show  with  reasonable 
clearness  that  the  plan  for  paying  the  $61,106.54,  as  fixed  and  executed, 
was  not  only  illegal,  but  of  a  nature  to  cripple  the  bank  and  seriously 
impair  its  earning  capacity  and  value ;  and  the  bill  alleges  that  these 
jiroceedings  were  a  fraud  on  the  bank,  and  through  their  fraudulent 
effect  upon  that  were  a  fraud  upon  complainant.  The  case  is  before  us 
on  final  hearing,  upon  pleadings  and  proofs,  and  it  is  neither  urged,  nor 
is  there  ground  for  urging,  that  any  defendant  has  been  misled.  With- 
out enlarging  this  opinion  by  repeating  what  the  bill  contains,  it  is  suf- 
ficient to  observe  that  the  allegations  will  justify  the  relief  sought  with- 
out departing  from  the  course  of  the  court,  or  even  going  so  far  as 
the  authorities  would  allow.  Hale  v.  Chandler,  3  Mich.  531 ;  Tong  v. 
Marvm,  15  Mich.  60 ;  Attorney  General  v.  Corporation  of  Poole,  4 
Myl.  &  C.   17-28;  WiUiams  v.  Earl  of  Jersey,  1  Craig  &  P.  91 ;   Smith 

,  v.  Kay,  7  House  of  Lords  Cases,  750. 

Whether  in  point  of  fact  the  defendants  were  at  the  time  aware  that 
their  proceedmgs  were  illegal  and  fraudulent  is  not  a  subject  of  inquiry, 
because,  admitting  they  were  not,  the  complainant's  equity  is  just  the 
/same. 

'  I  think  the  decree  of  the  circuit  court,  in  consequence  of  the  delay 
occasioned  by  the  appeal,  should  be  modified  by  a  reasonable  enlarge- 
ment of  the  time  prescribed  for  delivering  to  the  register  the  promis- 
sory notes  mentioned,  and  that  in  all  other  respects  it  should  be  af- 
firmed, with  costs  against  the  defendant  Gibson,  and  that  the  case 
should  be  remanded  for  the  execution  of  the  decree. 


COLES  V.  STRICK. 

(Court  of  Queen's  Bench,  1850.    15  Adol.  &  El.  [N.  S.]  2.) 

Assurnpsit.  Thejdeclaration  stated  that,  whereas,  one  William  Henry 
Smith,  before  and  at  the  time  of  the  making  of  the  promise,  etc.,  was 
indebted  to  plaintiff  in  £200.,  for  work  done  by  plaintiff  for  Smith  on 
his  retainer  and  at  his  request,  and  for  money  paid,  etc.,  and  there- 
upon, to  wit,  on,  etc.,  jn  consideration  of  the  premises,  and  that  plain- 
tiff, at  the  request  of  defendant,  would.wriLe  and  send  to  Smith  an  ac- 
knowledgment in  writing  that  he,  plaintiff,  had  no  legal  claim, upon 
Sn\ith  in  respect  of  the  said  debt,  defendant  undertook,  and  promised 
plaintiff,  to  be  answerable  to  plaintiff  for  the  due  payment  thereof  to 
him  within  twelve  calendar  months  then  next  ensuing:   And  the  plain- 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS  OF  SURETYSHIP.  91 

tiff  further  avers  that  he,  confiding,  etc.,  did  afterwards,  to  wit,  on, 
etc.,  write  and  send  to  Smith  an  acknowledgment  in  writing  that  he, 
plaintiff,  had  no  legal  claim  upon  Smith  in  respect  of  the  said  debt; 
but  plaintiff  says  that,  although  twelve  calendar  months  since  the  time 
of  the  writing  and  sending  of  the  said  acknowledgment  had  elapsed 
before  the  commencement  of  this  suit,  and  although  Smith  has  not 
paid  the  said  sum  of  money  or  any  part  thereof  to  plaintiff,  of  which 
defendant,  at  the  expiration  of  the  said  twelve  calendar  months,  and 
from  thence  hitherto  continually,  had  notice,  yet,  etc. ;  breach,  nonpay- 
ment of  the  £200.  or  any  part  thereof. 

There  were  counts  for  goods  sold  and  delivered,  work  and  niaterials, 
money  lent,  and  money  paid,  and  for  interest,  and  on  an  account  stated. 

The  defendant  pleaded  non-assumpsit  to  the  whole  declaration,  ex- 
cept as  to  i4.  and  £21.  7s.  8d.,  which  sums  he  paid  into  court  on  the 
last  count.  The  plaintiff  joined  issue  on  the  first  plea,  and  took  the 
£25.  7s.  8d.  out  of  court. 

The  defendant  also  pleaded  to  the  first  count  as  follows : 

FleaT^.  That  tire  promise  in  the  first  count  mentioned,  and  the  after- 
mentioned  request  of  the  said  W.  H.  Smith,  were  made  after  the  pass- 
ing of  an  act,  etc.  (7  &  8  Vict.  c.  96),  "to  amend  the  law  of  insolvency, 
bankruptcy,  and  execution,"  and  while  that  act  was  in  force,  to  wit,  on, 
etc.  That,  before  and  at  the  time  of  the  making  of  the  promise,  Smith 
was  a  prisoner  in  execution  upon  a  judgment  theretofore,  to  wit,  on, 
etc.,  obtained  against  him  in  the  court,  etc.  (Common  Pleas),  by  one 
Edward  Rawson  Clark,  in  an  action  against  the  said  Smith  for  the  re- 
covery of  a  debt,  and  was  a  trader  within  the  meaning  of  the  statutes 
relating  to  bankrupts  which,  on  the  day  and  year  last  aforesaid  (12th 
February,  1847),  were  in  force,  and  owed  debts  amounting  to  £300. 
and  upwards,  and  was  desirous  of  petitioning  the  Court  of  Bankruptcy 
for  the  Bristol  district,  within  which  he.  Smith,  had  resided  twelve. cal- 
endar months,  for  protection  from  process  under  the  provisions  of  the 
said  act  of  Parliament,  as  a  trader  within  the  meaning  of  the  said  stat- 
utes, owing  debts  amounting  in  the  whole  to  less  than  £300,... and,  in 
support  of  such  petition,  of  falsely  representing  himself  to  the  last- 
mentioned  court  to  be  a  trader  within  the  meaning  of  the  said  statutes, 
owing  debts  amounting  in  the  whole  to  less  than  £300.;  all  which 
premises  the  said  Smith  at  the  time  when  defendant  made  the  said 
premise,  and  at  the  time  when  Smith  requested  defendant  to  make^Le 
same  as  after  mentioned,  well  knew.  That  he  so  made  the  said  promise 
in  the  first  count  mentioned,  at  the  request  of  Smith,  then  to  him  in 
that  behalf  made.  That  he  so  made  the  said  promise,  and  that  Smith 
so  requested  him  to  make  the  same,  each  of  them  with  the  intent  that 
bylhe  aid  of  the  said  acknowledgment  in  writing  Smith  might,  on  scl_ 
petitioning  as  aforesaid  in  support  of  such  his  petition^. be  the  better 
a'BlFfalsely  to  represent  to  the  said  court  that  he.  Smith,  owed  delfts 
amounting  in  the  whole  to  less  than  £300.  That  plaintift",  at  the  time  of 
the  making  the  said  promise,  knew  the  said  corrupt  purpose  for  which 


92  FORMATION.  (Part  1 

the  said  promise  was  so  made,  and  with  that  knowledge  accepted  the 
said  promise,  and  assented,  for  the  purpose  after  mentioned,  to  write 
and  send  to  Smith  the  said  acknowledgment  in  writing,  for  the  pur- 
pose of  aiding  Smith  in  making  such  false  representations  to  the  last- 
mentioned  court  as  aforesaid  for  the  purpose  so  intended  by  Smith  as 
aforesaid ;  and  so  the  defendant  says  that  the  said  promise  was  and 
is  wholly  void.    A'enfication. 

Plea  3.  As  to  ;£1G1.  18s.  3d.,  parcel  of  the  sum  mentioned  in  the  last. 
count :  That  the  promise  next  mentioned,  and  the  after-mentioned  re- 
(juest  of  W.  H.  Smith,  were  made  after  the  passing  of  an  act,  etc.  (7 
&  8  Vict.  c.  9G).  The  plea  then  stated  the  imprisonment  of  Smith  in 
execution,  and  that  he  was  a  trader,  etc.,  exactly  as  in  plea  2,  and  that 
he  owed  debts  amounting  to  £300.  and  upwards,  and,  among  these,  a 
debt  to  plaintiff  of  £161.  18s.  3d.,  and  that  he  was  desirous  of  petition- 
ing for  protection  from  process,  and  of  falsely  representing,  etc.  (as  iu 
plea  2,  with  averment  of  knowledge  by  Smith  as  in  that  plea).  That 
thereupon,  and  before  the  stating  of  the  account  in  the  last  count  men- 
tioned, to  wit,  on,  etc.,  defendant,  at  the  request  of  Smith  then  to 
him,  defendant,  in  that  behalf  made,  promised  plaintiff  that,  if  plaintiff 
would  write  and  send  to  Smith  an  acknowledgment  in  writing  that  he» 
plaintiff,  had  no  legal  claim  upon  Smith  in  respect  of  the  said  debt,  de- 
fendant would  be  answerable  to  plaintiff  for  the  due  payment  thereof  to 
plaintiff  within  twelve  calendar  months  then  next  ensuing.  Averments, 
as  in  plea  2,  of  the  intent  with  which  defendant's  promise  and  the  re- 
quest of  Smith  were  made,  and  that  plaintiff  knew  the  corrupt  purpose, 
etc.,  and,  with  that  knowledge,  accepted  the  promise,  and  assented  to 
write  and  send  the  acknowledgment  to  Smith,  for  the  purpose  of  aiding 
Smith  in  making  the  false  representation,  etc.  That  plaintiff  after- 
wards, to  wit,  on,  etc.,  relying  on  defendant's  said  promise,  did  write 
and  send  to  Smith  the  said  acknowledgment  in  writing  that  he,  plain- 
tiff, had  no  claim  upon  Smith  in  respect  of  the  said  debt.  That  the  said 
account,  so  far  as  it  relates  to  the  said  sum  of  £161.  18s.  3d.,  was  stated 
after  twelve  calendar  months  had  elapsed  from  the  time  of  making  the 
said  promise,  and  when  the  said  promise  of  £161.  18s.  3d.  was  due  from 
defendant  to  plaintiff  upon  and  by  virtue  of  the  said  promise,  and 
that  the  same  was  so  stated,  so  far  as  relates  as  aforesaid,  of  and 
concerning  the  last-mentioned  sum  and  no  other  money  whatever. 
That  the  said  sum  of  £161.  18s.  3d.,  parcel  as  aforesaid,  was  and  is 
claimed  by  plaintiff  to  be  due,  and  sought  to  be  recovered  as  money 
found  due,  on  the  stating  of  the  said  account:  and  so  defendant  says 
that  the  said  promise  to  pay  the  last-mentioned  sum  was  and  is  wholly 
void.    Verification. 

Replication  to  each  plea,  2  and  3 :    De  injuria.    Issues  thereon. 

On  the  trial,  before  Wightman,  J.,  at  the  sittings  in  Middlesex  after 
last  Hilary  term,  it  appeared  that  Smith,  being  in  custody  as  stated  in 
the  pleas,  had,  in  18-16  and  1847,  endeavored,  without  success,  to  obtain 
his  discharge  as  a  certificated  bankrupt.    See  Wearing  v.  Smith,  9  Q. 


Ch.  3)       GENERAL  ESSENTIALS  TO  CONTRACTS  OF  SURETYSHIP.  93 

B.  1024.  The  defendant  had  acted  as  Smith's  soHcitor,  and  employed 
the  plaintiff  as  his  agent;  and,  in  the  course  of  the  proceedings,  £161. 
ISs.  3d.  had  become  due  from  Smith  to  the  plaintiff,  for  his  costs.  In 
1847,  Smith  then  purposing  to  petition  as  stated  in  the  pleas,  the  de- 
fendant wrote  as  follows  to  the  plaintiff: 

"Doughty  Street,  13th  February,  1847. 

"My  Dear  Coles :  You  are  aware  that  our  friend  ]\Ir.  Smith  pur- 
poses a  fresh  application  to  the  court  at  Bristol  for  an  interim  order, 
putting  himself  down  as  a  trader  under  £300.  To  enable  him  to  do 
this,  you  and  I  must  release  him  pro  tern,  against  any  legal  claim  we 
have  against  him;  therefore,  as  he  is  better  known  to  me  than  to  you, 
I  would  take  upon  myself  any  responsibility  that  may  attach.  If,  there- 
fore, you  would,  with  your  usual  kindness,  so  far  oblige  me  as  to  send 
him  a  letter  to  the  effect  that  you  have  no  legal  claim  on  him,  I  will 
undertake  that  your  charges  are  paid,  if  not  before,  certainly  within 
twelve  months  from  this  time.  You  will  do  this  at  once  in  case  of 
necessity.    I  am,  etc.,  Edward  Strick. 

"Robert  Coles,  Esq." 

The  plaintiff  then  wrote  to  Smith: 

"Dear  Sir :  I  hereby  release  you  from  any  claim  I  may  have  against 
you  up  to  this  time.    Yours  truly,  Robert  Coles." 

His  charges,  however,  were  not  paid  according  to  the  promise.    The    • 
plaintiff's  case  at  the  trial  rested  mainly  on  the  defendant's  letter  of 
February  13th.     A  verdict  was  found  for  plaintiff  on  the  first  issued 
and  for  defendant  on  the  others,  with  leave  to  the  plaintiff  to  move  that/,  a^^^/ 
a  verdict  might  be  entered  for  hiiiTon  these  issues~as~tHe  first,  withi 
£1()1.  18s.  3d.  damages,  or  such  sum  as  the  master  might  find  to  be  due.^ 

Shee^-^Prjt  ,  Tinw  mnvpH  arrnrrlincrly  (before  Lord  CaMPBELL,  C.  J., 

and  Patteson,  Wightman,  and  Erle,  JJ.)  [Wightman,  J.  The 
facts  were  proved  as  pleaded ;  you  have  to  contend  that  they  are  no, 
defense.  The^properjUQtion, J f  anyj^seems_tQ..be.ioi:-ijidgnient non^b- ' 
stania_xeredicto.]  Perhaps  that  is  so.  The  contract  was  legal,  and 
f ouM^d-i^Kail^onsideration ;  whether  an  adequate  one,  or  not,  the 
court  will  not  inquire.  [Lord  Campbell,  C.  J.  There  is  abundant 
consideration;  the  question  is  on  the  legality.]  The  transaction  was 
legal.  There  was  nothing  unreasonable  or  against  morality  in  the  ar- 
rangement as  described.  St.  7  &  8  Vict.  c.  96,  referred  to  in  the  pleas, 
does  not  differ  from  St.  5  &  6  Vict.  c.  116,  in  any  respect  material  to 
this  question.  The  earlier  act  (section  1)  empowered  the  Court  of 
Bankruptcy  to  grant  protection,  by  an  interim  order  on  petition,  to 
any  person  being  a  trader  within  the  bankrupt  acts,  "but  owing  debts 
amounting  in  the  whole  to  less  than  £300."  St.  7  &  8  Vict.  c.  96,  §  6, 
extends  this  power  to  the  case  of  any  prisoner  in  execution  on  a  judg- 
ment for  debt,  being  such  trader,  owing,  etc.  (as  before).  If  the 
creditors  of  a  trader  had  actually  released  him  to  an  amount  which 
brought  his  debts  within  £300.,  he  might  legally  state  them  to  the  court 
at  such  reduced  amount.    The  whole  question  is  whether  nothing  short 


04  Fou.MATiON.  (Part  1 

of  a  release  will  authorize  such  a  representation.  The  plaintiff  here  did 
not  release;  but  his  acknowledgment  was  an  effectual  bar  to  his  re- 
covering against  Smith,  the  insolvent.  [P.\TTESOX,  J.  Smith  was  not 
cleared.  If  the  defendant,  as  surety,  had  paid  Ihe  plalriTiff^  he^might 
h.TVe^recovered  over  against  Smith.  Lord  Campbell,  C.  J.  Does  the 
debt  now  subsist,  as  between  Smith  and  the  plaintiff,  or  is  it  extin- 
guished? If  it  exists,  the  court  to  which  the  petition  went  is  deceived. 1 
There  may  be  a  valid  arrangement,  though  the  parties  do  not  go  to 
the  expense  of  a  release.  [Wigiitman,  J.  I  doubt  whether  this  is  not 
in  effect  a  release,  as  between  the  plaintiff  and  Smith.  I  do  not  sec 
how,  after  the  acknowledgment  given  under  his  hand,  the  plaintiff 
could  have  sued  Smith.]  Technically,  there  ought  to  have  been  a  re- 
lease under  seal;  but  the  transaction  here  had  the  same  effect.  [Erle, 
J.  If  the  plaintiff  had  sued  Smith,  what  would  the  plea  have  been? 
WiGHTMAN,  J.  According  to  your  argument,  he  would  have  pleaded 
a  parol  discharge  on  a  new  consideration.]  That  might  have  been  the 
form.  [Erle,  J.  Was  it  actually  intended  here  that  Smith  should  be 
released?  As  to  judgment  non  obstante  veredicto,  which  must  turn  on 
the  words  of  the  plea,  it  appears  by  the  averments  that  the  promise  was 
made  in  order  to  carry  a  falsehood  through.]  The  transaction  is  not 
regular ;  but  nothing  so  corrupt  or  illegal  appears  as  to  render  it  void. 
[Lord  Campbell,  C.  J.    We  will  look  into  the  pleas.] 

Cur.adv.  vult. 

Lord  CamTbell,  C.  J.,  on  the  following  day,  delivered  the  judgment 
of  the  court. 

There  will  be  no  rule  in  this  case.  The  evidence  at  the  trial  was  quite 
sufficient  to  support  the  pleas,  and  to  show  that  there  was  no  bona  fide 
intention  of  releasing  Smith,  but  only  a  design  to  impose  upon  the  com- 
missioner of  the  Court  of  Bankruptcy.  And  the  pleas  being  proved, 
there  is  no  ground  for  judgment  non  obstante  veredicto.  The  aver- 
ments  show  an  intention  in  the  plaintiff  and  defendant  to  defeat  the  law, 
and  a  contrivance  to  deceive  the  commissioner  and  rnake  him  believe 
that  Smith  owed  less  than  iSOO.,  when  in  fact  he  owed  more. 

Rule  refused. 


WARREN  V.  CRABTREE. 
(Supreme  Judicial  Court  of  Maine,  1821.    1  Greenl.  1C7,  10  Am.  Dec.  51.) 

Assumpsit  by  the  indorsee  against  the  indorser  of  a  promissory  notjg 
dated'May  17, 1812,  signed  by  Ebenezer  Mayo,  and  made  payable  to  the 
defendant  or  order,  for  $150  in  60  days  with  grace,  and  by  the  defend- 
ant indorsed  to  the  plaintiff".    The  defense  was  usury. 

It  appeared  that  Hugh  ]\IcLellan,  some  time  m  the  year  1811,  hav- 
ing occasion  for  a  sum  of  money,  applied  to  the  plaintiff'  f^^r  tlie_ac- 
Qommodation ;  that  it  was  agreed  between  him  and  the  plaintiff  that,  if 
he  wouiH~procure  a  good  note  for  $500  payable  in  90  days,  he,  the 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  95 

plaintiff,  would  discount  it,  at  the  rate  of  1  per  cent,  per  month ;  that 
in  pursuance  ot  this  agreement  McLellan  did  procure  a  note  signed  by 
Ebenezer  Mayo,  and  made  payable  to  the  defendant  or  his  order,  for 
$500,  in  90  days,  which  note  the  defendant  indorsed,  and  AIcLellan 
thereupon  obtained  the  money  of  the  plaintiff  at  a  discount  of  i  per 
cent,  per  month,  which  was  the  market  value  of  the  note.  At  this 
time  it  was  the  intention  of  ]\IcLellan  to  pay  the  note  at  its  maturity, 
which  he  had  undertaken  to  Alayo  and  Crabtree  that  he  would  do.  But 
before  that  time  arrived,  finding  that  he  should  not  be  able  to  pay  the 
whole  of  the  sum  as  he  had  intended,  he  agreed  with  the  plaintiff  that 
he  would  pay  $200  upon  the  note  when  it  should  become  due,  and  for 
the  remaining  $300  he  would  procure  another  negotiable  note  from  the 
same  parties  and  indorsed  as  before,  payable  in  60  days,  which  he  ac- 
cordingly did,  and  paid  the  plaintiff  the  same  rate  of  discount  as  be- 
fore. This  last  note,  also,  he  expected  to  pay  at  its  maturity ;  but,  be- 
ing unable  to  do  it,  he  again  agreed  with  the  plaintiff,  before  this  note 
became  due,  to  pay  $150  thereon,  and  for  the  remaining  moiety  he  v^as 
to~procure  another  note,  signed  and  indorsed  as  before^  paying  the 
same  discount.  Accordingly  he  procured  the  note  now  in  stiit,  and 
passed  it  immediately  to  the  plaintiff.  McLellan  did-flot  indorse  either 
of  these  notes;  and  it  was  proved_thaL_Lhe,.plaintiff  paid-their---fair 
market  value7  and  that  Mayo  and  Crabtree  were  secured  against  their 
liaHlity  on  tEis  note,  by  another  note  made  by  IMcLellan  and  indorsed 
b^^nother  person  to  them. 
""Upon  this  evidence  the  judge  who  presided  at  the  trial  of  this  cause 
directed  a  nonsuit :  itT)emg  agfeed~l)v"the  parties"  that  If  "should  be  set  , 
asjde,  if,  in  the  opinion  of  the  court,  the  law  was  with  the  plaintiff  upon^  \ 
the  evidence  reported  by  the  judge.  ^" 

"MellEN,  C.  J.,  delivered  the  opinion  of  the  court,  as  follows : 

The  sum  demanded  in  this  action  is  part  of  a  debt  contracted  in  the 
year  1811,  (Here  the  Chief  Justice  recapitulated  the  facts  in  the  case 
as  before  stated.) 

In  examining  the  question  presented  in  this  case,  it  does  not  seem  ma- 
terial whether  the  note  in  suit  be  considered  as  a  substitute  for  a  usu- 
ridu's"TioIe7  aiid  given  to  secure  the  balance  due  on  the  second  note,  or, 
as"'being  usurious  in  itself,  and  in  its  origin,  by  reason  of  the  verbal 
agreement  to  pay  12  per  cent,  interest. 

It  is  a  principle  well  settled  that,  if  the  "original  contract  is  usurious, 
any  subsequent  contract  to  carry  it  into  effect  is  also  usurious."  3  D. 
&  E.  531 ;  Bridge  v.  Hubbard,  15  Mass.  96,  8  Am.  Dec.  86.  And  if  the 
substituted  security  be  given  to  the  party  to  the  original  security,  or 
his  representative,  it  is  void,  according  to  the  doctrine  of  Cuthbert  v. 
Haley,  3  D.  &  E.  390.  / 

The  plaintiff  opposes  the  defense  on  two  grounds:  (1)  Because  the 
plaintiff  must  be  considered  as  having  purchased  the  notes  in  the  mar- 

2  0  The  arguments  of  counsel  are  omitted. 


96  FORMATION.  (Part  1 

kct,  at  a  fair  discount,  and  under  such  circumstances  that,  according 
to  the  case  of  Churchill  v.  Suter,  the  contract  cannot  be  deemed  usu- 
rious.   (2)  Because  the  contract,  if  usurious,  was  not  made  by  .the  de- 
fendantj  and  of  course,  that  he  is  not  entitled,  by  law,  to  set  up  such 
defense. 
h-^UtZ^^      ^     With  respect  to  the  first  objection,  when  we  look  at -the_evideaceJji 
'OM^f.i,  ♦//   this  case,  we  are  not  able  to  discover  how  the  notes  can  be  considered 
^  in^-^j  *■  as  liaving  been  purchased  in  the  market  by  the  plaintiff,  so  as  to  pro- 
j^f^'i         tect  them  from  the  operation  of  the  statute.    In  cases  of  such  purchase, 
♦^  -  tU^YA/  the  note  is  fairly  made  without  previous  concert,  or  any  stipulations  re- 

lating to  interest,  and  without  reference  to  any  one  in  particular  as  the 
intended  purchaser.  The  note,  being  signed  and  indorsed,  is  offered 
for  sale.  Its  value  in  the  market  must  depend  on  the  responsibility  of 
the  parties  to  it,  the  time  of  payment,  and  the  scarcity  of  money ;  and 
the  purchaser  takes  these  particulars  into  consideration,  and  makes  the 
purchase  at  what  is  supposed  a  fair  discount.  But  in  the  present  case 
all  was  arranged  beforehand.  The  loan  was  agreed  upon,  the  rate  of 
usurious  interest  settled,  between  the  plaintiff  and  McLellan,  for  whose 
use  the  loan  was  to  be  made,  and  the  names  of  the  promisor  and  indorser 
were  known  and  accepted  as  good.  Surely,  if  such  a  mode  of  doing 
the  business  could  change  the  whole  transaction  into  a  fair  and  inno- 
cent purchase  of  the  note  in  the  market,  the  law  would  be  worse  than 
useless,  and  such  an  evasion  no  honor  to  our  courts  of  justice. 
J  ^j  I  )C  The  plaintiff's  second  point  is  entitled  to  more  respect;  but  we  ap- 
pU,  lhJ^  -  prehend  it  does  not,  in  reality,  possess  any  more  merit  or  solidity  than 
^        ,  I       -J    the  former. 

"  '        1*^  In  the  case  of  Chadbourn  v.  Watts,  10  Mass.  121,  6  Am.  Dec.  100, 

the  substituted  security  was  given  to  Lancaster,  and  afterwards  in- 
dorsed to  Chadbourn,  the  plaintiff,  who  had  no  notice  that  usury  had  in- 
fected any  of  the  preceding  securities  which  had  been  given  up;  and 
in  this  respect  it  differs  from  the  case  at  bar. 

In  Cuthbert  v.  Haley,  before  cited,  Grose,  J.,  expressly  states  that  if 
the  bond,  which  was  the  substituted  security,  had  been  given  to  Plank, 
who  was  the  party  to  the  original  security  and  lender  of  the  money  on 
usurious  interest,  it  would  have  been  void ;  and  the  court  proceeded  on 
this  principle. 

In  Young  v.  Wright,  1  Camp.  139,  the  contract  for  usury  was  not 
made  by  the  defendant,  but  between  third  parties;  but  Lord  EHenbor- 
ough  decided  the  defense  to  be  good. 

According  to  the  decision  in  the  case  of  Bridge  v.  Hubbard,  15  ^lass. 
96,  8  Am.  Dec.  86,  cited  at  the  bar,  it  is  of  jnojrnportance  that  the  cgn- 
tract  for  the  usury  was  made  by  IMcLellan  with  the  plaintiff  and  the 
notes  signed  by  others,  he  being  no  party  to  them,  because  it  was  known 
by  all  concerned  that  the  loan  was  for  his  exclusive  benefit,  and  tEe 
mode  of  securing  the  sum  was  agreed  to  by  the  plaintiff.  It  is  true 
the  court  were  divided  in  opinion  in  that  case;  but  the  division  was 
upon  a  question  that  does  not  seem  to  arise  in  the  present  case.     Two 


Ch.  3)        GENERAL   ESSENTIALS  TO   CONTRACTS  OF  SURETYSHIP.  97 

of  the  court  there  considered  the  former  contract,  which  all  admitted 
to  be  usurious,  as  canceled  and  extinguished  by  payment.  In  the  case 
before  us  it  expressly  appears  that  the  last  note  was  given  to  secure 
the  balance  due  on  the  second.  But  if  this  distinction  did  not  exist,  we 
might  refer  to  the  case  of  Maddock  v.  Hammet,  7  D.  &  E.  184,  to  show 
that  such  substitution  of  securities  does  not  amount  to  payment,  and 
also  to  Davis  v.  Maynard,  9  Mass.  242,  by  which  it  appears  that  a  new 
and  even  higher  security,  given  for  a  debt  secured  by  mortgage,  does 
not  discharge  the  mortgage. 

If  the  note  declared  on  be  considered  as  unconnected  with  the  pre- 
ceding notes,  the  result  must  be  the  same,  because,  at  the  time  it  was 
given,  there  was  an  express  promise  on  the  part  of  McLellan  to  pay 
12  per  cent,  interest,  and  all  was  executed  according  to  the  wishes  of 
the  plaintiflf,  and  by  a  preconcerted  arrangement  with  him  for  the 
usury,  and  for  the  kind  of  security.  If  the  principal  and  interest  are 
secured)  by  distinct  notes,  or  the  usury  by  a  parol  promise  only,  and 
all  are  executed  at  the  same  time,  all  are  void,  because  such  promise 
to  pay  interest  constituted  a  part  of  the  contract  for  the  loan,  and  the 
statute  declares  the  whole  contract  void.  If  such  a  device  could  pro- 
tect the  lender  from  the  penalties  of  the  statute,  it  would  always  be 
evaded  with  impunity. 

We  are  therefore  all  of  opinion  that  the  motion  to  set  aside  the  non- 
suit must  be  overruled,  and  that  there  must  be 

Judgment  for  the  defendant. 


HOOK  V.  WHITE. 
(Supreme  Court  of  Pennsylvania,  1901.    201  Pa.  41,  50  Atl.  290.) 

Argued  October  21,  1901,  Appeal,  No.  23,  October  Term,  1901^y 
plaintiff,  from  judgment  of  Common  Pleas,  Greene  County,  June  Term, 
1897,  No.  8,  on  verdjct  for  defendants  in  case  of  Thomas  Hook  and 
Uriah  Inghram,  executors  oFTIiomls~Goodwin,  deceased,  now  for  use 
of  George  Goodwin,  against  Z.  G.  White,  alias  Zadoc  G.  White,  Wm. 
Blair,  alias  William  Blair,  and  Hicey  S.  Kent,  executors  of  Mordecai 
Kent,  deceased.  Before  McCollum,  C.  J.,  and  Mitchell,  Dean, 
Fell,  Brown,  Mestrezat,  and  Potter,  JJ.    Affirmed. 

Issue  to  determine  the  validity  of  a  judgment  entered  on  z^lndgm^tit 
note.    Before  Crawford,  P.  J.  ^  9    L      JL    ' 

At  the  trial  the  evidence  for  the  defendants  tended  to  show  that  the  ^ -^iVT^ 
note  in  controversy~was  dat'ecTUctober  21),  1882,  calling  for  payment  of  ^  ^^\\  jj^' 
$S1S,  and  "that  it  was  given  by  Z.  G.  White  to  Thomas  Goodwin,  ^'^^^-  (J!^^f   _T 
ative,  immediat^ely  before  White  made  an  assignment  for  creditors  ;  that      ^^*^  y»**-^ 
tlTerejwasno  consideration  for  the  note ;    that  it  was  given  to  defeat 
the~creditors  of  White,  and  that  the  other  parties  to  the  note,  beside 
Hen.  Sub. — 7 


98  FORMATION.  (Part  1 

WJiite,  knew  nothing:  of  the  fraud,  and  had  signed_the  note  as  sure- 
ties^believing  it  to  be  a  bona  "fiTre'Transaction. 
~\'ercuct  and  judgment  for  defendant. 

Errors  assigned  were  various  rulings  on  evidence  and  instructions. 

Per  Curiam.  The  plaintiff  appealed  to  this  court  and  filed  twenty- 
five  assignments  of  error.  An  inspection  of  the  assignments  failed 
to  convince  the  court  of  substantial  error  in  either  of  them.  The  charge 
of  the  court  to  the  jury  was  impartial,  and  nothing  appears  in  it  which 
can  justly  be  construed  as  depriving  the  plaintiff  of  any  right  or  privi- 
lege he  was  fairly  entitled  to.  The  testimony  was  against  his  conten- 
tion and  was  so  regarded  by  the  jury.  The  verdict  was  for  the  de- 
fendant and  the  judgment  was  properly  entered  thereoni  We  there- 
fore  dismiss  all  of  the  assignments. 

Judgment  affirmed. 


SWIFT  et  al.  v.  BEERS. 

(Supreme  Court  of  New  Tork,  1S4G.    3  Denlo,  70.) 

*^'rlfrw^y.'i*V      Assumpsit,  tried  at  the  New  York  Circuit  in  February,  1844.  before 
f'j  C  v*  •  Kent,  late  Chief  Judge.    The  plaintiffs  gave  in  evidence  a  promissory 

note,  with  a  guaranty  written  under  it,  signed  by  the  defendant,  in  the 
following  word¥i" 

" "New  York,  30th  June,  1841. 

"Sixty  days  after  date  the  North  American  Trust  &  Banking  Co. 
promise  to  pay  to  the  order  of  Messrs.  Swift  &  Co.  thirty-seven  hun- 
dred dollars,  for  value  received,  with  interest,  having  deposited  with 
them  as  collateral  security  seven  bonds  of  this  company,  secured  un- 
der the  Yates  trust — three  for  one  thousand  dollars"  (giving  the 
amounts  and  numbers  of  the  bonds).        Thomas  G.  Talmage,  Pres't. 

"For  value  received,  I  guarantee  the  payment  of  the  above  note  at 
the  time  mentioned.  J.  D.  Beers." 

It  was  admitted  that  the  North  American  Trust  &  Banking  Company 

was  a  banking  association,  organized  under  the  general  banking  law. 

f    The  defendant's  counsel  moved  for  a  nonsuit,  insisting  that  the  note 

i  and  guaranty  were  illegal  and  void  ;  and  the  circuit  judge  being  of  that 

j opinion,  directed  a  nonsuit  to  be  entered.^ ^ 

^  Bronson,  C.  J.  We  have  no  doiibt  about  this  case.  The  note  is 
directly  within  the  terms  of  the  prohibition  of  the  act  of  1840 ;  and  we 
do  not  doubt  but  that  it  was  equally  within  the  intention  of  the  Legis- 
lature. X).l?t  act  has  no  reference  to  the  circulation  of  such  notes,  3s 
money,  but  was  designed  to  prohibit  them  altogether  for  any  purpose. 
The  guaranty  partakes  of  the  character  of  the  principal  contract.    It 

21  The  arguments  of  counsel  have  been  omitted. 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP. 

was  intended  to  reinforce  and  secure  it,  and  is  equally  illegal. 
cuit4«dg€^w:asj:ight  in  nonsuiting  the  plaintifiE^. 
New  trial  denied.- ^ 


MOUND  V.  BARKER. 

(Supreme  Court  of  Vermont,  1899.    71  Vt.  253,  44  Atl.  346,  76  Am.  St.  Rep.  767.) 

Debt  on  a  bond.  Special  plea  and  notice.  Trial  by  Court,  at  the 
March  Term,  1898,  Rutland  County ;  Start,  J.,  presiding.  Pro  forma 
Judgment  for  the  defendant  to  recover  his  costs.  The  plaintiff  ex- 
cepted. 

The  defendant  offer ed  tn  ^Vinty  by  parol  evidence  that  at  the  time 
the  lease  and  bond  were  executed  the  plaintiff  and  the  lessees  under- 
stqod  and  expected  that  intoxicating  liquors  would  be  sold  in  the  hotel 
leased,  in  violation  of  law,  by  the  lessees,  and  that  such  liquors  were 
sold  therein  with  the  knowledge  of  the  plaintiff.  The  plaintiff  objected!  -^^^^ 
to  this  evidence  as  contradicting  and  varying  the  written  lease.  The  ob-  \ 
jection  was  overruled  and  the  evidence  received,  and  the  plaintiff'  ex- 
cepted.^^     *    *    *  ^  it 

RowELL,  J.  When  an  agreement^  innocent  in  itself,  is  designed  by  /U^'y^^  '^  "^ 
one  of  the  parties  to  further  a  purpose  forbidden  by  the  law  or  op-W^^'^-^y^j^-fj' 
posecl  to  its  policy,  courts  will  not  enforce  it  in  favor  of  such  party,jior 
in^^vur  of  the  other  party  if  he  is  implicated  in  such  desiga.  Thus, 
when  property  is  leased  with  knowledge  on  the  part  of  the  less^rjhat 
the  lessee  intends  to  use  it  for  an  illegal  or  an  immoral  purjjose,  and 
does  so  use  it,  the  rent  therefor  cannot  be  recovered.  Sherman  v.  Wil- 
der, 106  Mass.  537 ;  Riley  v.  Jordan,  122  Mass.  231 ;  Ernst  v.  Crosby, 
140  N.  Y.  3.64,  35  N.  E.  603 ;  2  Taylor,  Land.  &  Ten.  (8th  Ed.)  §  521 ; 
Jennings  v.  Throgmorton,  Ry.  &  M.  251,  21  E.  C.  L.  7U ;  Smith  v. 
White,  L.  R.  1  Eq.  Cas.  625. 

Carrigan  v.  Lycoming  Fire  Ins.  Co.,  53  Vt.  418,  38  Am.  Rep.  687, 
is  not  opposed  to  this,  for  there  the  liquors  were  legitimately  used  in 
the  plaintiff's  drug  business,  though  occasionally  sold  in  violation  of 
law,  and  no  illegal  design  entered  into  the  making  of  the  policy.  /-  F^^-^ 

The  bond  in  suit  was  given  by  the  defendant  as  surety  for  the 
lesseeTof  a~TTC»tel,  conditioned  for  the  payment  by  them  of  the'reiifTe- 
served,  and  was  executed  at  the  same  time  as  the  lease.  The  lease 
was  innocent,  in  itself :  but,  at  the  time  of  its  execution  and  de- 
livery, both  the  plaintiff',  who  is  the  lessor,  and  the  lessees,  under- 
stood an'd  expected  that  the  hotel  would  be  used,  not  only  for  the  -en- 
tertainment of  guests,  but  that  intoxicating  liquor  would  be  sold 
th'efeiifTh  violation  of  law;    and  it  was  so  sold,  to  the  knowledge  of 

22Accord:  Board  of  Education  v.  Thompson,  33  Ohio  St.  321  (1877);    Miller 
V.  Gaskins.  Smedes  &  M.  Ch.  (Miss.)  .'=)24  (1843). 
23Arguments  of  counsel  are  omitted. 


100  FORMATION.  (Part  1 

y.  the  plaintiff.    Therefore,  if  this  suit  was  upon  the  lease  itself,  it  could 
not  be  maintained.    It  can  be  maintained  no  better  on  the  bond";   for, 
wHen  the  foundation  fails,  all  goes  to  the  ground.     Riley  v.  Jordan, 
123  Mass.  231. 
Judgment  -affirmed. 


SECTION  4.— THE  EFFECT  OF  DURESS 


1 


HUSCOMBE  V.  STANDING. 
(Court  of  King's  Bench,  Triuity  Term,  1G08.    Cro.  Jac.  187.) 

Debt  upon  an  obligation  of  £40.,  conditioned  that  Richard  Street 
should~pay  £20.  on  such  a  day,  etc.  The  defendant  pleads  that  tlie  said 
*■"  ^reet  was  irnprisoned  by  one  Eveley,  steward  of  the  Stannaries,  and 
the  ^plaintiff ,  of  covin  with  him,  and  without  any  reasonable  cause, 
detained  the  said  Street  in  prison,  against  law,  and  to  the  greaPpefil 
of  his  life,  until  the  said  Street  should  pay  to  the  plaintiff  £2-4.,  or  be- 
come bound  with  a  surety  for  the  payment  thereof;  whereupon,  to 
enlarge  the  said  Street,  and  to  avoid  danger  of  his  life,  he,  and  the  de- 
fendant as  his  surety,  entered  into  that  bond.  " 

It^-as  thereupon  demurred,  and  withouf^rgument  adjudged  for  the 
'plaintiff,  that  it  was  not  any  glea  for  the  surety,  although  it  had 
been  a  good  plea  for  the  said  Street;  for  none  shall  avoid  his  own 
bond,  for  the  imprisonment  or  danger  of  any  other  than  of  himself 
only,  and  although  the  bond  be  avoidable  as  to  the  one,  yet  it  is  good 
quoad  the  other.  Wherefore  it  was  adjudged  for  the  plaintiff.  Vide 
39  Hen.  VI,  pi.  51 ;  7  Edw.  IV,  pi.  12 ;  21  Edw.  IV,  pi.  13. 


o..,f 


TOLES  V.  ADEE  et  al. 
(Court  of  Appeals  of  New    York,  1881.     84  X.  Y.  222.) 

Appeal  from  jiKlgment  of  the  General  Term  of  the  Supreme  Court, 
in  the  Third  Judicial  Department,  in.  favor  of  plaintiff,  entered  upon 
an  order  made  November  26,  1879,  denying  a  motion  for  a  new  trial 
and  directing  judgment  on  a  verdict. 

This  action  was  brought  upon  an  undertaking  executedJaX-jStfiphen 
B.  Adee,  defendants'  testator,  for  bail. 

The  material  facts  are  stated  in  the  opinion. 

F»/v^  Andrews,  J.  The  order  of  arrest  issued  in  the  action  of  Sarah  L. 

Adee  (now  Sarah  L.  Toles),  against  her  former  husband,  Augustus 

W.  Adee,  was  in  the  form  prescribed  by  section  183  of  the  Code  of 

Procedure,  and  required-the-^eriff  to  arTest_the  defendant  and  hold 


Ch.  3)        GENERAL  ESSENTIALS   TO   CONTRACTS   OF  SURETYSHIP.  101 

him  to  bail  in  the  sum  of  $1,000.  The  sheriff  arrested  the  defendant, 
and  at  the  time  of  the  arrest  delivered  to  him  a  copy  of  the  order  of 
arrest  and  of  the  affidavit  upon  which  it  was  granted.  The  sheriff, 
after  the  arrest  had  been  made,  went  with  the  defendant  to  the  house 
of  his  father,  Stephen  B.  Adee,  upon  the  defendant's  suggestion  that 
he  would  procure  his  father  and  some  other  person  to  execute  the 
requisite  undertaking  for  his  release  on  bail.  It  was  there  proposed 
to  the  sheriff  that  he  should  accept  an  undertaking  executed"" By~!he 
father  alone.  The  sheriff  declined  to  do  this,  but  finally,  upon  tb.e 
urgent  solicitation  of  the  defendant,  agreed  that  if  the  defendant's 
father  would  execute  an  undertaking  in  the  sum  of  $2,000,  he  would 
takejrt  to  the  plaintiff's  attorneys,  and  if  they  appTOTed^and  accepted 
it,  the  defendant  should  be  discharged  from  the  arrest,  the  defendant 
onTTiT  part  agreeing  that  if  the  plaintiff's  attorneys  should  decline  to 
accept  the  undertaking,  then,  on  being  notified  of  the  fact  by  the  sher- 
iff, he  would -cause  a  new  undertaking  to  be  executed  with  two  sure- 
ties, as  required  by  the  order,  and  that  meanwhile  he  should  remain  in 
the  custody  of  his  father.  An_undertaking-wasLihereupon  executed_by 
Stephen  B.  Adee,  and  delivered  to  the  sheriff,  who^  on  receiving  it,  dis^- 
charged  the  defendant  from  actual  custody.  The  plaintiff's  attorneys 
accepted  the  undertaking,  and,  judgment  having  been  obtained  in  the 
action  in  favor  of  the  plaintiff,  thjs  action  is  broyight jrpon^  the  under- 
taking against  the  executors  of  Stephen  B.  Adee,  for  a  breach  of  tJie 
condition  that  Augustus  W.  Adee  should  hold  himself  amenable  to 
the  process  of  the  court  during  the  pendency  of  the  action,  and  to 
such  as  might  issue  to  enforce  the  judgment  therein.  \  i^j^rf^^ffj^ 

The  undertaking  was  not  in  conformity  with  the  statute.  (!JTh£_stat-  r^  »f  ^'^ot^*/ 
ute  prescribes  that  the  undertaking  of  bail  shall  be"  executed  by  two  or  '  '  '' 
m^re'^baTl.  Code,  §  187.  ijNor,  did  the  under^aking_comply  with  the 
order  of  arrest.  The  order  required  the  sheriff  to  take  bail  in  the  sum 
of  $1,000,  whereas'the  undertaking  is  in  double  that  sum.  It  is  insisfed 
by  the  defendants  that  the  undertaking  is  void  colore  officii  within 
the  statute,  which  enacts  that  "no  sheriff  or  other  officer  shall  take 
any  bond,  obligation  or  security,  by  color  of  his  office,  in  any  other 
case  or  manner  than  such  as  are  provided  by  law ;  and  any  such  bond, 
obligation  or  security,  taken  otherwise  than  as  herein  directed,  shall 
be  void."    2  Rev.  St.  p.  286,  §  59.  )(      j^     .j^ 

Section  183  of  the  Code  requires  that  the  order  of  arrest  shall  specify    u^'7^ j/*-^*^^ 
the  sum  for  which  the  defendant  shall  be  held  to  bail.     The  amount  >*f'j^^'>  ^^5<^ 
of  bail  is  to  be  fixed  by  the  judge  granting  the  order.    The  plain  ob-  'j ^-f^*^ -f^  vm 
iect  of  this  requirement  of  the  statute  is  to  prevent  the  exaction  of 
unreasonable  or  oppressive  bail,  and  to  leave  nothing  to  the  dTscreflon 
orih£._officer  executing  the  process.    The.  sum  mentioned  in  the  order 
limits  the  power  of  the  officer;   and  if  he  exacts  an  undertaking  for  a 
greater  sum  the  undertaking  is  clearly  within  the  statute  and  void. 
We  have  had  occasion  recently,  in  the  case  of  Cook  v.  Freudenthal, 
80  N.  Y.  205,  to  pass  upon  the  vahdity  of  an  undertaking  taken  by  a 


102  FORMATION.  (Part  1 

sheriff  from  a  defendant  arrested  in  an  action  for  the  claim  and  de- 
livery of  personal  property,  which  contained  a  provision  beyond  what 
was  required  by  the  statute  ;  and  we  held  that  the  bond  was  for  that  rea- 
son void  and  could  not  be  enforced  at  the  suit  of  the  plaintiff  in  the  ac- 
tion, although  tlie  sheriff  appeared  to  have  acted  in  good  faith.  Fur- 
ther reflection  has  confirmed  the  opinion  we  then  entertained,  that 
pubhcjjolicy  requires  that  officers  armed  with  bailable  process  for_the 
arrest  of  defendants  should,  in  taking  bonds  or  other  securities  for 
their  enlargement,  be  held  to  a  strict  compliance  with  statutory  re- 
quirements, neither  accepting  less  nor  demanding  more  than  tlie  law 
prescribes. 
/-       Taking  bail  in  personal  actions  was  made  compulsory  upon  sheriff's 

"  ■■■'-'        by  St.  23  Hen.  VII,  c.  8;    and  this  privilege  was  made  more  definite' 
^  and  secure  by  subsequent  enactments.     The  statute  of  Henry  VII  re- 

lated to  bail  on  mesne  process  only.  The  right  of  the  sheriff"  to  take 
bail  for  the  appearance  of  defendants  to  answer  a  writ  or  process  is 
said,  in  Dive  v.  Maningham,  1  Plowden,  67,  to  have  existed  before 
the  statute  at  common  law,  although  this  is  denied  in  Beawf age's  Case, 
10  Co.  426.  The  statute  required  sheriffs  to  let  to  bail  prisoners  ar- 
rested in  personal  actions,  upon  their  giving  reasonable  surety  to  keep 
their  days,  etc.,  and  prescribed  the  form  of  the  bond,  and  that  it  should 
be  on  condition  that  the  prisoner  appear  at  the  day  contained  in  the 
writ,  etc.,  and  in  such  place  as  the  writ  requires ;  and  then  followed 
the  provision  that  if  any  sheriffs  take  any  obligation  in  other  form,  by 
color  of  their  offices,  it  should  be  void.  This  was  the  original  of  the 
statutory  enactments  found  in  this  and  most  of  the  states  prohibiting 
and  making  void  bonds  taken  colore  officii.  But  our  statute,  as  was 
said  by  Cowen,  J.,  in  Webber's  Ex'rs  v.  Blunt,  19  Wend.  191,  32  Am. 
Dec.  445,  is  much  broader  than  the  statute  of  23  Henry  VII.  The  bail 
required  to  be  taken  by  that  statute  was  what  was  known  under  the 
common-law  practice  as  bail  to  the  sheriff  or  bail  below,  and  the  bonds 
or  obligations  referred  to  wxre  those  taken  in  the  first  instance  for 
the  appearance  of  the  prisoner  arrested  to  answer  the  writ.  But  our 
statute  applies  to  every  bond,  obligation  or  security  taken  by  a  sheriff 
or  other  officer,  by  color  of  his  office,  contrary  to  his  duty. 

Und£r,our^practice  the  undertaking  to  be  given  by  a  defendant  in  a 
'^"  "  I  civil  action  to  be  refeased  from  arrest  stands  in  the  place  bothonjaiT" 
to  the  sheriff  and  bail  to  the  action,  or  special  bail,  under  the  former" 
system.  The  sheriff,  in  taking  an  undertaking  on  letting  to  bail,  acts 
both  in  the  interest  of  himself  and  of  the  plaintiff'.  If  the  bail  fail  to 
justify  on  demand,  he  stands  liable  as  bail,  and  has  a  remedy  over 
against  the  bail,  unless  other  bail  be  given  or  justify.  Code,  §§  201, 
y  203.    The  statute  of  Henry  VII  was  strictly  construed  by  the  English 

v^  .,,,,, /i'- courts ;  arid  securities  or  agreements  taken  by  sheriffs,  not  in  strict 
conformity  with  its  provisions,  were  held  to  be  void.  Scryven  v.  Dy- 
ther,  Cro."  Eliz.  672  ;  Rogers  v.  Reeves,  1  Term  R.  4is';  Fuller  v. 
Prest,  7  Term  R.  110.    These  decisions  have  been  followed  in  analogous 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  103 

cases  in  our  courts.  Sullivan  v.  Alexander,  19  Johns.  233;  Bank  of 
Buffalo  V.  Boughton,  21  Wend.  57;  Barnard  v.  Viele,  21  Wend.  88; 
People  V.  Meighan,  1  Hill,  298.  The  fact  that  under  our  practice  the 
bail  taken  by  the  sheriff,  on  discharging  a  prisoner  from  arrest,  stands 
in  some  sense  both  as  bail  to  the  sheriff'  and  as  bail  to  the  action,  does 
notj  we  think,  at  all  affect  the  application  of  the  statute  making  void 
obligations  taken  colore  offfcii,  when  the  undertaking  contains  condi- 
tions not  prescribed  by  law ;  nor  is  it;  as  we  conceive,  in  the  power  of 
the_j)laintiff  afterward  to  adopt  the  act  of  the  sheriff  and  thereby  ^ 
avoid  the  eft'ect  of  the  illegality.  Such  a  principle,  if  admitted,  would' 
defeat  the  purpose  of  the  statute.  The  statute,  like  the  statute  of  Henry 
Vn,  is  specially  designed  to  prevent  extortion  and  oppression  by  of- 
ficers of  prisoners  in  their  custody.  The  law  prescribes  the  nature  of 
the  undertaking  and  the  duty  of  the  sheriff.  H  the  officer  takes  an 
illegal  security,  he  is  liable  to  the  plaintiff  in  a  proper  action ;  but  the 
plaintiff  cannot  be  permitted  to  elect  to  enforce  an  undertaking  illegally 
taken,  when  it  is  for  his  interest  to  do  so.  The  statute  does  not  admit 
of  such  a  construction.  The.  illegal  security  is  wholly  void,  and  can 
be  enforced  neither  by  the  sheriff"  nor  by  the  plaintiff.  '^. 

It  is,  we  think,  no  answer  to  the  defense  based  upon  the  statute  >i"-''  *^*' '  ^ 
that  the  illegal  security  was  taken  at  the  instance  of  the  defendant  *^'^^f^'^^ 
The  security  is  not  good  or  bad,  depending  on  the  circumstance  whether  <^yyW  "^  *r' 
it  was  voluntarily  and  willingly  given,  or  was  extorted  by  actual  duress 
and  oppression.  The  law  defines  the  condition  of  the  undertaking  that 
the  duty  of  the  officer  and  the  right  of  the  party  in  custody  may  be 
plainly  understood,  and  that  nothing  be  left  to  conjecture  or  in  un- 
certainty. Courts  justly  regard  with  great  jealousy  all  departure  by 
officers  holding  prisoners  under  arrest  from  the  strict  line  of  duty. 
The  undertaking  in  this  case  bound  the  surety  in  double  the  sum  au- 
thorized by  the  order  of  arrest,  and  if  the  undertaking  is  to  be  re- 
garded as  taken  by  the  sheriff  in  his  official  character  and  in  the  ex- 
ercise of  his  official  authority,  it  must,  both  upon  principle  and  au-\ 
thority,  be  held  to  be  void. 

But  we  are  inclined  to  the  opinion  that_the_mid£ilaldn^_m_iiiiesT 
tion  may,  in  view  of  the  circumstances  under  which  it  was  made^  be    l^j^     ^^om 
regarded  as  an  agreement  made  between  the  parties  to  the  action,  and   v^TjlI^^^v,/*'' 
not  as  an  undertaking  taken  by  the  sheriff,  under  the  claim  or  in  the     r^„^?-i  W 
exercise  of  official  authority.    It  is  said  by  Blackstone  (1  Bl.  Com.  137) 
that  if  a  man  be  lawfully  arrested,  and  either  to  procure  his  discharge 
or  on  any  other  fair  account,  seals  a  bond  or  a  deed,  this  is  not  by 
duress  of  imprisonment,  and  he  is  not  at  liberty  to  avoid  it.    This  prin- 
ciple of  the  common  law  has  been  applied  in  several  cases,  in  actions 
upon  agreements  claimed  to  be  void  under  the  statute  of  Henry  VII ;  f 

tThis  is  evidently  a  misprint  for  Henry  VI.  By  the  Statute  23  Hen.  VI, 
c.  10,  it  was  provided: 

"And  that  no  sheriff  *  •  •  shall  take  or  cause  to  be  taken  or  make 
any  obligation  for  any  cause  aforesaid  or  by  colour  of  their  office,  but  only  to 


Ik.--^  -io  -*.  A 


104  FORMATION.  (Part  1 

and  it  has  been  held  that,  where  the  agreement  to  discharge  a  party 
from  arrest  was  between  the  parties  to  the  action,  it  could  be  enforced 
by  the  plaintilT,  although  it  did  not  conform  to  the  statute.  It  is  compe- 
tent for  the  parties,  independently  of  the  statute,  to  agree  upoTTThe 
terms  and  conditions  upon  which  the  discharge  shall  be  had.  In  IMTT- 
^Vard  V.  Clerk,  Cro.  Eliz.  190,  the  defendant  having  been  arrested  at 
the  plaintiff's  suit,  in  consideration  that  he  should  be  permitted  to  go 
at  large,  and  that  the  plaintiff  would  give  his  warrant  to  the  bailiff,  to 
suffer  him  to  go  at  large,  promised  the  plaintiff  to  appear  at  the  day 
of  the  return  of  the  process,  or  pay  him  ten  pounds.  In  an  action 
upon  this  promise  the  defendant  pleaded  the  statute  of  23  Henry  V.II ; 
but  the  court  said:  "It  is  a  good  assumpsit,  being  made  to  the  party 
who  had  authority  to  dispense  with  the  appearance ;  but  if  the  prom- 
ise had  been  made  to  the  sheriff,  or  to  any  one  to  his  use,  it  had  been 
witliin  the  equity  of  the  statute."  In  Hall  v.  Carter,  2  Mod.  301,  the 
action  was  upon  a  bond  executed  by  the  defendant  to  the  plaintiff, 
conditioned  that  if  a  third  person  (who  had  been  arrested  at  the  suit 
of  the  plaintiff)  should  give  security  for  the  payment  of  the  plain- 
tiff's debt,  or  should  render  his  body  to  prison  at  the  return  of  the 
writ,  the  obligation  should  be  void.  The  defendant  pleaded  the  stat- 
ute, and  the  plaintiff  demurred.  The  court  sustained  the  demurrer, 
and  gave  judgment  for  the  plaintiff,  saying;  "There  is  no  law  that 
makes  the  agreement  of  the  parties  void;  and  if  the  bond  was  not 
taken  by  such  agreement,  it  might  have  been  traversed."  The  same 
principle  was  recognized  and  applied  in  Winter  v.  Kinney,  1  N.  Y.  365. 
The  court  reversed  the  judgment  below,  on  the  ground  that  the  ques- 
tion should  have  been  submitted  to  the  jury  whether  the  agreement  un- 
der which  the  plaintiff  paid  the  money,  which  he  sought  to  recover 
back,  was  made  with  the  sheriff  or  with  the  party  at  whose  suit  he  was 
arrested  ;  the  court  saying  the  party  may  make  such  agreement  or  take 
such  security  as  he  pleases,  on  discharging  his  debtor  from  arrest. 
See,  also,  Harp  v.  Osgood,  2  Hill,  216.  TJie  evidence  shows  tha^  the 
sheriff  declined  at  first  to  take  the  undertaking  in  question,  doubting 
hi^authority  to  do  so.  He  did  not  take  it  in  the  exercise  of  hi^  of- 
ficial authority.  He  simply,  as  the  transaction  is  proved,  consented,  at 
the  solicitation  of  Adee,  to  act  as  the  intermediary  to  ascertain  whether 
the  plaintiff's  attorneys  would  accept  the  undertaking  and  discharge 
him  from  arrest.  When  the  plaintiff's  attorneys  consented  to  the  prop- 
osition and  accepted  the  undertaking,  it  became  operative  and  bind- 

theniselves,  of  any  i>erson,  •  •  •  but  by  the  name  of  their  office  and  npon 
condition  written,  that  the  said  prisoners  shall  appear  at  the  day  contained 
in  Ibe  said  writ:,  bill  or  warrant,  and  in  such  places  as  the  said  wTits,  bills 
or  warrants  shall  require.  And  if  any  of  the  said  sheriffs  *  *  *  take 
any  obligation  in  other  form  by  color  of  their  offices,  that  it  shall  be  void." 

In  Beawfage's  Case,  10  Co.  99  (1613),  the  above  statute  was  construed  to 
allow  the  sheriff  having  a  fi.  fa.  to  take  a  bond  to  pay  money  into  court. 
.    On  the  point  of  the  rejection  of  the  void  surplusage  of  a  bond  vide  Haber- 
stro  V.  Bedford.  118  N.  Y.  187,  23  N.  E.  459  (1890) ;    Board  of  Educ-atiou  v. 
Grant,  107  Mich.  151,  M  N.  W.  1050  (189.5). 


Ch.  3)        GENERAL  ESSENTIALS  TO   CONTRACTS  OF  SURETYSHIP.  '  105 

ing,  not  as  a  statutory  obligation,  but  as  a  common-law  agreement  be- 
tween the  parties,  for  a  breach  of  which  an  action  would  lie,  as  upon 
any  other  assumpsit.  X 

The  remaining  question  which  we  deem  necessary  to  consider  is 
whether  there  was  evidence  tending  to  establish  the  defense  that  the 
plaintiff,  by  her  laches,  had  discharged  the  surety  or  his  estate  from 
liability.     ***•]••{- 

The  judgment  should  be  reversed  and  a  new  trial  granted,  costs  to 
abide  event.    All  concur. 

Judgment  reversed. 


SECTION  5.— CONDITIONS  PRECEDENT 


BONSER  V.  COX. 

(Rolls  Court,  1S41.    4  Beav.  379,  49  Eng.  R.  3S5.) 

This  cause  came  on  upon  exception  to  the  master's  report,  and  re- 
lated to  claims  on  the  estate  of  Mr.  John  Cox,  deceased,  for  tlie^admin- 
istration  of  whose  estate_this_suit„h a d_.  been  institute d . 

It  appeared  that  Richard  Cox  (the  brother  of  the  testator,  John 
Cox)  carried  on  the  business  of  a  banker  at  Oxford,  in  partnership 
with  Messrs.  Morrell,  under  the  firm  of  Cox  &  Morrell,  and  he  was 
also  engaged  in  a  colliery  business  in  the  Forest  of  Dean,  in  partner- 
ship with  D.  Davies,  under  the  firm  of  Cox  &  Davies. 

Messrs.  Cox  and  Morrell  had  made  considerable  advances  to  Messrs. 
Cox  and  Davies,  and,  Richard  Cox  having  applied  to  his  partners 
for  a  further  advance,  it  was  agreed  that  they  should  advance  a  fur- 
ther sum  upon  his  brother  John  Cox  becoming  security  for  the  re- 
payment of  i3,000.  jQhn.Cox  agreed,  as  .surety  for  Richard  Cox,  to 
execute  a  joint  and  several  bond  to  James  and  John  Morrell  for  the 
sum  of  i3,000.,  upon  having  a  counter-bond  for  the  like  sum  from 
Messrs.  Cox  and  Davies  to  indemnify  him. 

A  joint  and  several  bond,  intended  to  be  executed  by  Richard  Cox 
and  John  Cox,  was  prepared,  and  was  carried  by  a  clerk  to  John  Cox 
for  his  execution,  and  who  accordingly  executed  it.  Tlie_same..clerk 
afterwards  went  to  the  house  of  Richard  Cox  to  obtain  his  execution ; 
biTThe,  being  from  home,  did  not  then  execute  it,  and  the  bond,  having 
b^eii  mislaid,  was  never,  in  fact,  executed  by  Richard  Cox. 

tt  The  remainder  of  the  opinion,  which  deals  with  the  question  of  laches, 
holding  that  the  failure  of  the  creditor  to  institute  proceedings  when  requested 
by  the  surety  raised  a  question  which  should  have  been  submitted  to  the  jury, 
has  been  omitted. 


106  FORMATION.  (Part  1 

The  counter-bond  was^  hawever,  given  by  Eicliard  Cox  and  Davies 
to  John  Cox,  and  tlie  further  advances  were  made  by  the  bankers  to 
iNlessrs.  Cox  and  Davies.  Some  time  after  Richard  Cox  ceased  to  be 
a  partner  in  the  bank. 

In  this  suit  Messrs.  Morrell  claimed  before  the  master  the  sum  of 
£3,000.  and  interest,  as  due  upon  the  bond,  from  the  estate  of  John  Cox. 
The^Iaim  was  resisted,  on  the  ground  that  John  Cox_waS-JLJr'^^^ 
surety,  and  that  the  bankers,  having  neglected  to  obtain  a  _bond  from 
the  principal  debtor,  had  released  the  surety. 

Th£_claim  was  disallowed  by  the  master,  and  Messrs^Iorrdl  took 
exceptions  to  the  master's  report,  which  now  came  on  for  argument.-* 

The  Master  of  the  Rolls  (Lord  Laxgdale).  I  think  that  it  can- 
not, upon  any  principles  on  which  this  court  acts,  be  doubted  that 
the  surety  has  an  interest,  and  a  most  material  interest,  in  the  rights 
and  remedies  which  the  creditor  has  against  the  principal  debtor. 
He  is  not  to  be  held  bound  where  the  situation  of  circumstances,  in 
respect  to  the  rights  and  the  remedies  whicli  tHe  creditor  has  against " 
the  principal  debtor,  are  different  from  that  which  was  contemplated" 
byliimself  and  all  other  parties.  I  do  not  think  that  it  is  materiaPto" 
inquire  in  what  way  the  surety  contemplated  benefit  or  protection  to 
himself,  by  stipulating  that  a  particular  remedy  should  be  held  by  the 
creditor  against  the  principal  debtor.  A  man  may  reasonably  say, 
I  will  be  surety  to  you  for  payment  of  such  a  sum,  provided  youjhave 
it  secured  b}'  the  bond  of  the  principal  debtor,  but  I  will  not  be  surety 
upon  any  other  terms.  The  surety  in  this  case  has  a  right  to  say,  "The 
arrangement  was  that  Mr.  Richard  Cox,  as  well  as  myself,  should  be 
held  bound  by  bond  to  the  creditor.  That  arrangement  never  was 
carried  into  effect."  The  circumstance  of  ^Mr.  Richard  Cox  being 
held  by  bond  to  the  surety  does  not  appear  to  be  material  in  this  case. 

1  thinkthat  this"  exception  cannot  be  sustained ;  that  the  master 
is  right,  ~Fecause'~^the  slirety"Had  not  Ih^at  wHTch  he  contemplated, 
and  that  which'  was"a''material  portion  of  the  contract  stipulated  for 
by'~him  attlie  time  when  he  entered  into  this  obligation.  In  the  con- 
tract as  existing  between  the  principal  debtor  and  the  creditor,  there  is  a 
departure  from  that  which  the  surety  stipulated  for,  and  in  a  matter 
in  which,  I  conceive,  the  surety  had  a  most  material  interest.  This 
exception  must  therefore  be  overruled.-^     *     *     * 

2  4  The  arguments  of  counsel  are  omitted. 

25  The  opinion  of  the  >L'ister  of  the  Rolls  has  been  abbreviatecL  This  deci- 
sion was  affirmed  by  Lord  Cottenham,  June  25,  1S4L 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  107 

BUTLER  V.  UNITED  STATES. 

(Supreme  Court  of  the  United  States,  1874.    21  Wall.  272,  22  L.  Ed.  614.) 

Error  to  the  Circuit  Court  for  the  Eastern  District  of  Tennessee. 

De4)l--oa---a- |oi»t-^and  s&veral  interrial  revenue  bond,  executed  by 
Emory,  as  principal,  and  by  Butler,  Sawyer,  and  Choppin  as  sureties ; 
the  bond  on  oyer  appearing  to  be  in  the  sum  of  $15,000. 

Butler  pleaded  that,  at  the  time  he  signed  and  affixed  his  seal  to  the 
bond,  it  was  a  mere  printed  form,  with  blank  spaces  for  the  names, 
dates,  and  amounts  to  be  inserted  therein ;  that  the  blanks  were  ngt 
fifled,  and  there  was  no  signature  thereto,  except  Emory's;  that 
Emory  promised,  if  Butler  would  sign  the  bond,  he,  Emory,  would 
fill  up  the  blanks  with  the  sum  of  $-l:,000,  and  would  procure  two  addi- 
tional sureties  in  the  District  of  Columbia,  each  of  whom  was  to  be 
worth '■$5,000;  that  he,  Butler,  signed  the  bond  and  delivered  it  to 
Emory  with  the  understanding  and  agreement  that  the  bond  was 
otherwise  not  to  be  binding  on  him,  Butler,  nor  delivered  to  the  United  . 
States,  or  to  any  of  its  agents  or  officers,  but  was  to  be  returned  to  him  ; 
that  Emory  did  not  so  fill  up  the  bond,  but,  on  the  contrary,  falsely 
and  fraudulently  filled  it  up  with  the  sum  of  $15,000,  and  with  the 
names  of  Sawyer  and  Choppin,  neither  of  whom  resided  in  the  Dis- 
trict of  Columbia,  and  neither  of  whom  was  worth  $5,000,  but,  on  the 
contrary,  both  of  whom  were  wholly  insolvent  and  worthless ;  that 
Emory  accordingly  obtained  the  signature,  of  him,  Butler,  by^Ialse 
and~Traudulent  representations ;  that  the  bond  was  therefore  not  the 
bond  of  him.  Butler,  when  made,  and  that  he  had  never  aftenyard 
ratified  or  acknowledged  its  validity. 

The_CiicuiL_Cpurt,  relying  on  Dair  v.  United  States,  16  Wall.  1, 
21  L.  Ed.  491',  ruled  that  this  was  no  defense  to  the  action.  The 
defendant^ excepted  and  brought  this  writ  of  error.  y 

In  the  case  of  Dair  v.  United  States,  just  mentioned,  two  per- 
sons, as  sureties,  signed  a  bond  to  the  government  at  the  instance  of 
a  third  person,  who  had  signed  it  as  principal,  the  two  signing  as 
sureties  doing  so  upon  the  condition  that  the  instrument  was  not  to 
be  delivered  to  the  government  until  it  should  have  been  executed  by 
a  third  person  named  as  surety,  and  then  placing  it  in  the  hands  of 
the  person  who  had  signed  it  as  principal,  who  without  the  perform- 
ance of  the  condition,  and  without  the  consent  of  the  two  persons 
signing  as  sureties,  delivered  the  bond  to  the  government  ;,^f_^l;he 
bond  being  regular  on  its  face,  and  the  government  having  had  no 
notice  of  the  condition,  but  where,  on  suit  by  the  United  States,  the 
parties  who  had  signed  as  sureties  were  held  by  this  court  bound.^^ 

26  If,  how^eyer.  the  principal  never  delivers  the  bond,  it  cajinot  take  effect 
Crawford  v.  Foster,  6  Ga.  202,  oO  Am.  Dee.  327  (1849). 
2  7  The  arguments  of  counsel  are  omitted. 


108  FORMATION.  (Part  1 

The  Chief  Justice  delivered  the  opinion  of  the  court. 

We  cannot  distinc,aiish  this  case  in  principle  from  Dair  v.  United 
States.  The  printed  form,  with  its  blank  spaces,  was  signed  by  Butler 
and  delivered  to  Emory,  with  authority  to  fill  the  blanks  and  perfect  the 
instrument  as  a  bond  to  secure  his  faithful  service  in  the  office  of  col- 
^  lector  of  internal  revenue.  He  was  also  authorized  to  present  it  when 
iT  perfected  to  the  proper  oflficer  of  the  government  for  approval  and  ac- 
ceptance. If  accepted,  it  was  expected  that  he  would  at  once  be  per- 
mitted to  enter  upon  the  performance  of  the  duties  of  the  ofiice  to 
which  it  referred. 

It  is  true  that,  according  to  the  plea,  this  authority  was  accompanied 
ty  certain  private  understandings  between  the  parties  intended  to 
limit  its  operations,  but  it  was  apparently  unqualified.  Every  blank 
space  in  the  form  was  open.  To  all  appearances  any  sum  that  should 
be  required  by  the  government  might  be  designated  as  the  penalty^ 
and  the  names  of  any  person  signing  as  co-sureties  might  be  inserted 
in  the  space  left  for  that  purpose.  It  was  easy  to  have  limited  this 
authority  by  filling  the  blanks,  and  the  filling  of  any  one  was  a  limita- 
tion to  that  extent.  By  inserting  in  the  appropriate  places  the  amount 
of  the  penalty,  or  the  names  of  the  sureties,  or  their  residences,  Butler 
could  have  taken  away  from  Emory  the  power  to  bind  him  otherwise 
than  as  thus  specified.  This,  however,  he  did  not  do.  Instead,  he 
relied  upoxi  the  good  faith  of  Emory,  and  clothed  him  with  appar.ent 
power  to  fill  all  the  blanks  in  the  paper  signed  in  such  appropriate 
manner  as  might  be  necessary  to  convert  it  into  a  bond  that  would 
be  accepted  by  the  government  as  security  for  the  performance  of  his 
contemplated  official  duties.  It  is  not  pretended  that^  the  acts  of 
Emory  are  beyond  the  scope  of  his  apparent  authority.  The  bond 
was  accepted  in  the  belief  that  it  had  been  properly  er&cuted.  There 
is  no  claim  that  the  officer  who  accepted  it  had  any  notice  of  the  pri- 
vate agreements.  He  acted  in  good  faith,  and  the  question  now  is, 
which  of  two  innocent  parties  shall  sufifer.  The  doctrine  of  Dair's 
Case  is  that  it  must  be  Butler,  because  he  confided  in  Emory  and  the 
government  did  not.  He  is  in  law  and  equity  estopped  by  his  acts  from 
claiming,  as  against  the  government,  the  benefit  of  his  private  in- 
structions to  his  agent. 

Judgment  affirmed. f 

t  Accocd:  Stoner  v.  Millikin,  85  111.  218  (1877) ;  Selser  v.  Brock,  3  Ohio  St. 
302  (18.54) ;  Bigelow  v.  Comegys,  5  Ohio  St.  256  (1855) ;  Yorlj  County,  etc.,  Co. 
V.  Brooks,  51  Me.  DOG  (18G3) ;  Dair  v.  U.  S.,  16  Wall.  1,  21  L.  E<L  491  (1872). 

S.ee.  also,  Wiley  v.  Moor,  17  S.  &  R.  (Pa.)  438  (1828). 

In  Russell  v.  Freer,  56  N.  Y.  67  (1874),  the  bond,  at  the  time  of  execution 
by  tlie  surety,  contained  in  the  body  of  it  another  name;  but  this  name  was 
erased  before  delivery  to  the  obligee.  It  was  held  that  the  sureties,  who  had 
signed  upon  the  condition  that  this  other  should  sign,  had  no  defense. 


Ch.  3)       GENERAL  ESSENTIALS  TO  CONTRACTS  OF  SURETYSHIP.  109 

GWYN  V.  PATTERSON. 
(Supreme  Court  of  North  Carolina,  1875.    72  N.  C.  189.) 

Settle,  J.-*  The  bond  which  is  the  suhjVrt  nf  this  action  came  ^c^^ 
to  the  hands  of  the  plaintiff's  testator,  perfect  in  form,  with  nothing 
about  it  to  excite  inquiry  and  put  the  obHgee  on  guard.  He  received 
it  and  advanced  his  money  thereon,  and  it  is  only  vyhgjl  suit  is  brought 
for  the  collection  thereof.,  several  years  thereafter,  that  we  hear  any- 
thing_of  a  private  understanding  between  Minter,  the  principal  ob- 
ligor,  and  Patterson,  his  surety,  the  present  defendant,  that  another 
surety  should  afso  sign  the  bond  before  delivery.  Concede  that  such 
was  the  understanding  between  Minter  and  Patterson,  what  is  it  worth, 
when  we  consider  the  fact  that  Johnson,  the  plaintift"'s  testator,  when 
he  parted  with  his  money,  knew  nothing  about  the  conversation  and 
understanding  between  Minter  and  Patterson?  y. 

Conditions  imposed  by  a  party  to  a  contract,  to  be  effectual  against 
the  other  party,  who  has  been  induced  by  the  contract  to  alter  his  con- 
dition to  his  prejudice,  must  have  been  in  some  way  brought  to'  his 
notice.  In  Townsend  v.  Moss,  58  N.  C.  145,  with  a  similar  state  of 
facts'  to  the  case  at  bar,  it  was  said  by  the  Chief  Justice,  arguendo : 
"If  loss  follows  from  this  breach  of  confidence,  it  should  fall  on  the 
party  who  reposed  the  confidence,  rather  than  on  an  innocent  third  per- 
son." Or,  in  other  words,  where  one  of  two  innocent  persons  must 
suffer  by  the  acts  of  a  third,  he  who  had  enabled  such  third  person  to 
occasion  the  loss  must  sustain  it.  In  State  v.  Peck,  53  Me.  284,  Bur- 
rows, J.,  has  collected  and  distinguished  the  cases  on  this  subject  in  so 
satisfactory  a  manner  as  to  render  a  further  discussion  of  it  unnec- 
essary. We  will  only  quote  the  syllabus  in  Millett  v.  Parker,  2  Mete. 
(Ky.)  608,  whjch  is  directly  in  point:  "One  who  signs  a  covenant  as 
surety  upon  the  condition  and  agreement,  between  him  and  his  princi- 
pal, that  it  is  not  to  be  binding  upon  him  or  delivered  to  the  covenantor, 
unless  another  person  should  also  sign  it  as  surety,  is  bound  there- 
by, although  the  principal  to  whom  he  intrusted  it  delivered  it  to  the 
covenantor,  without  a  compliance  with  such  condition,  of  which  and 
its  breach  the  latter  has  had  no  notice." 

Per  Curiam.    Judgment  below  affirmed.^* 

2  8  The  statement  of  facts  is  omitted. 

2 9 Accord:  Mowbray  v.  State,  88  Ind.  324  (1882), 

Gpntra:  People  v.  Bostwick,  32  N.  Y.  445  (1865).  See,  however,  Russell  v. 
Freer,  56  N.  Y.  67  (1874),  where  the  court,  in  referring  to  the  last  cited  case, 
says :  "Assuming  that  that  case  was  well  decided."  wnietlier_tli£Sfi-taui£aaea.are 
dlstinguishjaMaia-doubtful.      Ayres  v.  Milroy,  53  INIo.  516, 14  Am.  Rep.  465  (1873),  A,f^,.iV,^^  ^ 

If  Ihe  delivery  of  the  bond  (being  a  completed  instrument)  is  made  by  the  ^.r,~r       t'*P 
surety  obligor  to  the  creditor  obligee  upon  a  parol  condition  precedent,  such    "'"'"  ^"^ '^  "^ 
-condition  cannot  be  shown.    According  to  the  common-law  doctrine  of  contract 
by  deed,  to  give  effect  to  this  condition  would  be  to  defeat  the  unequivocal 
act  of  delivery.     Garvey  v.  Marks,  134  Mo.  1.  34  S.  W.  1108,  38  S.  W.  79 
(1896)  ri^Teely  v.  Lewis,  10  111.  31  (1848).     See  RoUe's  Abr.  Faits,  (o),  1,  2.        X  'A-Ut...^...  .•-  4 

But,  if  anjncomplete  instrument  Is  given  by  the  obligor  surety  to. an  agent    tif  o^.^  ■^.,,^ 

^^Mv;=.->(i  1^/--^^^  H^^,wrr,.vp^.^.vi.av  ^  u^^Li^  ^^c^^ts  ^/,L^ 


>(ttfsU^, 


>-rw*« 


110  FouMATioN.  (Part  1 

MORTEN  et  al.  v.  MARSHALL. 
(Court  of  Exchequer,  1SG3.    2  Hurl.  &  C.  305.) 

declaration :  For  that  heretofore,  to  wit,  on  the  7th  November,  1861, 
the  plaintiffs,  as  and  being  executors  of  the  last  will  and  testament  of 
J.  Lovatt,  deceased,  in  the  Court  of  Exchequer  of  Pleas  at  Westminster, 
by  the  judgment  of  the  said  court  in  an  action  therein,  recovered 
against  one  W.  Turnbull  il85.  Is.  Gd.,  together  with  £4.  for  his  costs 
in  that  behalf;  and  thereupon  afterwards,  to  wit,  on  the  2.'jth  of 
August,  18(j2,  in  consideration  that  thejplaindffs,  at  the  request  of  the 
defendant,  would  stay  execution  upon  the  said  judgment  in  the  said 
action  agafnst  the  said  W.  Turnbull  until  the  6th  of  October  then. apxt, 
the  defendant  promised  the  plaintiffs  that  the  amount  of  i90.  Is.  6(J., 
being  the  balance  of  debt  then  due  to  the  plaintiffs  and  recovered  by 
them  under  the  said  judgment,  together  with  the  costs  of  the  said 
action,  should  be  paid  to  the  plaintiffs  on  or  before  the  said  6th  October, 
and  that  if  not  paid  to  the  plaintiffs  by  the  said  W.  Turnbull  that  the 
defendant  would  pay  the  same  to  the  plaintiffs. 

Averments:  That  all  things  have  been  done  and  happened,  and  all 
times  have  elapsed  necessary  to  entitle  the  plaintiffs  to  maintain  this 
action;  yet  neither  the  said  W.  Turnbull  nor  the  defendant  have  or 
hath  paid  the  said  sum  of  £90.  Is.  6d.  and  costs  as  aforesaid,  or  any 
part  thereof. 
po^  1^     Jlea:    That  the  said  promise  was  a  promise  and  undertaking  in 

writing  made  by  the  defendant  to  the  tenor  following: 
"j\Iorten  and  Another  v.  Turnbull. 

"In  consideration  of  the  execution  being  stayed  in  this  matter  until 
the  6th  day  of  October  next,  I  hereby  undertake  that  the  amount  of 

^principal   or  auother),  the  instrument  must  be  completed  according  to  its 
terais ;  otherwise  the  obligee,  receiving  it  in  an  apparently  incoiuplete  state, 
r^eives  it  with  notice.     Fales  v.  Filley,  2  ]\Io.  App.  34.5  (1S7G) ;    Pawliug'^rr" 
United  States,  4  Cranch,  219,  2  L.   Ed.   601  (1S08).   delivered  as  escrow  to 
principal. 

The  use  of  the  word  "sureties,''  where  only  one  surety  had  signed,  was  held 
not  to  amount  to  notice  that  another  should  sign  in  Brown  v.  Probate  Judge, 
42  Mich.  .^>01,  4  N.  W.  19.5  (1880). 

In  Mullen  v.  Morris,  43  Neb.  596,  62  N.  W.  74  (1895)  the_boiid.  WfLS-Joint 
and  several,  and  contained  in  the  body  of  it  two  names  of  obligors  who  had 
not  "signed  when  the  defendant  obligor  delivered  the  bond  to  the  obligee. 
Held,  that  there  was  a  valid  delivery.  See,  also,  to  the  same  effect,  Towns 
V.  Kellctt.  11  Ga.  2SC  (18.52) ;  Blume  v.  Bowman,  24  N.  C.  338  (1842). 
I  Where  the  creditor  or  promisee  has  notice  of  the  condition  precetleut,  Ji^ 
must  ascertain  whether  it  has  occurred.  This  rule  has  no  application  where 
the  notice  is  of  an  immaterial  fact,  as  in  the  case  of  delivery  of  a  specialty 
to  the  obligee  upon  a  parol  condition  precedent.  Fertig  v.  Bucher,  3  Pa.  308 
(1&4G) ;   Leaf  v.  Gibbs,  4  C.  &  P.  466  (1S30). 

See  Ellesmere  lirewery  Co.  v.  Cooper,  L.  R.  1  Q.  B.  Div.  75  (1896),  where 
one  surety  who  signed,  but  not  in  accordance  with  the  amount  of  liability 
mentioned  in  the  bond  as  assumed  l>y  him,  thereby  rendered  the  bond  unen- 
forceable against  all  the  sureties  who  had  sigued. 


Ch.  3)        GENERAL   ESSENTIALS   TO   CONTRACTS   OF   SURETYSHIP.  Ill 

£90.  Is.  6d.,  the  balance  of  debt  now  due  to  the  plaintiffs,  together 
with  costs,  shall  be  paid  to  the  plaintiffs  on  or  before  the  said  6th  day 
of  October;  and  if  not  paid  by  the  defendant,  I  hereby  undertake  to 
pay  the  same ;  and  in  consideration  of  the  above  undertaking  the 
said  plaintiffs  agree  to  stay  execution  until  the  said  6tli  day  of  October 
if  the  uiTcIersigncd,  William  jMarshall,  give  to  Alessrs.  Woodbridge  & 
Sons  satTsTaHory  references  as  to  his  ability  to  pay  the  amount  afore- 
sai_d,  butjiot'otherwise ;  and  if  the  references  are  not  satisfactory,  then 
this  guarantee  to  be  given  up  within  a  week  from  the  present  date. 
"Dated  this  25th  day  of  August,  1863. 

"William  Alarshall,  200  Regent  Street, 

"For  self  and  co-executor  Henry  Morten." 

And  the  defendant  says  that  the  said  references  in  the  said  promise 
and  undertaking  named  were  not  given,  and  were  not  satisfactory ; 
and  thereupon  the  defendant  requested  the  plaintiffs  to  give  up  the 
said  promise  and  undertaking,  according  to  the  terms  of  it,  which 
they  refused  so  to  do,  and  the  defendant  became  and  was  discharged 
from  performing  the  same.  ")  \ 

'    Demurrer  to  the  plea,  and.joindeiLlJiejjeiix.^"  \     ^^ 

Wilde,  B.  I  am  of  the  same  opinion.  The  question  turns  upon 
the  construction  of  a  guarantee  signed  by  the  defendant,  whereby,  in 
consideration  of  the  execution  being  stayed  against  one  TurnbuU,  the 
defendant  undertook  to  pay  the  plaintiffs  £90.  Is.  6d.  if  Turnbull  did 
not.  The  guarantee  goes  on  to  say :  "And  in  consideration  of  the 
above  undertaking  the  plaintiffs  agree  to  stay  execution  until  the  said 
6th  day  of  October,  if  the  undersigned,  W.  Marshall,  give  to  Messrs. 
Woodbridge  &  Sons  satisfactory  references  as  to  his  ability  to  pay  the 
amount  aforesaid,  but  not  otherwise;  and  if  the  references  are  not 
satisfactory,  thep  this  guarantee  to  be  given  up  within  a  week  from  the 
present  date."  The  question  is,  wljat  is  the  meaning  of  that?  The 
plaintiff's  agree  that  the  defendant  shall  stand  in  the  place  of  Turnbull, 
if  he  will  give  satisfactory  references  as  to  his"  ability  to  pay  the 
amount,  and,  if  he  does  not,  there  shall  be  an  end  of  the  guarantee. 
The  defendant  cannot  tell  whether  the  references  are  satisfactory  to 
the  plaintiffs  or  not,  and  That  provision  was  inserted  for  the  purpose  of 
enabling  "the  defendant  to  know  whether  he  is  bound  by  the  guarantee. 

It  is  not  necessary  to  decide  whether  the  plaintiff's  might  renounce 
the  stipulation  as  to  saiisfactory  references.  1  will  assume  that  they 
might ;  but,  if  they  intended  to  do  so,  they  should  have  given  notice  to 
the  defendant  that  they  waived  the  benefit  of  that  stipulation.  It  is  said- 
that  notice  is  included  in  the  general  allegation  in  the  declaration ;  but 
the  plea  rather  shows  the  contrary,  and,  if  notice  was  really  given,  it 
should  have  been  stated  by  way  of  replication. 

Judgment  for  the  defendant. 

80  The  argnmeuts  of  counsel  aud  the  concurring  opinions  by  Pollock,  C.  B.. 
and  Bramwell,  B..  are  omitted. 


112  FORMATION.  (Part  1 


CHAPTER  IV 

DISTINCTION  BETWEEN  SURETYSHIP  AND  OTHER  FORMS 
OF  CONTRACTUAL  LIABILITY 


SECTION  1.— DISTINCTION  BETWEEN  SURETYSHIP  AND 
OTHER  FORMS  OF  CONTRACTUAL  UNDERTAK- 
ING, CHIEFLY  WITH  RESPECT  TO  THE 
STATUTE  OF  FRAUDS 

I.  Promises  Made  by  the  Defendant  to  the  Debtor 


EASTWOOD  V.  KENYON.J 
(Court  of  Queeu's  Bench,  1840.     11  Adol.  &  E.  43S.) 

Lord  Denman,  C.  J.^  The_first  point  in  this  case  arose  on  the  fourth 
section  of  the  statute  of  frauds,  viz. :  Whether  the  promise  of  the  de- 
fendant  was  to  "answer  for  the  debt,  default,  or  miscarriage  of 
another  person."  Upon  the  hearing  we  decided,  in  conformity  with  the 
case  of  Buttemere  v.  Hayes,  5  ISIee.  &  W.  456,  that  this  defense  might 
be  set  up  under  the  plea  of  non-asssumpsit. 

The  facts  were  that  the  plaintiff  was  liable  to  a  Mr.  Blackburn,  on 
a_promissory  note;  and  the  defendant,  for  a  consideration,  which  mav 
for  the  purpose  of  the  argument  be  taken  to  have  been  sufficient, 
promised  the  plaintiff  to  pay  and  discharge  the  note  to  Blackburn^/ J  If 
thejpromise  had  been  made  to  Blackburn,  doubtless  the  statute  would 
have  applied.  It  would  then  have  been  strictly  a  promise  to  answer 
for  the  debt  of  another/;^4nd  the  argument  on  the  part  of  the  defendant 
is,  that  it  is  not  less  the  debt  of  another  because  the  promise  is  made 
to  that  other,  viz.,  the  debtor,  and  not  to  the  creditor,  the  statute  not 
having  in  terms  stated  to  whom  the  promise,  contemplated  by  it,  is  to  be 
made.  But  upon  consideration  we  are  of  the  opinion  that  tjie^  statute 
applies  only  to  promises  made  to  the  person  to  whom  another  is  an- 
swerable. We  are  not  aware  of  any  case  in  whTch  the  point  has  arisen, 
or  in  which  any  attempt  has  been  made  to  put  that  construction  upon 
the  statute  which  is  now  sought  to  be  established,  and  which  we 
think  not  to  be  the  true  one.^ 

1  The  statement  of  facts  is  omitted,  as  they  sufficiently  appear  In  the  opin- 
ion, only  so  much  of  which  is  printed  as  relates  to  the  statute  of  frauds. 

The  arguments  of  counsel  are  likewise  omitted. 

°-  Aocord :  Hargreaves  v.  Parsons,  13  M.  &  TV.  569  (1844):  Johnson  v.  Gil- 
bert. 4  Hill  (N.  Y.)  178  (1843) ;  Tighe  v.  Morrison,  116  N.  Y.  263,  22  N.  E.  164, 
5  L.  R.  A.  617  (1SS9) ;  Mersereau  v.  Lewis,  25  Wend.  (N.  Y.)  243  (1840) ;  Barker 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  113 

II.  Promises  Made  by  the  Defendant  to  the  Creditor 
(A)  At  the  Time  the  Credit  is  Given  or  Debt  Created,  etc, 

YEAR  BOOK,  IX  HENRICI  V,  FOLIO  14,  PL.  23. 
(Court  of  Common  Pleas,  Michaelmas  Term,  1422.) 

■  AjTian  hn'^^g'^i  a  wrii-  ai  A<-ht  against  another  and  counts  by  Strange 
how  such  a  day,  year  and  place  he  had  recovered  a  debt  of  ten  pounds 
in  the  Exchequer  of  our  Lord  the  King  at  Westminster  against  one  T., 
and  the  defendanLxQines  to  him  in  the  same  Exchequer  and  says  to  the 
plaintift,  that  if  he  is  wilHng  to  release  execution  against  the  said  T. 
that  then  he  would  become  debtor  to  him  for  the  said  ten  pounds,  in 
consequence  of  which  conversation  he  released  the  execution  to  T., 
which  is  of  record,  and  so  he  has  become  debtor  to  us.. 

Westbury :   You  see  well  enough  how  he  has  shown  that  if  he  was 
willing  to  release  the  execution  to  the  said  T.,  that  then  he  would  be- 
come debtor,  the  which  is  not  sufficient  matter  in  law  to  charge  him,- 
wherefore   judgment,  &c.,  and  on  this  demurrer.  "-^^^v 

CoKAYNE,  y^^  In  my  understanding,  tHe~matter  is  not  sufficient  at 
alL__Wherefore,  Ex  nudo  pacto  non  oritur  actio,  &c.,  so  is  the  opinion, 
&c. 


YEAR  BOOK,  XII  HENRICI  VIII,  FOLIO  11,  PL.  3. 

(Court  of  King's  Bench.  Michaelmas  Term,  1521.) 

In  the  King's  Bench  one  brings  action  on  his  case  against  two  ex- 
ecutors of  one  J.  S.  And  counts  that  one  J.  N.  comes  to  the  house  of 
the  plaintiff  to  buy  certain  goods,  and  the  said  J.  S.,  the  testator  comes 
with  him  and  while  the  said  J.  S.  had  the  goods,  the  plaintiff  said  to 
him  that  he  was  in  doubt  as. to  the  payment,  and  the  said  J.  S.,  the 
testator  said  to  him,  if  he  does  not  pay  you  I  will  pay  you,  upon  which 
promise  the  plaintiff  delivered  the  goods^to  the^said,.Xw_N.,  and  then 
the  said  J.  N.  became  unable  to  pay  the  plaintiff,  and  then  the  said 
J.~S7  died :    and  the  plaintiff  submits  that  he  has  left  assets  to  his 

V.  Bucklin,  2  Denio  (N.  Y.)  45,  43  Am.  Dec.  726  (1846) ;  Ely  v.  McNight,  30 
How.  Prac.  (N.  Y.)  97  (1S64) ;  Oliphant  v.  Pattersou.  56  Pa.  368  (1S<}7) :  Meyer 
V.  Hartman,  72  111.  442  (1874),  obiter ;  Crira  v.  Fitch,  53  Ind.  214  (1876) ;  Car- 
raher  v.  Allen,  112  Iowa,  IGS,  83  N.  W.  902  (1900). 

Similarly  it  has  been  held  that  a  promise  to  the  sheriff  having  a  writ  of 
executioix  against  the  principal  is  not  within  the  statute.  Reader  v.  Kingham,' 
ITcTb.  (N.  S.)  344  (1862). 

3  Justice  of  the  Common  Pleas,  1406-1422. 

Thfi_£as,e.is  inserted  here  to  be  contrasted  with  the  cf.se  npxt  following.  JThe 
principal  case  is„of  the  class  (B).    See  post,  p.  135,  note  21. 
Hen.  Sub. — 8 


114  FORMATION.  (Part  1 

/executors  to  pay  all  debts  and  all  legacies,  and  to  satisfy  him  also.  The 
Vjnatter  in  dispute  was  whether  he  would  have  this  action  against  the 
/executors  or  not.  And  it  \vas  adjudged  by  all  the  justices  that  he 
should  recover  by  this  action  for  two  reasons:  ^ne,  that  because  he 
has  no  other  remedy  at  the  Common  Law  except  by  this  action :  the 
other,  because  the  plaintiff  on  the  promise  of  the  -testator  had  deliv- 
ered the  goods,  and  it  is  not  right  that  his  soul  should  be  in  jeopardy 
if  he  has  sufficient  to  satisfy  him,  seeing  that  by  his  promise  he  has 
had  a  prejudice.    And  so  was  Judgment  given. 

And  FixEux,  Chief  Justice,  said  that  this  is  outside  of  the  case 
where  Actio  moritur  cum  persona :  for  it  is  where  the  hufTTn-tiamage 
is  corporeal ;  as  if  one  beats  me  and  dies,  my  action  is  gone ;  or  if  I 
die  my  executors  will  not  have  action,  for  the  party  cannot  be  punished 
when  he  is  dead :  but  in  this  case  the  plaintiff  can  have  what  he  would 
have  if  the  party  had  been  alive,  to  wit  the  price  of  his  goods:  and 
for  this  reason  this  action  does  not  die,  for  each  party  can  have  his 
remedy ;  but  it  is  not  so  in  battery,  because  the  writ  cannot  say  that 
the  Executors  beat  him,  and  they  shall  not  respond  to  this,  Ouere,  if 
the  testator  being  alive  would  have  this  action  against  him  or  wage  his 
law  in  this  case. 


LIVINGSTON  V.  TREMPER. 

(Supreme  Court  of  New  York,  1S09.     4  Johns.  416.) 

This  was  a^j-Ction  of  covenant.  The  declaration  stated  that  on  the 
25th  July^  1792,  one  Thorhas  iBerry  executed  a  bond  to  the  plaintiff' 
for  i9G.,  conditioned  to  pay  i48.  on  the  1st  November,  1798,  with  the 
interest  yearly,  to  be  calculated  from  the  1st  November,  1791 ;  that  on 
the  3d  December,  1807,  the^efendant , executed  a  writing,  under  his 
hand  and  seal,  by  which  he  covenanted  and  promised,  to  and  with  t^ie 
plaintiff,  that  the  principal  and  interest  of  the  bond  given  by  Berry 
sfioiiM  be  paid  to  the  plaintiff',  in  twelve  months  thereafter,  etc.,  aver- 
Crliig  a  breach,  etc.  with  the  common  conclusion. 
J4>^'  y     There  was^a  general  demurrer  to  the  declaration,  and  joinder.* 

Kext,  C.  J.  We  do  not  wish  to  heir^you'on  this  point.  It  is  too 
well  settled  to  admit  of  doubt. 

\'.\x  Ness,  J.  There  is  a  fallacy  in  the  argument  of  the  defendant's 
counsel.  The  statute  of  frauds  was  never  meant  to  alter  the  common 
law.  Any  prornise  under  seal  was  valid  at  common  law.  The' seal 
imports  a  consideration,  as  much  as  if  it  was  expressed  in  so  many 
words.  The  statute  of  frauds  says  merely  that  a  promise  to  pay  the 
debt  of  another  shall  not  be  valid,  unless  in  writing.  The  statute  has 
no  opplication  to  a  writing  under  seal. 

*  Arguiueiit  of  counsel  is  omitted. 


Ch.  4)       SURETYSHIP   DISTINGUISHED   FROM   OTHER  CONTRACTS.  115 

Per  Curiam.  The  promise  to  pay,  in  this  case,  was  in  writing  and 
under  seal,  and  is  not,  therefore,  within  the  statute  of  frauds,  nor  any 
decision  under  it.  The  covenant,  of  itself,  conclusively  imports  a  con- 
sideration, so  that  it  is~noFnecessary  that  it  should  be  set  forth  in  the 
dee^  The  plaintiff"  Ts  entitled  to  judgment,  but  the  defendant  has 
leave  to  withdraw  his  demurrer,  on  payment  of  costs. 

Judgment  for  the  plaintiff.** 


ALFORD  V.  EGLISFIEIvD. 

(Court  of  Queen's  Bench.  Trinity  Term,  1564.     Dyer,  230b,  pi.  .56.) 

Note,  by  the  opinion  of  the  Justices  of  the  Bench,  that  if_a^^purveyor, 
factor,  ot^^ex^Lant  make  a  contract  for  his  sovereign  or  master,  for  fat 
beasts,  for  a  certain  sum  of  money,  and  make  a  bill  of  receipt  for  the 
beasts  to  the  use  or  behoof  of  the  sovereign  or  master,  and  besides, 
by  ^he  same  billbjnd  himsejf  to  payment  at  a  day  certaiuj  but  do  not 
se^jhejbill,  •this  is  not  such  a  contract  as  shall  charge  the  purveyor  or 
servant  by  writ  of  debt  counting  upon  a  buying,  but  an  action  on  the 
cas^  will  serve  on  this  occasion  upon  an  assumpsit.  And  this  between 
Alford  and  Eglisfield. 

See  of  the  undertaking  of  the  master  for  the  debt  of  the  servant, 
&c.  East.,  10  Eliz.  fol.  (272  pi.  31  post).  And  of  the  undertaking  to 
warrant  a  term  of  years.    M.  15,  fol.  328. 


WARD  V.  COGGIN. 

(Court  of  King's  Bench,  Hilary  Term,  1647.     Styles,  6.) 

Ward  brings  acti(2i]„oi_d£b±  in  the  Common  Pleas  against  Coggin, 
and  dgclajxs_tliat_the  defendant,  in  consideration  that  he,  the  plain- 
tiff, jit  the  request  of  the  defendant,  had  sold  certain  wares  to^  J.  S. 
did  assume  and  promise  to  him,  the  plaindft',  that  he  would  pay  such 
a  sum  of  money  lor  them ;  and  for  non-payment  accordingly  he  brings 
his  action,  and  hath  a  verdict  and  judgment.  The_defendant  brin^;sjiis 
writ^f  error  in  this  Court  to  reverse  this  judgment,  and  assigns  Jor 
error,  that  an  action  of  debt  lyes  not  injhis  case,  because  the  debt  which 
the  defendant  promised  to  pay,  and  for  which  the  action  is  brought, 
was  raised  and  became  a  duty  before  the  promise  made  for  the  payment 
of  it,  an^^so'an  action  of  debt  cannot  be  grounded  for  it  on  the  promise. 
And  the  Avords  in  the -declaration  do  sound  merely  upon  a  promise/' 
upon  which  a  good  consideration  for  an  action  of  the  case  may  be  •• 
grounded  ;' HBut  not  to  bring  an  action  of  debt. 

B  Accori^:    Erickson  v.  Brandt,  53  Minn,  10,  55  N.  W.  62  (1893);  Douglass  v. 
HowH^7r24  Wend.  35  (1S40). 


IIG  FORMATION.  (Part  1 

FOSTER  V.  HALLIMAN. 
(Court  of  King's  Bench.  Michaelmas  Term,  1663.   1  Keb.  512  [87].  Id.  627  [106].) 

In  Actipn_upon  the  Case  on  promise  by  the  Defendant,  that  if  the 
iPlaintiff  and  ].  S.  do  agree  of  a  price,  he  would  pay  on  Communica- 
tion of  the  Sale  of  a  Horse,  of  which  the  Defendant  having  notice 
prornisit,  &c.  to  which  promise  the  plaintiff  fidem  adhibens,  did  agree, 
&c.  After  Verdict  in  the^Palace  Court,  it  was  assigned  for  error, 
that  here  is  no  Sufficient  Consideration,  no  mention  being  made  thafTEe 
Agreement  for  the  price  was  ad  Specialem  Instantiam  of  the  Defend- 
ant :  But  the  Court  inclined  it  was  well  enough ;  but  the  promise  being 
on  Record,  That  if  the  Plaintiff  and  J.  S.  do  agree  for  the  Horse  that 
he  should  be  paid,  which  being  a  voluntary  leaving  the  Sale  to  the 
Plaintiff,  it's  no  Sufficient  Consideration. 

Adjornatur. 

TKe  Defendant  promised,  that  if  the  Plaintiff  do  agree  with  J.  S. 
for  the  price  of  a  horse,  on  Communication  of  the  Sale  betwixt  J.  S. 
and  the  Plaintiff,  That  if  J.  S.  did  not  pay,  the  Defendant  would,  which 
P|R  Curiam  (it  being  assigned  for  Error  after  Verdict  and  Judgment 
in  tlie  Palace  Court  at  Westminster)  is  good  enoj^gh,  in  that  unless 
the  Defendant  had  not  promised,  no  Sale  had  been  made;  and  it's 
all  one,  as  if  he  had  said,  If  the  plaintiff  will  agree,  the  Defendant  will 
pay  &c.    Judgment  affirmed. 


STONEHOUSE  v.  BODVIU. 

(Court  of  King's  Bench,  1663.  T.  Raym.  67,  1  Keb.  439.) 
The  plaintiff  declares  upon  an  Indebitatus  assumpsit  for  Physick, 
Wares  and  Commodities  provided  and  delivered  for  the  Daughter_of 
the  Defendant  at  his  request;  after  non-assumpsit  and  verdict  forjhe 
Plaintiff,  William_s  moved  in  Arrest  of  Judgment,  because  it  is  a  Col- 
lateral Promise  and  so  no  Debt,  and  consequeiitTy  the  Plaintiff*  ought  to 
/  have  declared  Specially :  But  the  whole  Court  resolved  it  well  enougfi^. 
For  that,  1st.  It  is  for  Wares  provided  and  delivered  (for)  not  (to) 
the  Daughter  of  the  Defendant,  and  so  after  a  verdict  it  shall  be  in- 
tended delivered  to  the  Defendant  for  the  Daughter.  _2dly^_An  Action 
of  Debt  will  lie  for  this ;  as  if  the  Father  desire  one  to  find  Physick 
for  his  Daughter,  Debt  lies  against  the  Father,  and  so  Indebitatus  as- 
sumpsit; and  Judgment  was  given  for  the  Plaintiff. 


AMBROSE  V.  ROWE. 
(Court  of  King's  Bench,  Michaelmas  Term,  16So.     2  Show.  421.) 
Indebtatus^  f OX  prosecuting  suits  as  an  attorney  for  B.  at  the  request 
of  the  defendant. 

Upon  motion  in  arrest  of  judgment  it  was_held_good :   and  the  case 
of  Sands  v.  Trevilian,  Cro.  Car.  107,  193,  denied  to  be  law ;   for  that 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER  CONTRACTS.  117 

though  soliciting  in  another's  cause  will  not  raise  a  contract  from  J. 
S.  yet  an  express  promise  from  J.  S.  to  pay  for  the  solicitations  of  J. 
N,'"s  causeTlvill  make  it  a  debt :  as  if  I  build  a  house  for  J.  S.  at  the 
request  of  J.  N.  and  J.  N.  promises  to  pay  me,  debt  will  lie;  so  in  case 
of  a  surgeon's  cure;  and  there  is  no  difference  between  those  cases 
and  this :  it  is  true,  it  will  not  raise  a  promise,  but  an  express  promise 
will  well  ground  an  action. 

And  jEFFERiES,  Chief  Justice,  said,  that  he  thought  Rolle's  argu- 
ment in  that  case  of  Sands  v.  Trevilian  not  to  be  answered.  See  3  Jac. 
I,  c.  7,  and  2  Geo.  II,  c.  23. 

See  Woodhouse  v.  Bradford,  2  Roll.  R.  76.  See  Sands  v.  Trevilian, 
Cro.  Car.  107, 


ROZER  V.  ROZER. 

(Court  of  Common  Pleas,  Trinity  Term,  1682.    2  Ventris,  36.)  4jJ-^^.  .Kx^h 

An  Indebtitatus  Assurnpsi.t  pro  parcell'^orit^ad  specialem  instantiam 
and  requisitionem  of  the  defendant,  sold  and  delivered  to  J.  S.  Et  sic 
inde  Indebitat'  existens  the  defendant  promised  to  pay. 

Upon  non-assumpsit  plea4e(i,  and  a  verdict  for  the  plaintiff,  it  was 
moved  in  arrest  of  judgmenV'tliat  there  is  no  promise  laid,  and  no  rea-^ 
son  to  presume  a  proipise,  when  'tis  the  very  ground  of  the  action,' 
though  after  a  verdictt  ^-lAnd  admitting  there  were  a  promise ;  yet  it 
being  collateral  it  did  not  make  a  debt,  but  should  have  been  brought  \^ 
as  an  action  upon  the  case.  Mo.  702,  and  Dyer,  230.  And  hereupon 
judgment  was  stayed.  Though  (as  I  hear)  in  the  King's  Bench  about 
two  years  since^ "between  Derby  and  Kent,  they  held  such  a  case  well 
enough  after  a  verdict.    Quser^ 


AUSTEN  V.  BAKER. 

(Court  of  King's  Bench,  1699.    12  Jlod.  250.) 

Assumpsit  against  Baker  upon  a  promise  supposed  to  be  made  by 
himTo^ay  for  goods  delivered  by  the  plaintiff  to  A. 

Holt,  Chief  Justjce^JiQQk-this  difference/: ZJIf  B.  desire  A.  to  deliver 
goods  to  C.  and  promise  to  see  him  paid,  there  assumpsit  lies  against 
B.;  though  in  that  case  he  said,  at  Guildhall  he  always  required  the 
tradesman  to  produce  his  books  to  see  whom  credit  was  given  tdv^^^But 
if  after  goods  delivered  to  C.  by  A.,  B.  says  to  A.  "You  shall  be  paid 
for  the  goods,"  it  will  be  hard  to  saddle  him  with  the  debt. 

6  Accord:  Chicago  &  Wilmiucton  Coal  Co.  v.  Liddell,  69  111.  639  (1873) ; 
WooTTTTBenson,  2  Cromp.  &  J.  94  (1831) ;  Davis  v.  Patrick,  141  U.  S.  479,  12 
Sup.  Ct.  58,  35  L.  Ed.  826  (1891). 

7  See  Cooper  v.  Gilibons,  3  Camp.  363  (1813).  r 

In  Boykin  v.  Dohlonde,  37  Ala.  583  (1861),  the  court  said:   "Tii£_eiltry.  in  .the  rA'^.'fo  t.>^p^<''^ 
books  of  the  seller  is  often  of  great  importance,  in  determining  to  whom  cred-  .^..,  .J^Jff^r'k"-''-^' 


^ 


118  FORMATION.  ^Part  1 

WATKINS  V.  PERKINS. 

(Court  of  King's  BeucU,  Easter  Term,  ITOli.    1  TA.  Raym.  224.) 

Per  Holt,  Chief  Tusticei '^If  A  promise  B  being  a  Surgeon,  that 
if  B  cure  D  of  a  wound,  he  will  See  him  paid ;  this  is  only  a  promise 
to  pay  if  D  does  not.  and  therefore  it  ought  to  be  in  writing  by  the 
Statute  of  Frauds.  f7^ut  if  A  promise  in  such  case,  that  he  will  be 
B's  paymaster,  whatever  he  shall  deserve;  it  is  immediately  the  debt 
of  A,  and  he  is  liable  without  writing. 

it  was  given.  Being  made  by  the  seller,  it  Is.  of  course,  of  much  greater  weight 
when  against  him,  than  when  it  sustains  his  chiim.  If,  on  production  of  the 
plaintiffs  Iwoks.  it  appears  that  the  defendant  was  not  orisinally  debited 
there,  Init  that  the  goods  were  cliarged  against  the  person  receiving  them,  this 
fact,  if  unexplained  by  other  circumstances,  wouhl  be  very  strong,  if  not  con- 
clusive, evidence  that  credit  was  given  to  the  person  receivins  the  goods." 

Ufll.diiiS  that  the  entry  against  another  than  the  defendant  may  bet-ex- 
plained awav  bv  other  evidence  of  the  plaintiff  are:  Lusk  v.  Throop.  1,S1>  III. 
127.  51)  X.  E.  r.29  (10<")1) ;  Myer  v.  Grafflin.  .'il  Md.  350,  100  Am.  Dec.  GG  (18G9) ; 
Walker  v.  Richards.  41  N.  H.  3SS  (ISGO). 

Similarly  a  book  entry  against  the,  defendant  does  not  preclude  his  evidence 
that  the  real  debtor  was  another.  Slackev~v.  Snuth.  L'l  Or.  5'J8.  28  Pac.  5^4 
(15112);  KiiTTocB  V.  Brown,  nTIcir  Law  (S.  C.)  223  (1845);  Cutler  v.  Hinton, 
G  Rand.  (Va.)  509  (1S2S).  Contra:  Laugdon  v.  Richardson,  58  Iowa,  610,  12 
N.  W.  <;22  (1882). 

In  thej2cmmon  Picas. of  New  York  tlie  plaintiff  was  held  to  haveJ'jiuL,Ms 
own  (Oil  '  1  the  agreeinerJF^  by  charging  the  goods,  not  to  the  de- 

fentlant.  r  party..    Dixon  v.  Frazee^;  1  E.  "OrBmith  32rTI^nnr.'~'BTlt 

th§"l)Ook  ontry  airniiist  the  defendant  is  not  conclusive  that  no  credit  was 
given  to  another,  but  only  relevant  evidence  on  the  question  of  his  sole  and 
original  liability.  Cowdin  v.  Gottgetreu.  55  N.  Y.'G50  (1873).  And  an  unex- 
plained charge  against  a  third  party  in  the  absence  of  all  other  evidence  fur- 
nishes no  possible  ground  of  recovery.  McRoberts  v.  Mathews,  18  App.  Dlv. 
024,  45  N.  Y.  Supp.'  431  (1897) ;  Bussel  v.  Sagor.  27  Misc.  Rep.  810.  57  N.  Y. 
Supp.  221  (1S!X)).  accord. 

The  doctrine  of  Birkmyr  v.  Darnell,  Salk.  27  (see  page  119),  Is  followed  in 
Hetfield  v.  Dow,  27  N.  J.  Law.  440  (1859). 

In  Merriman  v.  Liggett.  1  Wlcly.  Notes  Cas.  379  (1S75).  Common  Pleas  of 
Philadelphia,  the  language  used  was  to  "let  Samuel  ^Nlarsh  have  what  goods 
he  might  want  within  the  bounds  of  reason,  and  they,  the  defendants,  wouMi 
pay  for  them."    The  account  was  against  Marsh  on  the  books  of  the  plaintiff. 

[Sharsi;\ood,  J.  "Cannot  two  persons  be  both  originally  liable  on  the  same 
contract?" 

[Agnew,  C.  .T..  and  Sharswood,  J.  "The  question  as  to  the  effect  of  the 
manner  in  which  the  liability  of  the  defendants  below  was  entered  in  the 
plaintiff's  book  was,  when  taken  with  the  testimony  of  J.  Liggett,  a  question 
of  fact  for  the  jury,  and  not  a  question  of  law.''] 

For  a  case  where  goods  were  bought  by  A.  to  be  delivered  to  B.,  see  Wat- 
son V.  Porzel.  158  Pa.  513.  27  Atl.  SGG  (1S03). 

A  promise  "that  the  plaintiff  should  have  its  account  for  the  goods  which 
were  to  be  sold  to  the  P.  Co.  under  the  above-mentioned  contract  guaranteed" 
is  a  promise  within  the  statute.  Putnam  Machine  Co.  v.  Cann,  173  Pa.  392, 
34  Atl.  G7  (1S96). 

See  post,  p.  130,  Ckjoper  v.  Gibbons,  3  Camp.  3G3  (1813). 


Cll.  4)       SURETYSHIP  DISTINGUISHED  FBOM  OTHER  CONTRACTS.  119 

BUCKMYR  V.  DARNALL. 
(Court  of  Queen's  Bench,  1704.    2  Ld.  Raym.  1085.) 

An  action  upon  the  case,  wherein  the  plaintiff  declared  that  the  de-  O'-Ck^^-Z^ 
fendant,  in  consideration  the  plaintiff,  at  his  request  locaret  et^Helib- 
eraret  cuidam  Josepho  English  a  gelding-  of  the  plaintiff's  ad  equitan- 
dum  et  itinerandum  usque  ad  Reading  in  comitatu  Berks,  assumpsit  et 
prqmisrt  the  plaintiff",  quod  the  said  Joseph  and  Charles  the  said  geld- 
ing to  the  plaintiff*  redeliberarent,  &c.    U4)on  non-_assumpsit  pleaded,  thisX 
cause  came  to  trial  before  Holt,  Chief  Justice,  at  Westminster-Hall ; 
and  the  counsel  for  the  defendant  insisting,  that  the  plaintiff  ought  to 
produce  a  note  in  writing  of  this  promise  within  the  statute  of  frauds, 
29  Car.  H,  c.  3,  §  4.     And  the  Chief  Justice  doubting  of"itV"a~case 
was  made  of  it.  and  ordered  to  be  movpri  in  r-r^^rt,  to  have  the  opinion ^ 
of  tne  other  judges.     Anri  r.r..,r  I'f  ..r^c;  ni-g-^fd  this  term  by  Serjeant:  , 

Darnairtor  the  detendant,  and  by  Mr.  Raymond  for  the  plaintiff.  And  ^^^yrU*-rJ^  t^^ 
it  was  insisted  for  the  defendant,  that  this  case  was  within  the  statute 
of  frauds,  29  Car.  II,  c.  3,  §  4,  for  it  was  a  promise  to  answer  for  the 
default  and  miscarriage  of  the  person  the  horse  was  lent  to.  The  very 
letting  out  and  delivery  of  the  horse  to  English  implies  a  contract  by 
English  to  redeliver  him,  and  he  is  bound  by  law  so  to  do,  and  conse- 
quently the  defendant  is  to  answer  for  the  default  of  another.  In  a 
case  2  Will,  and  Mar.  your  Lordship  settled  this  rule,  that  where  an 
action  will  He  against  the  party  himself,  there  an  undertaking  by  J. 
S.  is  within  the  statute ;  and  where  no  action  will  lie  against  the  party 
himself,  there  it  is  otherwise.  And  therefore  I  agree  this  case,  that  if 
a  man  should  say  to  another,  do  you  build  a  house  for  J.  S.  and  I  will 
pay  you ;  that  case  is  not  within  the  statute,  because  there  J.  S.  is  not 
liable.  But  th'is  case  is  not  more  than  this,  if  a  man  should  say,  do  you 
let  J.  S.  have  goods,  and  if  he  does  not  pay  you  I  will,  and  this  is 
within  the  statute  because  an  action  will  lie  against  J.  S.  for  the  money 
for  the  goods.  Or  if  a  man  should  say,  take  J.  S.  into  your  service, 
and  if  he  does  not  serve  you  faithfully,  or  if  he  wrongs  you,  I  will 
be  responsible,  that  is  also  within  the  statute. 

T^  this  it  was  answered  for  the  plaintiff,  that  here  the  credit  was  P-^*^-*^^'  c-rp^ 
wholly  given  to  tfie  detendant;  that  that  rule  of  the  Serjeant's  must  be 
understood,  where  an  action  does  or  does  not  lie  against  the  party  him- 
self on  the  contract,  and  not  where  an  action  does  or  does  not  lie 
against  him  upon  collateral  respects.  And  therefore  in  this  case  for 
an  actual  conversion,  or  for  refusing  to  redeliver  the  horse,  English 
may  be  charged  in  trover  or  detinue ;  yet  he  being  not  chargeable  upon 
the  contract,  the  case  is  not  within  the  statute.  This  contract  cannot 
be  said  properly  to  be  a  promise  to  answer  for  the  default  or  miscar- 
riage of  another,  unless  English  were  liable  by  the  first  contract.  'H  \C  '    J  HI  \' 

Upon  the  first  motion  and  arguing  this  case,  the  three  judges  against       'T^rV-^^ 
PowYS  seemed  to  lie  oT'opimonJ'l'Trat  this  case  was  not  within  the  stat-  '^   '''  ^"^     ^ 


120  FORMATION.  (Part  1 

*<trr-''^^vKL!^  y^  ute,  because  English  was  not  liable  upon  the  contract ;  but  if  any  ac- 
r^ ;  V^r^i-^Cj  tion  could  be  maintained  against  him,  it  must  be  for  a  subsequent  wrong 
'*"  ff'  in  detaining  the  horse,  or  actually  converting  it  to  his  own  use.    And 

Powell,  Justice,  said,  that  that  rule,  of  what  things  shall  be  within  the 
statute,  is  not  confined  to  those  cases  only  where  there  is  no  remedy 
at  all  against  the  other,  but  where  there  is  not  any  remedy  against  him 
on  the  same  contract.  This  case  is  just  like  the  case  where  a  man  says, 
"send  goods  to  such  a  one,  and  I  will  pay  you ;"  that  is  not  within 
the  statute,  for  the  seller  does  not  trust  the  person  he  sends  the  goods 
to.  So  here,  the  stable-keeper  only  trusted  the  defendant,  and  an  ac- 
tion on  the  contract  will  not  lie  against  English,  but  for  a  tort  subse- 
quent he  may  be  charged  in  detinue,  or  trover  and  conversion,  which 
is  a  collateral  action. 

PowYS,  Justice,  said,  that  there  was  a  trust  to  English,  for  the  very 
lending  of  the  horse  necessarily  implies  a  trust  to  the  person  he  is  lent 
to,  and  consequently  the  defendant  in  this  case  is  to  answer  for  the 
default  of  another,  and  is  within  the  statute. 
jC  Powell,  Justice,  agreed,  that  if  a  man  should  say,  lend  J.  S.  a  horse, 
and  I  will  undertake  he  shall  pay  the  hire  of  it;  or  send  J.  S.  goods 
and  I  will  undertake  he  shall  pay  you ;  that  those  cases  would  be  with- 
in the  statute:  and  agreed  with  Powys,  that  if  any  trust  were  given 
to  English,  then  the  case  would  be  within  the  statute.  But  he  and  the 
Chief  Justice  and  Gould  held  that  here  was  no  credit  given  to  Eng- 
lish ;  and  the  Chief  Justice  agreed  with  him,  that  if  there  had,  this 
promise  would  have  been  but  an  additional  security,  and  within  the 
statute.  And  the  Chief  Justice  said,  that  if  a  man  should  say,  "let 
J.  S.  ride  your  horse  to  Reading,  and  I  will  pay  you  the  hire,"  that  is 
not  within  the  statute,  no  more  than  if  a  man  should  say,  "deliver  cloth 
to  J.  S.  and  I  will  pay  you,"  He  said  also,  that  a  bailee  of  an  horse 
for  hire  is  not  bound  to  redeliver  him  at  all  events,  but  if  he  be  robbed 
of  him  without  fraud  in  him,  he  is  excused.  And  so  it  was  ruled  in 
/the  case  of  Coggs  v.  Bernard,  2  Ld.  Raym.  916. 
jC  The  last  day  of  the  term  the  Chief  Justice  delivered  tlie  opinionjif 
fn.  »|  L^wt"^^  ^the  court.  He  said,  that  th£L_question  had  been  proposed  at  a  meeting 
^ci^^^»,(  of  judges,  and  that  there  had  been  great  variety  of  opinions  befvveen 
^  '  them,  because  the  horse  was  lent  wholly  upon  the  credit  of  the  de- 
fendant; but  that  the  judges  of  this  court  were  all  of  opinion,  that 
the^case  was  within  the  statute.  The  objection  that  was  made  wtas, 
that  if  English  did  not  redeliver  the  horse,  he  was  not  chargeable  in 
an  action  upon  the  promise,  but  in  trover  or  detinue,  which  are  founded^ 
upon  the  tort,  and  are  for  a  matter  subsequent  to  the  agreement.  But 
I  answered,  that  English  may  be  charged  oil  the  bailment  in  detlaije 
on  the  original  delivery,  and  a  detinue  is  the  adequate  remedy,  and 
upon  the  delivery  English  is  liable  in  detinue,  and  consequently  this 
promise  by  the  defendant  is  collateral,  and  is  within  the  reason,  and  the 
very  words  of  the  statute;  and  is  as  much  so,  as  if,  where  a  man  was 
indebted,  J.  S.  in  consideration  that  the  debtee   would   forbear  the 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER   CONTRACTS.  121 

man,  should  promise  to  pay  him  the  debt,  such  a  promise  is  void,  un- 
less it  be  in  writing.  Suppose  a  man  comes  with  another  to  a  shop 
to  buy,  and  the  shopkeeper  should  say,  "I  will  not  sell  him  the  goods, 
unless  you  will  undertake  he  shall  pay  me  for  them,"  such  a  promise 
is  within  the  statute:  otherwise,  if  a  man  had  been  the  person  to  pay 
for  the  goods  originally.  So  here,  detinue  lies  against  English  the 
principal ;  and  the  plaintiff  having  this  remedy  against  English  the 
principal,  cannot  have  an  action  against  the  defendant,  the  undertaker, 
untess  there  had  been  a  note  in  writing.^ 

t  No  stereotjjocd  form  of  expression  is  conclusive  as  to  whether  n  riebt  or^   .    '        ftniff'^ 
a  special  promise  to  answer  for  another's  debt  has  been  created.    "The- real '^-^'''^'^'f^^^^s^- 
ehttraeter  of  a  promise  does  not  depend  altogether  npon  the  fm-m  of  expres-  C' 

sion,  but  largely  on  the  situation  of  the  parties ;  and  the  question  always  is, 
what  the  parties  mutually  understood  by  the  language,  whether  they  under- 
stood it  to  be  a  collateral  or  a  direct  promise."  Davis  v.  Patrick.  141  U.  S. 
489,  12  Sup.  Ct  58,  35  L.  Ed.  826  (1891). 

In  Tomlinson  v.  Gill,  Ambler  3.30  (17.56).  Lord  Hardwicke  said:  "The  dis- 
tinction taken  in  Buckmire  v.  Darnell.  6  Mod.  248.  1  Salk..  2  Ld.  Raym..  is  a 
very  slight  and  cobweb  distinction.  The  judges  were  much  divided  upon  the 
question.    I  agree  with  the  many."  '      ■  ^-t^.^^^^  JlL 

The  correct  interpretation  and  application  of  the  statute  depends  upon  pre-  j>       Y 

serving  the  distinction  between  a  "special  promise"  and  a  "debt"  at  common  ,  J^-y** 

lawj     The  statute  was  designed  to  render  unenforceable  all  verbal  "specialj 
promises,"  but  left  unaffected  all  verbal  debts.    The  test  is  therefore  whether  \ 
the^ transaction  constitutes  at  common  law  a  "special  promise"  or  a  "dilt.'  ; 
Professor  Ames,  in  8  Harvard  Law  Review,  pp.  263.  204,  has  poiiit«'(l  <iut  (his  * 
test::'   He-vvasthe  first  to  do  so.    In  tlie  former  case  the  absence  of  a  writing 
prevents  tEe~eflforcement  of  the  verbal  promise;   in  the  latter  casjg  no  writing 
is  necessary.    At  common  law  a  debt  was  created  by  the  physical  transfer  of 
chattels  or  by  tEe  performance  of  some  service  in  exchange  for  a  promise  to 
pay  a  specific  sum  of  money  therefor.    (Illustrations  of  contracts  of  debt  will 
be  found  in  52  Am.  Law  Reg.  p.  770  et  seq.)     But  the  contract  of  debt  could 
neverj.rise  if  in  exchange  for  a  quid  pro  quo  the  promise  was  to  pay  in  case 
another  person" who  received  the  quid  pro  quo  did  not  pay..  One  quid  pro  quo 
couTd  never  do  dauble  duty  to  support  two  contracts  of  debt — the  one  contin- 
gent upon  the  other. 

Judge  Hare  (Contracts,  p.  122  [1887]),  shows  that  this  characteristic  of 
debt  led  ultimately  to  the  action  on  the  case  upon  the  special  promise  to  an- 
swer for  the  debt  of  another.  Rozer  v.  Rozer,  2  Ventris,  36  (1681),  accord, 
supra,  p.  117. 

Hence  a  promise  by  A.  to  pay,  if  B.  did  not,  created  only  a  special  prom- 
ise enforceable  in  an  action  upon  the  case  before  the  statute,  Foster  v.  Holy- 
man,  supra  [1  Keble,  627  (1663)],  but  after  the  statute  a  writing  was  required. 
But  if  B.  at  A.'s  request  either  delivered  goods  to  C.  or  performed  a  service 
for  C.'s  benefit,  and  no  credit  whatever  was  given  to  O.,  A.  became  B.'s  debt- 
or thereby.  The  transaction  gave  rise  to  the  contract  of  debt.  Stonehouse  v. 
Bod\al,  supra  [1  Keble,  439  (1602)].  Hence  after  the  statute  if  a  debt  existed 
no  writing  was  necessary.    Ambrose  v.  Rowe,  supra  [2  Showers,  421]. 

The  action  of  debt  would  never  lie  upon  any  simple  contract  except  the 
contract  of  debt.  The  action  of  indebitatus  assumpsit  was  Invented  in  the 
sixteenth  century,  so  that  a  contract  of  debt  might  be  sued  in  assumpsit  and 
the  plaintiff  thus  obtain  a  trial  by  jury.  The  action  of  indebitatus  assumpsit 
would  lie  wherever  the  action  of  debt  would  lie,  but  not  otherwise,  aside  from 
Its  use  by  Lord  Mansfield  and  subsequently  to  enforce  quasi  contracts.  Hence 
indebitatus  assumpsit  would  not  lie  on  any  simple  contract,  except  the  con- 
tract of  debt.  Accordingly,  as  there  was  no  debt  created  in  Rozer  v.  Rozer, 
supra,  there  was  no  recovery.  The  case  decided  that  indebitatus  assumpsit 
will  not  lie  on  a  promise  to  pay  for  goods  sold  and  delivered  to  X.  at  the  de- 


122  FORMATION.  (Part  1 

JORDAN  V.  TOMPKINS. 
(Court  of  King's  Bencn,  1703.    2  Ld.  Raym.  982.) 

Itidebitatus  assupipsit,  forjhe  plaintiff  ad  rpqnisitionem  jpOhe^jie- 
fendant  did  provide  meat,  drink  and  lodging  for  J,  S^  and  J..D.  and 
the  plaintiff  had  judgment  by  default.  Mr.  Acherley  moved  in  arrest 
ol  judgment  that  an  indebitatus  assumpsit  did  not  ireTn'!hTs~case,  but 
the  plaintiff  ought  to  have  declared  specially. 

But  per  Holt,  Chief  Jnstice,  et  curiam.  It  is  well;  for  it  is  a  con- 
tract between  the  plaintiff'  and  defendant,  and  no  action  lies  against 
J.  S.  or  J.  D.   ■ 

]\IATSON  et  al.  v.  WHARAM. 
(Court  of  King's  Bench,  Michaelmas  Term,  1787.    2  Terra  R.  80.) 

This  was  an  action_for_o;QQ.ds  sold  and  dftlivered,  and  tried  before 
Wilson,  J.,  at  the  last  Assizes  at  Kingston  upon  Hull,  when  a  verdict 
was  found  for  the  plaintiff's,  subject  to  the  opinion  of  the  court  on  the^ 
following  case: 

In  January,  1785,  the  defendant  Wharam  applied  to  Matson,  one  of 
the  plaintiff's,  and  asked  him  if  he  was  willing  to  serve  one  Robert 

feudant's  request.  If  the  action  here  had  been  case  on  the  special  promise, 
the  lacli  of  a  writing  would  have  been  fatal  to  the  plaintiff  in  IGSl. 

If  any  credit  whatever  is  given  to  a  person  other  than  the  promisee,  the  de- 
fendant's promise  is  "pi'o  tanto,"  a  "special  promise  to  answer  for  the  debt  of 
another"  and  not  a  debt,  Rozer  v.  Rozer.  supra,  and  hence  must  be  in  writing. 
Though  in  writing,  indebitatus  will  not  lie.  Mines  v.  Sculthorpe,  2  Campbell, 
215  (1800),  by  Lord  Ellenborough. 

It  is  therefore  plain  that  the  liability  of  a  surety  can  never  be  a  debt,  but 
must  always  l)e  an  assumpsit.   .  ^ 

It  is  also  plain  that,  whenever  the  contract  of  debt  is  created,  no  writing 
whatever  is  necessarj',  as  tlie  statiite  of  frauds  does  not  apply.  ' 

The  well-known  case  of  Lakeman.  Appellant,  v.  Mountstephen.  Respondent, 
L.  R.  7  H.  L.  17  (s.  c.  43  L.  J.  Q.  B.  188,  30  L.  T.  437.  22  W.  R.  G17  [1874]  ;  the 
case  in  the  Court  of  Exchequer  Chaml>er  and  in  the  Court  of  Queen's  Beifch  is 
reiwrted  in  L.  R.  5  Q.  B.  013  [1870],  7  Q.  B.  196  [1871],  39  L.  J.,  Q.  B.  275 
[1J>70].  41  L.  J.,  Q.  B.  07  [1871]).  belongs  to  the  class  of  cases  now  under  con- 
sideration. The  credit  was  given  to  the  defendant  at  the  time  he  made  the 
promise  on  which  the  action  was  brought,  and  as  there  was  then  no  subsisting 
liability  of  the  municipality  of  Brixham,  the  jury  were  allowed  to  find  wheth- 
er the  words,  "Go  on.  Mountstephen.  and  do  the  work,  and  I  will  see  you 
paid."  were  or  were  not  an  original  undertaking  (i.  e.,  Jin  undertaking,  to  use 
Ix)rd  Cairns'  expression,  "as  a  matter  of  primary  liability  to  pay  for  the  work 
that  would  be  done"). 

^'CtC  V'<?^^" — The  doctrine  of  the  principal  case  is  applied  in  Carville  v. 
Crane,  5  Hill,  483,  40  Am.  Dec.  304  (1843).  A.  requested  B.  to  sell  goods  to  C, 
promising  by  parol  to  indorse  C.'s  note  for  the  price.  Held,  on  demurrer,  to 
he  witliin  tlie  statute.  Allen  v.  Scarff.  1  Hilt.  209  (18.50).  accord.  But  where 
the  defendant  said,  "If  my  nephew  should  call  for  papers,  I  will  be  resi»onsI- 
bie  for  the  papers  that  he  shall  take  *  *  *  to  sell  and  distribute,  etc.,  as 
a  news-carrier."  a  verdict  for  the  plaintiff  was  held  justifiable  on  the  ground 
that  "this  was  never  the  debt  of  the  nephew.''  Chase  v.  Daj-,  17  .Johns.  114 
(1S19).    Flanders  v.  Crolius,  1  Duer,  200  (1S52),  accord.    "If  the  whole  cre<ilt 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER   CONTRACTS.  12.3 

Coulthard  of  Pontef ract  with  groceries ;  he  answered  they  dealt  with 
nobody  in  that  part  of  the  country,  and  did  not  know  CouUhard;  to 
which  the  defendant,  Wha,ram  repHed^  jf  you  do„noLkaQ.W-JuiiL  you 
know  me,  and  I  will  see  you  paid.  Matson  then  said  he  would  serve 
him  ;-and"W1iaTam  answered^ ITe  is  a  good  chap,  but  I  will  see  you  paid. 
A  letter  was  afterwards  received  by  the  plaintiffs  from  Coulthard,  con- 
tainmg  an  ordei"  for  goods  to  the  amount  of  £7.  and  the  goods  were 
afterwards  sent  to  Coulthard  accordingly.  The  plaintiffs  made  Coult- 
hard the  debtor  for  these  goods  in  their  books.  They  afterwards  ap- 
plted  to  Coulthard  for  payment  of  the  debt  by  letter,  and  receiving  no 
answer,  they  then  applied  to  the  defendant,  Wharam,  who  refused  to 

be  not  given  to  the  person  who  conies  in  to  answer  for  another,  his  unilertak- 
ing  is  collateral,  and  must  be  in  writing."  Brady  v.  Sackrider,  1  Sandf.  .514 
(1848),  where  the  Marine  Court  was  reversed  on  the  facts.  In  Read  v.  Ladd, 
1  Edm.  Sel.  Cas.  100  (18-15),  a  verdict  of  sole  liability  was  set  aside,  as  there 
was  evidence  of  a  collateral  indelitedness. 

WTiere  A.,  one  party  to  a  contract,  refused  to  complete  it  because  of  the 
failure  of  B.,  the  other  party,  to  pay  an  installment  for  materials  furnished, 
C.'s  promise,  "Go  on  and  furnish  the  stuff,  and  he  would  see  it  was  paid  for," 
followed  by  the  supplying  of  the  materials  to  -B.  and  the  charging  of  them 
against  B.  and  not  against  C,  was  held  insuthcient  evidence  to  justify  a  find- 
ing against  C.  on  such  verbal  promise.  Payne  v.  Baldwin,  14  Barb.  570  (1853)  ; 
Brown  v.  Bradshaw,  1  Duer,  199  (1852).  So  a  re<iuest  to  a  physician  to  attend 
upon  a  third  person,  accompanied  by  a  promise  to  pay  therefor,  is  not  within 
the  statute.    Hanford  v.  Higgms,  1  Bosw.  (N.  Y.)  441  (1857). 

In  Hazeltine  v.  Wilson,  55  N.  J.  Law,  250,  26  Atl.  79  (1893),  the  defendant, 
acting  as  agent  for  Keenan,  applied  to  plaintiff  to  procure  a  loan  for  Keenan. 
Plaintiff  said:  "Mr.  Wilson,  to  whom  shall  I  look  for  the  expenses?"  Wilson 
replied:  "I  am  getting  this  money  as  an  accommodation  for  Peter  Keenan,  but 
I  will  be  responsible."    Held,  that  WiLson  was  liable. 

Pennsijlvania. — The  doctrine  of  the  principal  case  is  thoroughly  recognized. 

No  particular  form  of  expression,  however,  is  decisive  of  the  question  wheth- 
er the  promise  is  original  or  collateral.  Thus  the  words  "see  it  paid,"  or  "see 
you  paid,"  when  gpoken  under  circumstances  establishing  an  intention  to 
merelv  become  a  surety,  will  not  create  an  original  undertaking.  Miller  v. 
Long.  45  Pa.  350  (1863) ;  Gable  v.  Graybill,  1  Pa.  Super.  Ct.  29  (1895).  Al- 
though the  same  words  under  circumstances  from  which  an  intention  to  be- 
come primarily  liable  may  be  properly  inferred  will  create  an  original  obliga- 
tion. 

Thus  in  a  case  where  a  stepfather  said  to  a  physician:  "If  the  boy  dies  I 
don't  want  any  blame  resting  on  me.  You  go  and  get  the  doctor  (i.  e.,  a  sur- 
geon) and  do  all  that  you  can  for  the  boy.  I  will  see  that  you  get  your  pay." 
Held,  that  on  this  evidence  the  jury  might  find  an  "original  undertaking"  on 
the  part  of  the  defendant.  Boston  v.  Farr,  148  Pa.  220,  23  Atl.  901  (1892). 
See,  to  same  effect,  Patton's  Ex'r  v.  Hassinger,  69  Pa.  311  (1871).  "A  contract 
to  give  a  guaranty  is  required  to  be  in  writing  as  much  as  a  guaranty  itself." 
Per  Pollock,  C.  B.,  in  Mallet  v.  Bateman,  L.  R.  1  C.  P.  163  (1865). 

In  Dougherty  v.  Bash,  167  Pa.  429,  31  Atl.  729  (189-5),  "defendant  stated  that 
if  plaintiffs  would  sell  C.  W.  &  Co.  all  the  goods  in  their  line  which  the  said 
C.  W.  &  Co.  desired,  and  would  get  what  cash  plaintiffs  could  on  account,  and 
would  take  the  notes  of  C.  W.  &  Co.  for  the  balance  of  the  account,  drawn  to 
said  C.  W.  &  Co.'s  own  order  and  by  them  indorsed,  that  he,  defendant,  would 
discount  said  notes  for  plaintiff's  without  recourse."  Held,  the  promise  was 
within  the  sbitute.  Eshleman  v.  Harnish,  76  Pa.  97  (1874').  accord.  So  In 
Morley  v.  Boothby,  3  Bing,  107  (1825),  a  promise  that  a  certain  draft  of  the 
plaintiff"  to  his  own  order  on  a  third  person  shall  be  iiaid  wtus  held  to  be  a 
promise  to  answer  for  the  debt,  default,  etc.,  of  another. 

See.  also.  Weyand  v.  CrlchHeld,  3  Grant.  Cas.  (Pa.)  113  (1862)  ;  Warrick  v. 
Grosholtz,  14  Leg.  Int.  (Pa.)  117  (1857),  Hare,  J. 


124  FORMATION.  (Part  1 

pay  the  money.  The£e_was  no  promise  in  writing  made  hy-4he-4e- 
fendant.  The  question  for  the  opinion  of  the  court  is,  Wlietlier-the 
plaintiffs  are  entitled  to  recover? 
'^  tJarrow,  for  the  plaintiffs,  attempted  to  take  a  distinction  which 
had  been  before  taken  in  Jones  v.  Cowper,  Cowp.  227,  and  Mawbrey 
V.  Cunningham,  there  cited,  between  a  promise  for  the  payment  of 
goods  for  another  person  before  delivery  and  after.;  and  contended  that 
inlhe  former  case  it  amounted  to  an  original  undertaking,  and  SQ.wqs 
not  within  the  statute  of  frauds.  And  he  also  cited  Reed  v.  Nash,  1 
Wils.  305,  Fish  v.  Hutchinson,  2  Wils.  94,  and  Peckham  v.  De  Faria, 
M.  22  Geo.  Ill,  B.  R.    But  -  -  % 

/^     The  Court  were  clearly  of  opinion  that  that  distinction  had  been 
overruled;   and  " 

BuLLER,  J.,  added,  that  he  argued  the  case  in  Cowper,  the  facts  of 
which  were  these :  A  person,  who  was  going  abroad,  wished  to  make 
some  provision  for  his  mother-in-law  in  his  absence,  and  said  to  a 
baker,  "You  must  supply  my  mother-in-law  with  bread,  and  I  will  see 
you  paid."  That  case  was  tried  before  Nares,  J.,  at  Bristol.  I  was 
for  the  plaintiff;  and  cited  the  case  of  Mawbrey  v.  Cunningham  (Sit- 
tings after  Hil.  1773,  at  Guildhall),  in  which  Lord  Mansfield  said: 
"This  is  a  promise  made  before  the  debt  accrues ;  and  what  is  the 
reason  of  the  tradesman's  requiring  that  promise?  It  is  because  he 
will  not  trust  the  person  for  whose  use  the  goods  are  intended."  And 
the  plaintiff  obtained  a  verdict.  But  Nares,  J.,  overruled  this  deter- 
mination, and  non-suited  the  plaintiff;  and  this  court  afterwards  re- 
fused to  grant  a  new  trial.  If  this  were  a  new  question,  the  leaning  of 
my  mind  would  be  the  other  way;  for  Lord  Mansfield's  reasoning  in 
the  case  of  Mawbrey  and  Cunningham  struck  me  very  forcibly.  But 
the  authorities  are  not  now  to  be  shaken ;  and  the  general  line  now 
taken  is  that,  if  the  person  for  whose  use  the  goods  are  furnished  be 
liable  at  all,  any  other  promise  by  a  third  person  to  pay  tKat  debt  must 
be  in  writing,  otherwise  it  is  void  by  the  statute  of  frauds,  21)  Car. 
II,  c.  3.  — 

Lambe  was  to  have  argued  for  the  defendant. 

Per  Curiam.    Judgment  for  the  defendant." 


BUTCHER  V.  ANDREWS. 

(Court  of  King's  Bench,  1698.    1  Salk.  23.) 

Agsumpsit.  forjhat  the  defendant,  in  consideration  that  the  plaintiff 
at  his  request  would  lend  the  defendant's  son  any  sum  of  money,  and 
let  him  have  any  goods,  so  as  the  money  lent  and  goods  sold  exccrded 

» Accord:  Oommercial,  etc.,  Bank  v.  Smith,  107  Wis.  574,  S3  N.  W.  7Gd 
(1900) ;   Mease  v.  Wagner,  1  McCord  (S.  O.)  39.5  (1821). 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER  CONTRACTS.  125 

not_.i5^prQinis£d to-pay Jiim;  and  avers  that  he  lent  him  £o.  in  money, 
and  sold  him  goods  upon  credit  to  the  value  of  £5.,  and  declares  also 
that  the  defendant  was  indebted  to  him  for  so  much  money  mutuo  dat 
&  accomodat,  to  the  son  at  the  defendant's  request,  &c.  Upon  non  as-(^ 
sumpsit,  verdict  pro  quer  and  £3.  given  in  damages.  U£0in^ motion (  -*wy 
in  arrest  of  judgment  it  was  allowed,  That  the  defendant  could  not  be 
indebted  for  more  than  £5.,  for  he  engaged  for  no  more;  so  that  if 
the  jury  had  given  more,  it  had  been  naught.  Here  the  jury  having 
given  less  than  £5.  this  was  urged  to  have  helped  the  declaration.  Sed 
non  allocatur ;  for  first,  non  constat  to  the  court,  but  the  defendant  has 
paid  £5.  already,  and  that  this  is  now  claimed  over  and  above.  2dly, 
That  the  declaration-  was  naught ;  for  the  money  being  lent  to  J.  ^TOie 
defendant  cannot  be  obliged  as  for  a  debt,  and  liable  to  an  indebitatus, 
but  to  a  special  assumpsit,  as  being  but  collaterally  bound  by  his  prom- 
ise; fn£jjie_,same  money  cannot  be  lent  to  iwo,  otherwise  had  the 
rffdney  been  only  delivered  to  the  son  at  the  father's  request,  for  then 
thie Toan  had  been  to  the  father ;  quod  nota.^"* 


KEATE  V.  TEMPLE. 

(Court  of  Common  Pleas,  Michaelmas  Term,  1797.    1  Bos.  &  P.  158.) 

Assumpsit  for  goods  sold  and  delivered,  work  and  labour,  and  com- 
mon money  counts. 

Plea.     Non  assumpsit. 

This  cause  was  tried  before  Lawrence,  J.,  at  Winchester  summer 
assizes,  1797,  when  the  principal  facts  in  evidence  wftre  as^ollow:         _ 

The  plaintiff  v^as  a  tailor  and  slopseller  at  Portsmouth,  and  the  de-  ^"^ 
fendant  the  first  lieutenant  of  His  Majesty's  ship  the  Boyne.  When 
that  ship  came  into  port,  the  defendant  applied  to  a  third  person  to 
recommend  a  slopseller  who  might  supply  the  crew  with  new  cloaths, 
saying,  "He  will  run  no  risk;  I  will  see  him  paid."  The  plaintiff 
being  accordingly  recommended,  the  defendant  called  upon  him,  and 
used  these  words,  "I  will  see  you  paid  at  the  pay  table;  are  you  sat- 
isfied?" _The  plaintiff  answered,  "Perfectly  so."  The  cloaths  were  de- 
livered on  the  quarter  deck  of  the  Boyne.  Slops  are  usually  sold  on 
the  main  deck.  The  defendant  produced  samples  to  ascertain  whether 
his  directions  had  been  followed.  Some  of  the  men  said,  that  they 
were  not  in  want  of  any  cloaths,  but  were  told  by  the  defendant  that 

10  As  goods  may  be  sold  or  the  money  lent  to  two  jointly,  a  joint  contract  y^  <'<y'^fr^  ^ 
is  not  within  the  statute,  Cooper  v.  Gibbons,  3  Camp.  363  (1813),  post,  p.  130;  '  L^J~U^^^h 
Gibbs  V.  Blanchard,  15  Mich.  292  (1867). 

The  statement  that  "the  same  money  cannot  be  lent  to  two"  obviously  re- 
fers to  a  situation  where  no  joint  debt  arises. 

Where  the  promisor  is  a  member  of  a  partnership,  to  which  he  guarantees 
the  payment  of  a  third  person's  debt,  the  promise  is  not  within  the  statute. 
Hoyle  V.  Hoyle,  1  Gh.  84  (1893). 


12G  FORMATION.  (Part  1 

if  they  did  not  take  them,  he  would  punish  them;  and  others,  who 
stated  that  they  were  only  in  want  of  part  of  a  suit,  were  obliged  to 
take  a  whole  one,  with  anchor  buttons  to  the  jacket,  such  as  are  usually 
worn  by  petty  officers  only.  The  clothing  of  the  crew  in  general  was 
light  and  adapted  to  the  climate  of  the  West  Indies,  where  the  ship 
had  been  last  stationed.  Soon  after  the  delivery,  the  Boyne  was  burnt, 
and  the  crew  dispersed  into  different  ships.  On  that  occasion,  the 
plaintiff,  having  expressed  some  apprehensions  for  himself,  was  told 
by  the  defendant,  "Captain  Grey  [the  captain  of  the  Boyne]  and  I 
will  see  you  paid;  you  need  not  make  yourself  uneasy."  After  this 
the  commissioner  came  on  board  the  Commerce  de  Marseilles  in  order 
to  pay  the  crew  of  the  Boyne;  at  which  time  the  defendant  stood 
at  the  pay  table,  and  having  taken  some  money  out  of  the  hat  of  the 
first  man  who  was  paid,  gave  it  to  the  plaintiff ;  the  next  man  refused 
to  part  with  his  pay,  and  was  immediately  put  in  irons.  The  defend- 
ant then  asked  the  commissioner  to  stop  the  pay  of  the  crew,  who 
answered  that  it  could  not  be  done. 
AV  "^f'tW^  ^  '^^^  learned  judge  in  his  directions  to  the  jury  said,  that  if  they 
\y    [)  were"salisfied  on  the  evidence,  that  the  goods  in  question  were  advanced 

on  the  credit  of  the  defendant  as  immediately  responsible,  the  plain- 
ciff  was  entitled  to  a  verdict;  but  if  they  believed  that  at  the  time  when 
the  goods  were  furnished,  the  plaintiff  relied  on  being  able,  through 
the  assistance  of  the  defendant,  to  get  his  money  from  the  crew,  they 
ought  to  find  for  the  defendant. 

\[erdict  for  the  plaintiff  £576.  7s.  8d.^^ 
/  Eyre,  C.  J.  There  is  one  consideration,  independent  of  every  thing 
else,  which  weighs  so  strongly  with  me,  that  I  should  wish  this  evi- 
dence to  be  once  more  submitted  to  a  jury.  The  sum  recovered  is 
i5T6.  7s.  8d.  and  this  against  a  lieutenant  in  the  navy;  a  sum  so  large 
that  it  goes  a  great  way  to  wards  ^satisfying  my--miftd  ^kat— it  neiisr 
could  have  been  in  the  contemplation  of  the  defendant  to  make  him- 
self liable,  or  of  the  slopseller  to  furnish  the  goods  on  his  credit,  to_so" 
large  an  amount.  I  can  hardly  think  that  had  the  Boyne  not  been 
burnt,  and  the  plaintiff  been  asked  whether  he  would  have  the  lieu- 
tenant or  the  crew  for  his  paymaster,  but  that  he  would  have  given  the 
-ijL.",f^(VY~  preference  to  the  latter.  The  circumstances  of  this  case  create  some 
l,''^Ju^.j  prejudice  against  the  defendant,  but  which  I  think  capable  of  explana- 
tion. There  is  some  appearance  of  harshness  in  making  the  men  pur- 
chase these  cloaths  against  their  inclination.  But  it  was  in  evidence, 
that  though  they  were  pretty  well  cloathed,  yet  their  cloaths  were 
adapted  to  a  warm  climate  rather  than  to  the  service  in  which  they 
were  to  be  engaged.  It  was  therefore  the  bounden  duty  of  the  officer 
to  take  some  course  to  oblige  the  crew  to  purchase  proper  necessaries. 
We  all  know  that  a  sailor  is  so  singular  a  creature,  so  careless  of  him- 
self, that  he  cannot,  though  his  life  depend  upon  it,  be  prevailed  upon,. 

"  The  argument  of  counsel  is  omitted. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER   CONTRACTS.  1-7 

without  force,  even  to  bring  up  his  hammock  upon  deck  to  be  aired. 
We  know  that  he  will  risk  any  danger  in  order  to  employ  his  money 
in  a  way  that  he  likes,  rather  than  lay  it  out  in  that  provident  method 
which  his  situation  may  require.     The  whole  of  the  imputation  then 
on  the  defendant  and  Captain  Grey  amounts  to  this,  that  when  the 
men  were  to  be  cloathed,   they  wished  them   to   be   somewhat   well 
dressed.    I  do  not  know  but  that  this  circumstance  may  have  had  some 
influence  with  the  jury.     But  I  do  not  feel  the  force  of  it  when  op- 
posed to  the  weight  of, the  evidence  on  the  other  side,  so  as  to  make  v.      -ff'  ji-tLi 
the  officer  liable  for  so  large  a  sum.     From  the  nature  of  the  case  it       jYjT         ' 
is  apparent  that  the  men  were  to  pay  in  the  first  instance:  the  defend-  ^'    f^^"^    ^^Ji 
affTs"  words  were  "I  will  see  you  paid  at  the  pay  table;    are  you  sat-  '^u'^^^   '' 
isfied?"  and  the  answer  then  was,  "Perfectly  so."     The  meaning  of-'"*^  f  >«^  f*7 
which  was,  that  however  unwilling  the  men  might  be  To  pay  them- 
selves, the  officer  would  take  care  that  they  should  pay.    T_he_question 
isT'Whether  the  slopman  did  not  in  fact  rely  on  the  power  of  the  of- 
ficer  over  ffie  Tund  out  of  which  the  men's  wages  were  to  be  paid,  and 
did^tibt  prefer  giving  credit  to  that  fund,  rather  than  to  the  lieutenant, 
\vlTo7''if  we  are  to  judge  of  him  by  others  in  the  same  situation,  was 
not  likely  to  be  able  to  raise  so  large  a  sum?     Considering  the  whole 
bearing  of  the  evidence,  and  that  the  learned  judge  who  tried  the  cause 
has  not  expressed  himself  satisfied  with  the  verdict,  I  think  this  a 
proper  case  to  be  sent  to  a  new  triah 

IIhath,  J.    I  am  of  the  same  opinion. 

RooKE,  J.    I  am  of  the  same  opinion. 

Rule  absolute  on  payment  of  costs. 


MINES  V.  SCULTHORPE. 
(Court  of  King's  Bench,  at  Nisi  Prius,  1809.    2  Camp.  215.) 

Indebitatus  assumpsit  for  goods  bargained  and  sold ;  and  for  goods 
sold  to  defendant,  and  at  his  request  delivered  to  one  Cecil  Hicks;  with 
the  usual  money  counts.    Plea,  the  general  issue. 

Hicks,  a  retail  shopkeeper,  applied  to  the  plaintiff,  a  wholesale  deal- 
er, to  be  furnished  with  a  quantity  of  cheese  in  the  way  of  his  trade 
and  referred  him  to  the  defendant  as  a  person  who  would  be  account- 
able for  what  should  be  sent.  The  plaintiff  thereupon  wrote  a  letter  to 
the^defendant,  requiring  to  know  whether  he  consented  to  this.  ~^e 
defendant  returned  the  following  answer: 

^'Sir:  In  reply  to  yours  of  yesterday  respecting  Mr.  Hicks,  now  in- 
form you  I  wjilausAi'er  for  the  payment  of  goods  sent  to  him  to  the 
amount  of  100/.  for  six  months.  Hope,  after  that,  you  will  not  tlTink 
it  necessa^fy'  for  me  to  be  longer  accountable,  as  you  will,  of  course, 
become  well  acquainted  with  his  manner  of  doing  business,  and  that 
that  as  well  as  his  payments,  will  be  quite  satisfactory.    I  am,"  &c. 


128  FORMATION.  (Part  1 

Goods  were  accordingly  supplied  by  the  plaintiff  to  Hicks,  for  the 
value  of  which  the  present  action  was  brought.^^ 

Lord  Ellenborough.  The  goods  were  certainly  sold  to  Hicks.  The 
defendant's  undertaking  is  collateral,  and  ought  to  have  been  declared 
on  specially. 

Plaintiff  non-suited.** 


SMITH  BROS.  &  CO.  v.  IMILLER. 

(Supreme  C5ourt  of  Alabama,  1907.     152  Ala.  4S5,  44  South.  399.) 

Assumpsit. 

Appeal  from  Marshall  Circuit  Court.  Heard  before  Hon.  W.  W. 
Haralson. 

Action  by  Smith  Bros.  &  Co.  against  J.  M.  Miller.  Judgment  for 
delendant.    Plaintiffs  appeal.    Reversed  and  remanded. 

fhis  is  an  action  of  debt  begun  by  appellants  against  appexlee.  The 
pleas  were  the  general  issue,  payment,^ccord  and  satisfaction,  and  set- 
off.   The  facts  are  sufficiently  stated  in  the  opinion  of  the  court.     The 
person  mentioned  as  Miller,  on  the  question  as  to  whether  the  goods 
were  sold  to  Miller  and  Aldredge,  was  not  the  defendant,  but  a  brother 
of  his.    *    *    *  1* 
k  U.    jJt  (    ^         Tyson,  C.  J.     This  action  was  brought  to  recover  $78.80  due  hy 
j^  .  N      ^         account,  resulting  in  a  judgment  for  defendant.     Defendant  claimed 
^'  '  credit  for  a  bale  of  cotton  which  the  testimony  tends  to  show  was  de- 

livered by  him  to  the  wife  of  one  of  the  plaintiffs  at  their  home ;  and 
it  also  tended  to  show  that  this  bale  was  received  by  the  plaintiffs. 
Against  plaintift''s  objection  the  receipt  given  by  the  wife  for  the  cot- 
ton  was  admitted  in  evidence.  There  was  no  error  in  this  ruling. 
(•oa^U  J.  f  '  Acnong  the  items  in  the  account  sued  on  were  two  for  goods  sold 
*  and  delivered  to  one  Aldredge  and  one  Miller/ /jSome  of  the  testimony 

tended  to  show  that  the  credit  for  these  goods  was  extended  to  de- 
fendant alone. '^'Otlier  testimony  tended  to  show  that  the  credit  was 
given  to  Aldredge  and  jMiller,  and  that  defendant  agreed  to  see  it  paid. 
( ^Again,  other  testimony  tended  to  show  that,  while  the  credit  for  the 
goods  was  given  to  Aldredge  and  Miller,  the  plaintiffs  by  agreement 

12  The  argument  of  counsel  is  omitted. 

1 3  Xmiuinerable  contemporaneous  cases  are  In  accord.  Kent  v.  Derby,  1 
Vent.  311  (IGTS).  is  an  erroneous  decision;    Rainsford,  C.  J.,  dissentieute. 

The  gradual  disappearance  of  the  distinction  between  a  debt  and  a  special 
promise  may  be  seen  from  the  following  language  of  Wood,  L.  C.  B.,  in  Cope 
V.  Joseph,  9  Price  160  (1S21):  "In  this  case  the  person  guaranteeing  in  this 
manner  the  payment  of  the  debt  about  to  be  incurred  by  the  purchaser  of  the 
goods  became  at  least  as  much  the  debtor  of  the  plaintiff  for  the  goods  fur- 
nished as  the  purchaser  himself,  for  any  sum  within  the  amount  of  his  guar- 
antee. To  that  extent  he  made  himself  directly  responsible ;  and  there  can  be 
no  doubt  that  debt  might  be  supported  against  him  on  this  guarantee  to  that 
amount."    This  statement  is  not  and  never  was  the  law. 

1*  The  statement  is  abridged  and  fhe  afguruents  of  counsel  are  omitted. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  129 

with  appellant  released  Aldredge  and  Miller  from  their  liability,  upon 

the  consideration  of  his  (defendant's)  promise  to  pay  for  the  goods.^ 

On  this  agp^Tt  nf  ^^'^  '^'""^  the  court  charged  the  jury  that  "if  the  goods'  ( 

were  sold  to  Aldredge  and  Miller,  and  if  credit  was  extended  to  them, 

then  there  could  be  no  recovery  therefor  against  defendant,  unless  he 

agreed  in  writing  to  see  it  paid."    To  this  the  plaintiffs  excepted.    The /^'^  -ot^'y^^ tuft^^ 

exception  was  well  taken.    If  the  credit  wii^gTven  defendani7^ofwith- ,  "-T^jl^ ^<>j^' 

stand  iiTg'The  'goods"  we  re  delivered""to"  Aldredge  and  Miller,  his  promise^  "^^ 

or  undertaking  to  pay  for  them  was  original  and  not  within  the  statute  \ 

of  frauds,  and  was  not  required  to  be  in  writing.    Pake  v.  Wilson,  127  / 

Ala?  242,  28  South.  665,  and  cases  there  cited.  y 

A^ain,  if  Aldredge  and  Miller  were  entirely  released  or  discharged, ^f- ^'^'•'''*  v^' 
and  the  obligation  or  promise  of  defendant  was  substituted  for  theirs,  >^*'*'*-^ 
th^  statute  of  frauds  has  no  application.  The  new  debt  thus  created  is 
binding  on  the  substituted  promisor,  the  defendant.  "It  is  his  own 
debt,  and  can  no  longer  be  said  to  be  the  debt  of  another."  Thornton 
V.  Guice,  73  Ala.  321,  and  cases  there  cited ;  CarHsle  v.  Campbell,  76 
Ala.  247. 

There  is  clearly  no  merit  in  the  next  exception,  taken  to  the  oral 
charge  of  the  court. 

For  the  error  pointed  out,  the  judgment  is  reversed,  and  the  cause 
remanded.    -^  • 

Reversed  and  remanded. 

Haralson,  Dowdell,  and  Denson,  JJ.,  concur. 


lONA  SAVINGS  BANK  v.  BOYNTON. 

(Supreme  Court  of  New  Hampshire,  1896.    69  N.  H.  77,  39  Atl.  522.) 

Assumpsit,  onjthe  promissory  note  of  the  defendant,  a  married  wo- 
rnan.  Facts  found  by  the  court.  The  note  was  signed  by  her  at  the 
request  of  her  husband,  who  told  her  he  needed  the  money.  She  signed 
the  note  to  help  her  husband  in  his  business,  and  authorized  him  to  se- 
cure its  discount  and  dispose  of  the  proceeds.  The  defendant's  hus- 
band  applied  to  the  plaintiffs  for  a  loan  of  $5,000,  with  GO  shares_of 
thefcapital  stock  of  the  Tilton  Hosiery  Company  as  collateral.  ^_They 
dedined  to  make  the  loan,  but  told  him  that  if  his  wife  desired  to  bor- 
row  that  amount  with  the  same  security  the  loan  would  be  made. 
Shortly  afterward  he  brought  to  the  bank  the  note  in  suit,  with  the 
collateral  above  named,  and  received  the  amount  of  the  plaintiffs.  He 
deposited  the  avails  in  the  Citizens'  National  Bank  to  the  credit  ot 
the  Tilton  Hosiery  Company,  of  which  he  was  treasurer.  The  de- 
fendant never  met  or  had  any  talk  with  any  officer  of  the  bank  relative 
to  the  loan.  Upon  the  foregoing  facts  the  court  found  a  ver.di£.t.Jor 
the  plg^intiffs  for  the  amount  due  on  the  note,  and  the  defendant  ex- 
cepted. 

Hen.Sur. — 9 


130  FORMATION.  (Part  1 

Wallace,  J.  The  case  discloses  that  the  plaintiffs  refused  to  make 
the  loan  to  the  husband,  but  did  make  it  to  the  wife  alone  upon  a  note 
sig-ned  by  her  to  which  the  husband  was  not  a  party,  and  that  the 
hiring  of  the  money  by  the  defendant  from  the  plaintiffs  was,  the  i.n3e^ 
pendent  contract  of  the  wife  as  principal  and  not  as  tlie  surety  or  guar- 
antor of  the  husband.^  The  fact  that  she  hired  the  money  with  the  in- 
tention of  letting  her  husband  have  it  to  assist  him  in  his  business, 
and  did  so  let  him  have  it,  did  not  impair  or  suspend  her  legal  capacity 
to  make  the  contract,  or  malceTt  an  undertaking  for  hjm  oi^in  his  be- 
half within  the  meaning  oTthe  statute.  Parsons  v.  McLane,  64  N.  H. 
478,  13  Atl.  588;  Jones  v.  Holt,  64  N.  H.  546,  15  Atl.  214;  Wells  v. 
Foster,  64  N.  H.  585,  15  Atl.  216. 

Exception  overruled.^" 

Parsons,  J.,  did  not  sit.    The  others  concurred. 


COOPER  et  al.  v.  GIBBONS. 
(Court  of  Common  Pleas,  at  Nisi  Prius,  1813.    3  Camp.  363.) 

This  was  an  action  for  the  value  of  a  pipe  of  wine ;  and  the  ques- 
tion wasTj^'bether  it  had  been  sold  by~JRe~pIaintiffs  to  the  defendant 
and  one  Robertson,  deceased,  jointly,  or  the  credit  had  been  given  to 
Robertson  exclusively. 

The  plaintiffs  proved  that  the  wine  had  been  delivered  at  a  house  in 
which  the  defendant  and  Robertson,  who  were  partners  in  trade,  were 
living  together. 

The  circumstance  chiefly  relied  upon  by  the  defendant  was  that  no- 
tice ha^been  given  to  produce  the  plaintiffs'  books  containing  any  entry 
of  this  sale,  and  that  they  were  not  produced.^*' 

GiBBS,  J-  I  have  considered  this  subject  a  good  deal,  and^I  am  of 
opinion  that  the  jury  are  not  authorized  to  draw  any  such  inference 
from  the  circumstance  relied  upon.  The  non-production  of  the_plain- 
tiWs'  books,  after  a  notice  to  produce  them,  merely  entitles  the  defend- 
ant to  give  parol  evidence  of  their  contents. 

The  plaintiffs  had  a  verdict.^' 

» 

15  See  Littlefield  v.  Dingwall,  71  Mich.  223,  39  N.  W.  38  (1888),  where  a 
married  woman,  thoujrh  joint  maker  of  a  note,  was  held  to  be  only  a  surety. 

The_£tatute  referred  to  in  the  opinion  in  the  princixjal  case_is  Pub.  St.  N. 
H.  c.  176.  §  2:  "ProAMded  also  that  no  contract  or  conveyance  T)y  a  married 
woman,  as  surety  or  guarantor  for  her  husband,  nor  any  undertaking  by  her 
for  him  or  in  his  behalf  shall  be  binding  on  her.     *     ♦     *  " 

16  The  argument  of  counsel  is  omitted. 

17  Accord:  Gibbs  v.  Blanchard.  15  Mich.  292  (1867).  See  cases  collected  in 
Throop  oil  Validity  of  Verbal  Ai,'reements,  pp.  282-298  (1870).  It  is  im])ossi- 
ble  to  see  how  a  promise  by  two  jointly  could  l>e  a  promise  by  either  to  answer 
for  the  default  of  the  other.  If  .such  were  the  case,  either  joint  contractor 
could  be  sued  separately — a  conclusion  inconceivable  at  the  common  law. 

An  argument  ab  iuconveniente  has  been  urged  in  favor  of  a  contrary-  view 
(Throop   on    the   Validity   of  Parol    Agreements,   pp.   282-298  [1870]),   where. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  131 


(B)  After  the  Original  Credit  is  Given  or  Debt  Created,  etc. 

.,  \ 

HAWKINS  V.  PARKER. 

(Court  of  King's  Bench,  Trinity  Term,  1614.     2  Bulst.  256.) 

In  an  action  upon  an  account,  the  Case  appeared  to  be  this;  The  fkj^ 
Defendant,  by  hiFDeeg,  "gt<3"~a'cknowledge  the  receipt  of  £100.  frohi 
the  plaintiff,  to  be  employed  by  him  "^in  Merchandize,  and  covenanted 
at  hts' return,  to  give  unto  him  a  sufficient  account  of  this,  and  of  his 
besfowmg'of  it.  Upon  his  return,  the  Plaintiff  brought  against  him 
this  Action  of  account.  The  Defendant  pleaded,  that  at  his  return  he 
tendered  an  account  unto  the  Plaintiff,  the  which  he  refused.  28  H. 
VIII,  Dyer,  fol.  20,  Cores  Case,  was  cited;  the  Case  of  Pruens,  That 
a  mar.  may  have  an  Action  of  Debt,  Covenant  or  Account,  upon  the 
Receit. 

DoDDERiDGE.  TJiough  there  is  here  no  word  of  account,  yet  in  this 
Case  here,  upon  this  his  receipt,  the  Plaintiff  may  well  have  an  action 
of  Accompt,  for  the  Covenant  doth  not  take  away  his  Action  of  Ac- 
coufrt':"'The  Court  was  clear  of  opinion,  that  the  Action  of  Account 
did  well  lie  against  him  at  his  return,  for  that  this  is  not  taken  away 
by  his  cov"enant,  and  so  by  the  Rule  of  the  Court,  Judgment  was  given 
for  the  Plalntrilf.^8 


(^ 


SWAN  et  al.  v.  NESMITH  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  182S.     7  Pick.  220,  19  Am.  Dec. 

282.) 

Assumpsit.  The  action  was  entered  in  the  Common  Pleas  at  Sep- 
tember term,  1827.  The  declaration  then  contained  three  counts.  The 
firstalleged  that  the  defendants  were  indebted  to  the  plaintiffs,  on  the 
balanceof  accounts,  in  the  sum  of  $568.79,  and  that  in  consideration 
thereof  They" promised  to  pay  that  sum  on  demand,  with  interest  and 
damages  for  the  non-acceptance  of  the  plaintiff's  draft.  The  second 
was  for  money  had  and  received,  and  the  third  upon  an  insimul  com- 
putassent,  each  for  the  same  sum. 

to  the  promisee's  Icnowledge,  the  entire  benefit  is  to  be  received  by  one  only 
of  two  joint  promisors. 

18  The  principal  case  shows  the  action  of  account  in  common  use  before  the  \ 
enactment  of  the  statute  of  fraudsv  Th£_cuiestion.  is  suggested  whettier,  if  t.he 
goods  delivered  to  the  defendant  to  dispose  of  and  render  an  account  to  the 
phTjTiTTff  were  security  for  a  debt  of  a  third  person  to  the  ph^intiff,  the  de- 
feiidiiut's  agreement  to  render  such  account  would  be  a  special  promise  to  an- 
swer fur  the  debt  of  another.     The  author  has  elsewhere  advanced  the  view  I 
that  the  statute  of  frauds  did  not  apply  to  such  a  transaction,  because  the 
statute  was  directed  against  the  action  of  assumpsit,  and  not  against  the  ac-      r  {\)i 
Lion  of  account.     See  post,  p.  135,  note  to  Williams  v.  Leper,  3  Burr.  1886 '  <^ 
(17G6). 


•>*< 


132  FORMATION.  (Part  1 

At  December  term,  1827,  of  that  court,  the  plaintiffs  offered  three 
new  counts  as  amendments.  Thejirst  alleged  that  the  defendants,  in 
consideration  that  the  plaintiffs  had  intrusted  them  with  goods  to  be 
b>"  them  sold,  promised  to  pay  the  plaintiffs,  on  demand,  the  sum  for 
which  the  goods  should  be  sold,  deducting  the  customary  commission 
as  a  compensation  for  their  agency,  and  that  they  sold  the  same  for 
^1,292.14,  exclusive  of  such  deduction.  The  second  count  was  of  a 
similar  nature.  The  third  alleged  that  the  defendants,"in  considera- 
tion that  the  plaintiffs  would  deliver  to  the  defendants  divers  goods 
to  be  by  them  sold  for  a  reasonable  reward,  promised  to  sell  the  same 
and  to  guarantee  to  the  plaintiffs  the  price  for  which  the  same  should 
be  sold,  deducting  the  reasonable  reward,  in  a  reasonable  time  after 
such  sale,  and  that  the  plaintiffs  had  delivered  the  goods  to  the  de- 
fendants and  the  defendants  had  sold  the  same  for  $1,292.14,  but  had 
not  guaranteed  nor  paid  to  the  plaintiff's  the  price,  deducting  the  re- 
ward, although  a  reasonable  time  had  elapsed  since  the  sale  and  al- 
though a  special  demand  had  been  made  upon  them. 

The  defendants  objected  to  the  reception  of  these  new  counts  as 
amendments,  for  the  reason  that  they  were  for  causes  of  action  dif- 
ferent and  distinct  from  those  contained  in  the  original  declaration; 
but  the  common  pleas  permitted  them  to  be  filed  as  amendments,  to 
which  the  defendants  excepted. 
/^  When  the  cause  came  on  for  trial  in  this  court,  before  jMorton,  J., 

"■♦^^{      the  defendants  moved  that  the  new  counts  might  be  struck  out,  as 
having  been  improperly  admitted  in  the  court  below ;   but  the  judg^ 
directed  the  trial  to  proceed,  reserving  the  question  as  to  the  new 
counts  for  the  consideration  of  the  whole  court. 
\      It  appeared  in  evidence  that  the  plaintiffs,  who  lived  in  this  county, 
^^  consigned  to  the  defendants,  at  New  York,  the  goods  mentioned  in  the 

new  counts,  to  sell  on  commission;  that  the  defendants  made  sales 
of  the  same  and  stated  an  account  with  the  plaintiffs,  and  paid  over 
to  the  plaintiffs  all  the  money  they  had  actually  received~'"Ior~such 
sales,  but  that  some  of  the  purchasers  had  failed,  so  that  payment  had 
not  and  probably  could  not  be  obtained  of  them.  The  defendant^Jiook 
a  promissory  note  on  time,  of  one  or  more  of  the  purchasers,  to  whom 
they  had  sold  a  part  of  the  goods,  and  another  part  they  sold  to  one 
Rust  on  a  credit  of  six  months  without  taking  any  note  or  other  se- 
curity from  him. 

The  plaintiffs  then  offered  the  testimony  of  witnesses  to  prove  that, 
at  the  time  when  the  defendants  received  the  goods  for  sale,  they 
agreed  verbally  to  guarantee  the  sales.  The  defendants  objected  to  the 
admission  of  this  evidence,  as  being  intended  to  prove  a  contract  to 
pay  the  debt  of  another,  which  can  only  be  proved  by  writing.  But 
the  objection  was  overruled,  and  the  evidence  went  to  the  jury,  who 
thereupon  returned  a  verdict  for  the  plaintiffs  for  the  amount  of  the 
sums  which  the  purchasers  had  failed  to  pay,  deducting  the  commis.'ion. 
No  evidence  was  offered  by  the  plaintiffs,  either  in  the  common  j.leas 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER  CONTRACTS.  133 

or  in  this  court,  respecting  any  claim  upon  the  defendants,  except 
under  the  guarantee  set  forth  in  one  of  the  new  counts. 

The  defendants. jnoved  for  a  new  trial. 

The  opinion  of  the  court  was  afterwards  delivered  by 

Parker,  C.  J.    In  this  case,  it  is  stated  in  the  report  that  the  plain-  -;^.t  (W^<jo 
tiff  offered  the  testimony  of  witnesses  on  the  stand  to  prove  that,  at  ■■<^i<\<yMf  m^ 
the  time  when  the  defendants  received  the  goods  for  sale,  they  agreed       ■i'«'>A»y 
verbally  to  guarantee  the  sales.    This  evidence  was  objected  to,  on  the 
ground  that  by  the^  statute  of  frauds  a  contract  of  guarantee,  to  be 
binding,"must  be  in  writing,  and  that  parol  evidence  to  prove  it  was  not 
admissible. 

Now  this  depends  upon  the  question  whether  the  undertaking  of 
the  defendants  to  guarantee  the  sales  was  original  or  collateral.  The 
defendants  were  commission  merchants,  and  as  such  they  received  the 
goods  for  sale  in  the  way  of  their  business.  The  evidence  went  to 
prove  that,  when  they  received  the  goods,  they  guaranteed  the  sales; 
for  this  they  had  their  commission,- and,  in  the  mercantile  language, 
it  was  a  del  credere  commission. 

The  legal  effect  of  such  a  contract  is  to  make  them  liable  at  all 
events  for  the^'proceeds  of  the  sale,  so  that  according  to  some  of  the 
autEorities,  though  denied  by  others,  they  may  be  charged  on  indebita- 
tus assumpsit,  or  for  goods  sold  to  them.  And  there  seems  to  be  no 
reason  why  they  should  not  be  so  charged,  if  upon  receiving  the  goods 
they  became  accountable,  except  that  their  liability  is  not  fixed  until 
a  sale  is  made,  and,  if  upon  credit,  not  until  the  time  of  payment  ar- 
rives, the  goods,  too,  being  at  the  risk  of  the  vendors,  with  ordinary 
care  on  the  part  of  the  factors  until  the  sale.  But  as  the  action  cannot 
be  sustained  until  after  the  sale  has  taken  place,  and  then  there  is  no 
le^tlsxcuse  for  not  paying,  the  form  of  the  action  does  not  seem  very 
matenan  Such  is  the  nature  of  a  commission  del  credere,  as  stated  in 
3~Chitty  on  Com.  and  Manuf.  220,  221,  and  in  Paley  on  Principal  and 
Ag.  35.  McKenzie  v.  Scott,  6  Bro.  P.  C.  280;  Grove  v.  Dubois,  1 
T.  R.  112;  Bize  v.  Dickason,  Id.  285.  Some  of  the  principles  laid 
down  in.  these  books  are  questioned  in  Gall  v.  Comber,  7  Taunt.  559, 
and  Peale  v.  Northcote,  Id.  478 ;  but  it^seems  nowhere  to  be  required 
that  a  guarantee  of  this  nature  should  be  in  writing,  for  the  liability  is 
adrnitted  to  be  original,  and  although  the  vendor  may  in  such  case 
forbid  payment  to  the  agent  if  he  is  insolvent,  and  maintain  an  action 
for  himself,  which  in  other  cases  is  held  to  be  the  distinctive  mark  of 
a  collateral  undertaking,  yet  in  this  particular  contract  such  a  privi- 
lege to  the  vendor  is  held  not  to  alter  the  nature  of  his  claim  upon 
the  factor. 

We  assume,  from  the  terms  of  the  report,  that  the  evidence  admitted 
proved  such  a  contract  as  we  have  above  described,  and  that  the  verdict  V^^^^^^j^  l 
of  the  jury  was  founded  upon  the  fact  so  proved.    But,  on  the  supposi-  {jj^ji 
tion  that  the  three  original  counts  were  not  sustained  by  the  evidence,         '^ '^♦**''*»*m- 
we  have  considered  the  objection  to  the  subsequent  counts  allowed  to  be 


134  FORMATION.  (Part  1 

filed  on  leave  to  amend.  They  set  forth,  in  different  forms,  the  con- 
tract  as  proved,  viz.,  a  promise  to  guarantee  the  sales  of  the  goods. 
This  does  not  appear  to  us  to  be  a  different  cause  of  action  from  thaL 
sel  forth  in  the  first  series  of  counts.  They  are  attempted  to  be  charged 
for  the  same  goods,  in  all  the  different  forms,  and  in  all  as  originally 
liable  for  them.  The  counts  are  consistent  and  for  the  same  cause ; 
the  variation  is  onlylrTTEe^  form  of  liability.  It  is  like  the  case  of  Ball 
v:  Claflin,  5  Pick.  303,  16  Am.  Dec.  407. 
Judgment  according  to  verdict.^* 


BAXTER  V.  JACKSON. 
(Court  of  King's  Bench,  Hilary  Term,  16G3.     1  Keb.  609.) 

In  Action_jipQiLJ±i£_Case  against  the  Defendant  on^ promise  quod 
warrantizaret  pecuniam  due  by  J.  S.  in  consideration  that  the  plaintiff 
would  carry  beer  to  the  House  of  the  Defendant.     *     *     * 

Judgment  for  the  plaintiff.^" 


BUCKLY  v.  TURNER. 
(Court  of  King's  Bench,  Hilary  Term,  1671.    1  Mod.  43.  Case  97.) 

Action  upon  the  case  upon  a  promise.  The  case  was,  That  Edward 
Turner,  brother  to  the  defendant,  was  indeStecflo  the  plaintiff  for  a 
quarter's  rent ;  and  the  defendant  in  Consideration  that  the  plaintiff 
mitteret  prosequi  praedictTj Edwardum  Turner  (so  the  words  are  in 
the  declaration)  promised  to  pay  the  rnoney^ 

After  a  verdict  for  the  plaintiff  it  was  moved  in  arrest  of  judgment, 

^''^V  that  here  is  not  any  consideration;  for_there  is  no  loss  to  the  plaintiff 

'  in  sending  to  prosecute,  &c.  nor  any  benefit,  but  a  disadvantage  to 

the  party  that  owed  the  money:    besides,   there  is   an   uncertainty 

whether,  or  to  whom,  he  should  send.  ^ 

TwiSDEX.  Mittere  prosequi  is  well  enough;  for  the  plaintiff  must 
be  at  charge  in  it. 

Kelynge,  Chief  Justice.  Certainly  it  ought  to  have  been  omitteret ; 
and  if  it  be  so  in  the  Ofiice-book  we  will  mend  it. 

TwiSDEN,  Justice.  This  being  after  a  verdict,  if  you  mend  it,  they 
must  have  a  new  trial ;   for  then  it  becomes  another  promise. 

Jones  moved  for  judgment,  and  said  he  found  the  word  mitto  did 
signify  to  send,  forbear,  Cease,  or  let  alone;  as  mitte  me  quKso,  "I 
pray  let  me  alone,"  in  Terence  and  in  the  Latin  and  English  dictionary 
it  hath  the  Sense  of  forbearing. 

18  The  arffiinients  of  counsel  are  omitted. 

Accord:  Wolff  v.  Koppel,  5  Hill  (N.  Y.)  458  (1843).  , 

«o  The  case  has  been  abridged. 


Ch,  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER  CONTRACTS.  135 

Kelynge;,  Chief  Justice.  I  think  the  consideration  not  good,  unless 
the  word  mitto  will  admit  of  that'sense:  if  it  have  a  propriety  of  sense 
to"~signify,  forbear,  in  reference  to  things  as  well  as  persons,  it  will 
be  well. 

Whereupon  the  dictionary  being  brought,  it  was  found  to  bear 
that  sense.  And  Twisden,  Justice,  said:  If  a  word  will  bear  divers 
senses,  the  best  ought  to  be  taken  after  a  verdict. 

Per  Curiam.    Let  the  plaintiff  take  his  judgment 


KING  v.  WILSON. 

(Court  of  King's  Bench.    Trinity  Term,  1730.    2  Strange,  873.) 

Raymond,  C.  J.,  held  that  a  parol  promise  to  pay  the  debt  of  another 
in  consideration  of  forbearance,  was  void  by  the  statute  of  frauds 
and  perjuries^^ 


WILLIAMS  V.  LEPER. 

(Court  of  King's  Bench,  Easter  Term,  1766.    3  Burr.  1886.) 

One  Taylor,  ajLenant  to  the  plaintiff,  being  three-quarters  of  a  year 
(which  amounted  to  £45.)  in  arrears  for  rent,  and  insolvent,  conveyed 
all  his  effects  for  the  benefit  of  his  creditors.  They.^employed  L«per, 
tlie  defendant,  as  a  broker,  to  sell  the  effects:  and  accordingly,  he. ad- 
vertised a  sale.  On  the  morning  advertised  for  the  sale,  Williams  the 
landlord  came  to  distrain  the  goods  in  the  house.  Leper  having  notice 
of  the  plaintiff's,  intention  to  distrain  them,  promised  to  pay  the~said 

21  Accord:  Durham  v.  Arledge,  1  Strob.  (S.  C.)  5,  47  Am.  Dec.  544  (1846). 

The~aecision  of  Jordan's  Case,  Y.  B.  27  Hen.  VIII,  fol.  24,  pi.  3  (1535),  ante, 
p.  12.  is  shown  by  Judge  Hare  to  have  been  necessary  to  afford  a  remedy  in 
assumpsit  against  the  parol  guarantor  (Hare  on  Contracts,  pp.  122,  133),  who 
could  not  be  held  liable  in  debt. 

See  Y.  B.  9  Hen.  V.  fol.  14.  pi.  23,  ante,  p.  113. 

The  doctrine  of  Jordan's  Case,  that  forbearance  in  any  form  could  not  cre- 
ate a  debt,  has  femaiued  the  law  of  England  to  the  latest  day.     In  no  form 
has  forbearance  ever  been  held  to  be  the  quid  pro  quo  of  a  debt,  and  the  oyly  / 
writ  successfully  employed  has  been  the  action  on  the  case  on  the  contract  of  / 
assumpsit.     Rogers  v.  Snow,  Dalison.  94  (15  Eliz.).  "  /  i_     i 

Seme  of  the  innumerable  illustrations  of  forbearance  promises,  where  tJie  ^    /  ^  y^  \  f 
action  on  the  case  upon  the  assumijsit  was  successfully  maintained,  are  the  /  ^'^ 
following:  , 

Forbearance  until  Michaelmas  gave  rise  to  an  assumpsit  in  Thornton  v. 
Kemp,  Gouldsborough,  140  (Hilary  Term,  43  Eliz.).  A  stay  of  execution 
against  a  third  person  on  request  of  the  defendant  gave  rise  to  an  assumpsit 
in  Jennings  v.  Hatley,  Yelverton.  10  (44  &  45  Eliz.). 

An  agreement  by  a  pawnee  not  to  sell  the  goods  of  his  debtor  for  three  days 
upon  the  defendant's  promise  to  pay  the  debt.  Capper  v.  Dickingson,  1  Rol'le 
Rep.  235  (13  Jac.  1). 

Thus  a  discharge  of  a  debtor  from  imprisonment  on  request  gave  rise  to 
an  action  on  the  case  in  Atkinson  v.  Settree,  Willes'  Reports,  482  (1744). 


;52^^f' 


136  FORMATION.  (Part  1 

arrear  of  rent,  if  he  would  desist  from  distraining:  and  he  did  th.ere;__ 
upoiTdesisr 
"At  the  trial,  a  verdict  was  found  for  the  plaintiff,  for  £45. 

The  question  was  whether  the  verdict  should  be  entered  up  for  i45. 
^  or  for  a  smaller  sum  (i7.  5s.);  the  promise  not  having  been.jie- 
,  duced  to  writing.^^ 

Lord  Mansfield.  The  evidence  went  further  than  the  declara- 
tion states.  The  declaration  does  not  state  whether  the  promise  was 
in  writing  or  not ;  the  evidence  shows  it  was  not.  But  both  are  con- 
sistent. 

This  case  has  nothing  to  do  with  the  statute  of  frauds. 

The  res  gestae  would  entitle  the  plaintiff  to  his  action  against  the  de- 
fendant. 

The  landlord  had  a  legal  pledge.  He  enters,  to  distrain ;  he  has 
the  pledge  in  his  custody.  The  defendant  agrees  "that  the  goods  shall 
be  sold,  and  the  plaintiff  paid  in  the  first  place."  The  goods_aje  the 
fjmd;  the  question  is  not  between  Taylor  and  the  plaintiff.  The  plain- 
tiff had  a  lien  upon  the  goods.  Le£er  was  a  trustee  for  all  the  cfed- 
itors,  and  was  obliged  to  pay  the  landlord,  who  had  the  prior  lien. 
This  has  nothing  to  do  with  the  statute  of  frauds.  It  is  rather  a  fraud 
in  the  defendant,  to  detain  the  £45.  from  the  plaintiff,  who  had  an 
original  lien  upon  the  goods.  ^ 

Mr.  Justice  Wilmot  thought  this  case  out  of  the  statute  of  frauds. 
This  is  not  a  collateral  promise  to  pay  the  debt  of  another. 

The  case  of  Read  v.  Nash,  1  Willson,  305,  does  not  clash  with  the 
other  determinations  on  the  statute  of  frauds.  That  was  an  original 
undertaking;  the  debtor  was  never  liable  for  that  particular  sum  of 
ioO. 

But  this  case  is  not  within  the  spirit  or  meaning  of  the  act.  The 
tenant  was  here  the  original  debtor.  The  plaintiff  had  two  remedies 
against  him.  The  defendant  made  a  bill  of  sale  of  the  goods  liable  to 
the  plaintiff's  distress.  The  plaintiff  is  in  possession  of  the  goods ; 
having  entered  with  intent  to  distrain  them.  Leper  was  the  agent  for 
the  creditors.  He  makes  this  promise,  in  order  to  discharge  the  goods 
of  this  distress.  I  consider  this  distress  as  being  actually  made.  Leper 
says,  "If  you  will  quit  the  goods  and  disincumber  the  fund,  I  will  pay 
you." 

Leper  became  the  baiUft'  of  the  landlord;  and  when  he  had  sold 
the  goods,  the  money  was  the  landlord's  (as  far  as  £45.)  in  his  own 
bailiff's  hands.  Therefore  an  action  would  have  lain  against  Leper 
for  money  had  and  received  to  the  plaintiff's  use.  v, 

_^Ir.  Justice  Yates.     It  was  not  necessary  to  state  in  the  declara- 
tion,  "That  the  promise  was  in  writing." 

This  declaration  states  a  promise  "to  pay  the  arrear  of  rent  amount- 
ing to  £45."  (a  specific  sum).    The  defendant  was  in  possession  of  the 

2-  The  argument  of  counsel  is  omitted- 


X 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER  CONTRACTS.  137 

goods,  and  about  to  sell  them.  The  plaintiff  entered,  with  intent  to 
distrain  them  for  £45.  The  defendant  says,  "Let  me  go  on  to  sell 
them ;  and  I  will  pay  you  the  £45."  He  undertook  to  pay  this,  in  all 
events,  peremptorily  and  absolutely.  This  is  an  original  consideration 
to  the  defendant. 

Therefore  he  concurred  in  being  of  opinion  for  the  plaintiff;  and 
that  the  verdict  should  be  entered  for  the  sum  of  £45. 

Mr.  Jusjice^sTON.  If  this  was  a  promise  to  pay  the  debt  of  Taylor, 
I  should  think  it  within  the  statute,  upon  Sir  Fletcher  Norton's  dis- 
tinctions, which  are  the  true  ones. 

But^  I  look  upon  the  goods  here  to  be  the  debtor ;  and  I  think  that 
Leper  was  not  bound  to  pay  the  landlord  more  than  the  goods  sold  .for, 
in  case  they  had  not  sold  for  £45. 

The  goods  were  a  fund  between  both ;  and  on  that  foot,  I  concur. 

But  otherwise,  I  should  have  thought  (with  Sir  Fletcher)  "that 
the  case  of  Read  y.  Nash  does  not  clash  with  the  other  determina- 
tions about  collateral  promises." 

Postea  to  be  delivered  to  the  plaintiff:  and  the  verdict  to  stand  for 
the  whole  £45.^' 


HOULDITCH  v.  MILNE. 
(Court  of  King's  Bench,  at  Nisi  Prius,  Hilary  Term,  1800.    3  Esp.  86.) 

Assumpsit  for  the  repair  of  carriages. 

The  case'  in  evidence  was  that  the  carriages  belonged  to  a. Mr. 
Copey;  that  the  defendant  had  sent  them  to  the  plaintiffs  to  be -re- 
paired, and  had  given  orders  respecting  them. 

One  of  the  carriages  had  been  bought  by  Mr.  Copey  himself,  and 
paid  for  by  him ;  and  the  bill  which  was  the  object  of  the  present 
action  contained  a  charge  for  repairs  done  to  this  carriage,  and  was 
made  out  in  the  name  of  Copey. 

"^WTien  the  carriages  were  repaired,  the  defendant  sent  an  order  to 
pack  them  up,  and  send  them  on  board  ship.    The  plaintiffs  upon  this 

2  3  Accord:  Clvmer  v.  De  Young,  54  Pa.  118  (1867);  Hale  v.  Boardman,  27 
BarbrtN.  T.)  82  (1858);    Blackford  v.  Plainfield  Co.,  43  N.  J.  Law.  438  (1881). 

See  Fennel  v.  Mulcahy,  8  Ir.  Law  Rep.  434  (184.5),  where  the  distress  was 
given  back  to  the  tenant  and  not  to  the  defendant.  The  Irish  Exchequer  of 
Fleas  held  that  the  defendant's  promise  was  within  the  statute  of  frauds. 
The  opinion  of  Brady,  C.  B.,  contains  this  suggestive  language:  "He  did  not 
become  a  trustee  or  bailiff  for  the  plaintiff.    No  goods  were  left  in  his  hands." 

The_siibse(}uent  English  decisions  are  presented  and  discussed  by  the  editor  [^' 
in  "A  New  and  Old  Reading  on  the  Fourth  Section  of  the  Statute  of  Frauds," 
University  of  Pennsylvania  Law  Review,  and  American  Law  Register,  vol.57 
pp.  611-634  (1909).  Tlie .position  taken  is  that  the  "statute  of  frauds  did  not 
apply  to  the  action  of  account,  and  wherever,  therefore,  the  circumstances 
render  the  defendant  (upon  the  transfer  to  him  of  property)  liable  to  an  ac- 
tion of  account,  the  defendant's  promise  to  account  for  the  disposition  of  prop- 
erty so  transferred  is  not  within  the  statute,  although  this  promised  applica- 
tio'n  of  the  property  may  extinguish  the  debt  of  a  third  person. 


138  FORMATION.  (Part  1 

sent  to  him  to  know  who  was  to  pay  for  th^m.    The  defendant  said 
heTTad  sent  them,  and  he  would  pay  for  them. 

•In  consequence  of  this,  the  carriages  were  packed  up  and  sentjDn 
board  ship,  and  the  bill  was  made  out  and  delivered  to  the  defend^int. 
He  desired  time  to  look  over  it ;  and  when  the  plaintiff's  clerk  called 
a  second  time,  he  said  the  charges  appeared  very  high,  but  desired 
the  clerk  to  call  in  a  very  few  days,  and  he  would  settle  it.  Not  having 
done  so,  Mr.  Phillipson,  the  plaintiff's  attorney,  waited  upon  him, 
when  he  said  he  was  told  the  bill  was  a  most  exorbitant  one,  and  a  fit 
subject  to  refer.     He,  however,  said  he  had  the  money  to  pay  it,  but 

^  did  not  say  whether  his  own  or  Mr.  Copey's. 

/^  Upon  this,  Best,  Serjeant,  for  the  defendant,  contended  that,  there 
being  no  proof  of  the  defendant's  having  money  of  Hf.'t^pey'&-in 
his  hands  to  apply  to  the  count  in  the  declaration  for  money  had  and 
received,  the  plaintiff  must  be  non-suited,  and  said  it  came  exactly 
within  the  principle  of  Alatson  v.  Wharam,  2  Term  Rep.  80,  in  which  it 
was  decided  that,  if  the  person  who  had  the  goofts  was  at  all  liable, 
the  undertaking  of  another  must  be  in  writing.  The  question  there- 
fore was.  Was  Mr.  Copey  himself  liable  to  the  plaintiff's?  If  so  the 
present  action  could  not  be  supported. 

He  contended  that  this  must  be  taken  to  be  the  fact,  as  the  bill  sent 
to  the  defendant  was  made  out  in  Copey's  name,  and  contained  charges 
for  work  done  by  Copey's  own  order;  that  everything  done  by  the 
defendant  was  done  in  his  character  of  agent  to  Mr.  Copey,  and  there 
being  no  note  in  writing,  he  was  not  personally  liable. 

Lord  _EiPON  said  he  was  not  disposed  to  non-suit  the  plaintiff..  In 
general  cases,  to  make  a  person  liable  for  goods  delivered  to  another, 
there  must  be 'Either  an  original  undertaking  by  him,  so  that  the  credit 
was  given  solely  to  him ;  of  there  must  be  a  note  in  writing.  There 
might,  however,  be  cases  where  this  rule  did  not  apply.  If  ^  person  got 
goo^s  into  his  possession,  on  which  the  landlord  had  a  right  to.dis- 
train  for  rent,  and  he  promised  to  pay  the  rent,  though  it  was  cleanly 
thfe  debt  of  another,  yet  a  note  in  writing  was  not  necessary.  "  Itap- 
peared  to  apply  precisely  to.  the  present  case.  The  plaintiffs  had  to  a 
certain  extent  a  lien  upon  the  carriages,  which  they  parted  with  on  the 
defendant's  promise  to  pay.  That,  he  thought,  took  the  case  out^'of  the 
statute,  and  made  the  defendant  liable  for  the  amount  of  the  bill. 

The  plaintiffs  had  a  verdict,  subject  to  a  reference  with  respect  to 
the  charges  on  the  bill. 

HUGHES  v.  LAWSON. 
(Supreme  Court  of  Arkansas,  1S7G.     31  Ark.  613.) 

Appeal  from  Jefferson  Circuit  Court.  Hon.  J.  A.  Williams,  Cir- 
cuit Judge. 

Harrison,  J.  Lawson  sued  Hughes  before  a  justice  of  the  peace, 
upon  his  promise  to  pay  the  debt  of  one  Hudson  for  $80.00,     Tlie" 


} 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  139 

^3^aintiff  recovered  judgment  before  the  justice,  and'flie  defendant  ap- 
pealed to  the  circuit  court,  and  in  the  circuit  court  the  plaintiff  again 
obtained  a  verdict  and  judgment.'^  The  defendant  then  appealed  to 
this  court.  /  'rirub 

The  evidence  was  that  Hudson  owed  the  plaintiff  $80  for  the  labor  '^****^ 
of  his  son  in  his  crop,  and  being  threatened  by  the  plaintiff  with  a  suit, 
they,  at  his  suggestion,  went  to  the  defendant,  whose  land  Hudson 
had  cultivated,  to  get  him  to  settle  the  debt.  The  defendant  promised 
the  plaintiff  to_pay  the_delit_-wJieii  Hudson's  cotton,  then  in  his  gin, 
waFsold.  The  defendant  had  furnished  the  land,  and  the  team  and 
feed  for  the  same,  and  was  to  have  one-half  of  the  crop;  and  Hudson 
had  agreed  to  turn  over  the  cotton  raised  on  the  place  to  the  defendant 
to  secure  advances  he  had  made  him,  and  a  debt  which  he  owed  M.  M. 
Dodd,  and  for  which  the  defendant  was  bound. 

-After  the  defendant's  promise,  Hudson,  without  his  consent  or 
knowledge,  carried  the  cotton  to  Pine  Bluff  and  turned  it  over  to 
DocTd  in  payment  of  his  debt  to  him,  and  the  defendant  received  no 
benefit  whatever  from  it.  _  X  Ci<>-rv  '4  ^ 

The  court  gave,  at  the  instance  of  the  plaintiff,  the  two   follow-  '    r   / 

ing  instructions  to  the  jury,  against  the  objection  of  the  defendant: 

^Tir^.^f  vou  believe,  from  the  evidence,  that  the  defendant  agreed 
to  pay  the  plaintiff,  for  Hudson,  $80,  and  had,  at  the  time,  money  or 
property  in  his  possession  or  under  his  control,  or  afterwards  got  any, 
out  of  which  it  was  to  be  paid,  you  will  find  for  the  plaintiff. 

"Second.  H  you  believe,  from  the  evidence,  that  the  defendant  prom- 
ised, in  the  presence  of  the  three  parties,  and  it  was  so  agreed  and 
understood  between  them,  to  pay  the  plaintiff  Hudson's  debt  to  him,  it 
became  the  debt  of  the  defendant,  and  Hudson  was  discharged  from 
his  obligation  to  the  plaintiff,  and  you  will  find  for  the  plaintiff."  /.^^•^i^'^^^H 

The  rule  is. well  settled  that  the  mere  possession  of  property  be-  c^-««J''tn'T*^  (^ 
longing  to  the  original  debtor,  not  deposited  with  the  defendant  for  the  J^.^^,^.  ,r  \^{./  l 
purpose  of  paying  the  debt  will  not  withdraw  his  verbal  promise  to  '  '      '  '' 

paj  it  from  the  operation  of  the  statute  of  ^frauds.  Browne,  Stat. 
Frauds,  §  187 ;  Dilts  v.  Parke,  4  N.  J.  Law,  219 ;  Simpson  v.  Nance, 
1  Speers  (S.  C.)  4;  State  Bank  v.  Mettler,  2  Bosw.  (N.  Y.)  392. 

The  cotton  in  the  defendant's  gin  at  the  time  of  his  promise  was  not 
placed  there  for  the  purpose  of  paying  the  debt,  and  there  was  no  evi- 
dence that  any  property  afterwards  came  to  his  hands  for  that  purpose. 
The  case  is,  therefore,  clearly  within  the  rule  just  stated.  yife>o«  In^ 

It  is  also  as  well  settled  that  a  promise  by  a  third  person  to  pay  the  ,.,^  ■  ^^^,„,- 
pre-existing  debt  of  another,  having  immediate  respect  to  and  founded  ' 

upon  the  original  liability,  and  without  any  new  consideration  moving 
himTto  pay  or  answer  for  such  debt,  is  a  collateral  undertaking,  and, 
unless  in  writing,  within  the  prohibition  of  that  statute.  Kurtz  v. 
Adams,  12  Ark.  174;  Elder  v.  Warfield,  7  Har.  &  J.  (Md.)  391; 
Tileston  v.  Nettleton,  6  Pick.  (Mass.)  509 ;  2  Par.  Con.  9 ;  Browne, 
Stat.  Frauds,  §  212. 


140  FORMATION.  (Part  1 

There  was  no  evidence  of  any  new  consideration  moving  to  or  in- 
ducing the  defendant  to  assume  the  debt  as  his  own,  by  which  Hudson 
would  have  been  discharged.  No  purpose  of  his  own  was  shown  to 
be  subserved  by  his  promise. 
^.  The  second  instruction  was  Hkewise  erroneous. 
X  The  following  instruction  was  asked  by  the  defendant,  which  the 
court  refused  to  give : 

"If  you  find,  from  the  evidence,  that  there  was  a  pre-existing  debt 
from  the  plaintiff  to  Hudson,  and  that  the  defendant  promised  to  pay 
said  debt,  you  will  find  for  the  defendant,  unless  it  also  shows  that 
the  promise  was  in  writing,  o£_that  a  new  consideration  was  given  by 
the  plaintiflf,  which  moved  him  to  pa}ror  answer  tol"  lilt!  d^U."" — 

THFTatter  part  of  this  instruction,  or  that  in  regard  to  a  new  consid- 
eration, is  not  accurately  correct,  for  a  consideration  for  the  proniFse^ 
from  Hudson,  would  have  been  equalTy  as  availing;  btit  as-thrre-was 
no  evidence  of  any  such  consideration,  it  was  entirely  abstract  and  mere 
surplusage,  and  could  not  possibly  have  misled  the  jury. 

With  this  exception,  the  instruction  was  but  the  declaration  of  the 
statute  of  frauds  (Gantt's  Dig.  §  2951),  and^he  court  erred  in,  refus- 
ing to  give  it  to  the  jury.    Kurtz  v.  Adams,  supra. 

The  judgment  of  th'e  court  below  is  reversed,  and  the  cause  remand- 
ed to  it,  with  instructions  to  grant  the  defendant  a  new  trial.^* 


HARBURG  INDIA  RUBBER  COMB  CO.  v.  MARTIN. 

(Court  of  Appeal,  King's  Bench  Division.    [1902]  1  K.  B,  778.) 

Appeal  from  a  decision  of  Mathew,  J. 
fiy  **  The  plaintiffs,  a  foreign  company  carrying  on  business  in  Germany, 

were'Judgment  creditors  of  an  English  company  called  the  Crowdus 
Accumulator  Syndicate,  Limited,  of  which  the  defendant  was  a  director 
and  in  which  he  held  a  large  numBef  "of  shares.  He  had  also  financed 
the  syndicate. 

24  Accord:  Dilts  v.  Parke,  4  N.  J.  Law,  219  (1818) ;  Frame  v.  August,  88  111. 
424  (ISTS) ;    Simpson  v.  Nance,  1  Speers  (S.  C.)  4  (1S42).  ,, 

Contra:  Dock  v.  Boyd  &  Co.,  93  Pa.  92  (18S0),  where  the  defendant  was  held 
upon  his  oral  representation  to  the  plaintiff  that  he  had  money  or  other  prop- 
erty "oT  the  debtor  in  his  hands,  thereby  inducing  the  plaintiff's  forbearance 
by  promising  to  sell  the  said  property  and  pay  the  plaintiff.  "" 

*The  principal  case  follows  in  the  line  of  the  action  of  account.  Na  action 
of  account  could  lie  unless  the  property  was  transferred  to  tlie  defendant  for 
the  purpose  of  being  disposed  of  by  the  defendant  who  thereupon  agreed^fo 
render  an  account.     <  — 

Similarly,  the  instructive  case.  Walther  v.  Merrell,  6  Mo.  App.  370  (1878), 
decides  that  the  transfer  or  bailment  must  be  made  to  the  defendant  for  the 
purpose  of  putting  him  in  possession  of  property  as  to  which  he  must  ac- 
count. Therefore  a  depositor  in  a  bank  cannot  recover  against  its  president 
on  the  latter's  verbal  guaranty  of  the  deposit,  in  consideration  of  its  nou-with- 
,  drawal  by  the  defendant.  The  case  well  exposes  the  fallacj'  that  a  new  ciin- 
Eideration  takes  the  case  out  of  the  statute. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  141 

The  plaintiffsJtiadJssiied-ar-wfitol-fiT-far-upon  the  judgment,  which 
the  sh"entt  had  failed  to  execute,  because  he  could  not  effect  an  entry. 
The_defendant  then  had  an  interview  with  a  Mr.  Winter,  the  plaintiffs' 
agent  in  England,  at  which  he  verbally  promised  Winter  that  he  would 
indorse  two  bills  of  exchange,  each  for  half  the  amount  of  the  debt, 
ancf  payable  respectively  at  three  and  six  months.  Qn  the  faith  of 
this  promise  Winter  withdrew  the  writ.  The  action  was  brought  for 
breach  oflhe  defendant's  promise.  Y\/C''hf^'^'u 

At_the  trial  Mathew,  J.,  gave  judgment  for  the  plaintiffs,  holding   Qpp^  ^fH'yt 
that  section  4  of  the  statute  of  frauds  did  not  apply.  fh*"^  ^ 

RTthe  course  of  his  judgment  the  learned  judge  said:  "What  is  the 
result  of  the  evidence?  At  the  time  when  the  defendant  came  to  Mr. 
Winter  the  plaintiffs  were  uraTpo'sTtTohTo  take  possession  of  the  goods  ,       .ja. 

of  Hie  syndicate.  They  were  in  a  position  analogous  to  that  of  per-^  *^ 't^-'"^ 
sons  having  possession  of  the  goods,  and  their  legal  position  is  recog-  "^^ 
nized  in  Williams  v.  Leper  (1766)  3  Burr.  1887,  and  in  Edwards  v. 
Kelly  (1817)  6  M.  &  S.  204,  18  R.  R.  349.  Those  cases  have  been  dis- 
cussed with  approval,  and  very  sensible  and  reasonable  cases  they  are, 
and  in  their  facts  they  closely  approach  the  present  case.  They  are  dis- 
cussed in  the  notes  to  Forth  v.  Stanton,  1  Williams'  Saund.  209a. 
What  was  the  object  of  the  arrangement  here?  The  object  was  to  pro- 
tect the  goods  of  the  syndicate ;  it  was  not  to  pay  the  debt  of  another. 
It  is  pretty  clear  that  what  the  defendant  suggested  was  that  he  should 
have  time  to  sell  all  which  belonged  to  the  company.  If,  in  fact,  the 
object  of  the  contract  was  to  protect  the  goods,  that  would  be  suffi- 
cient to  take  the  case  out  of  the  statute.  p^Jh^  i  U* 

"^yUllH£-^i-?^*5^^S^  P°^^^  ^^^  more  clearly  in  favor  of  the  plaintiffs,  (^^  ^     rTlbv  '  J 
namely,  that  the  promise  was  given  for  the  purpose  of  obtaining  a  direct   ^T^^l^^s^/^ 
personal  advantage  for  the  defendant  himself.    He  had  invested  a  large     ^ 
sum  in  the  syndicate,  and  would  lose  every  farthing  of  it  unless  time 
were  given  for  the  syndicate  to  get  on  its  legs.     With  that  object — 
and  I  should  gather  it  was  the  sole  object  he  had  in  view — he  made  the 
promise.    That  again  is  a  ground  for  saying  that  the  case  is  not  within 
the  statute  of  frauds,  as  is  clear  from  Sutton  &  Co.  v.  Grey,  [1894]  1  Q. 
B.  285. 

"Under  these  circumstances  it  seems  to  me  clear  that  the  statute  of 
frauds  does  not  apply,  and  my  judgment  must  be  for  the  plaintiffs." 

The  defendant  appealed.^^  /^ 

y^  "^/.MTrT-T  ri  m  Wtt  t  t  "  i-'S-y  ^\y  ■]  The  material  facts  of  this  case  are  very  f^^fe' 
/  short.  The  plaintiffs  had  supplied  goods  to  a  company  called  the 
Crowdus  Accumulator  Syndicate.  The  syndicate  did  not  pay  what  was 
due  from  them  for  the  goods,  and  the  plaintiff's  recovered  judgment 
against  them,  and  placed  a  writ  of  fi.  fa.  in  the  hands  of  the  sheriff 
to  realize  the  amount  of  their  judgment.  The  sheriff  found  that  the 
works  of  the  syndicate  had  been  stopped  and  their  place  of  business 

»6  The  argument  of  counsel  Is  omitted. 


142  FORMATION.  (Part  1 

closed,  and  he  did  not  take  possession.  After  this  there  was  a  meeting 
between  the  defendant  and  Mr.  Winter,  the  plaintiffs'  agent.  A  conver- 
sation took  place  at  that  meeting,  and  the  jury  have  found  that  Mr. 
Winter's  account  of  it  is  accurate.  To  put  the  result  of  the  conversa- 
tion shortly,  the  defendant  then  verbally  promised  Mr.  Winter  that  he 
would  indorse  some  bills  for  the  amount  of  the  judgment  debt.  It  is 
said  that  amounted  to  an  oral  promise  to  give  a  guarantee  of  the  judg- 
ment debt  owing  by  the  syndicate  to  the  plaintiffs. 
, .      '  4,  /^      It  is  said  on  behalf  of  the  defendant  that  this  was  a  promise  by  him 

vM«^rVpY^j)  i^y  ^Qrd  of  mouth  to  make  himself  answerable  for  the  debt  of  the 
syndicate.  It  is  said  on  behalf  of  the  plaintiffs  that  this  was  not  a 
promise  to  make  himself  answerable  for  the  debt  of  another — that  is, 
the  syndicate — but  that  it  was  a  contract  of  indemnity,  by  which,  I 
suppose,  is  meant  a  new  contract  in  the  nature  of  an  original  obligation. 

»h/  r       The  question  which  we  have  to  decide  is  whether  this  bargain  is 

"a.  promise  to  answer  for  the  debt  of  another"  within  section  4  nf  the 
statute  of  fraiids.  Mathew,  J.,  has  held  that  it  is  not.  I  am  sorry  to 
say  that  I  cannot  agree  with  that  conclusion.  It  seems  to  me  that  this 
contract  was  as  plainly  as  possible  a  promise  by  the  defendant  to  make 
-J'  y»     r>         y  himself  answerable  for  the  debt  of  the  syndicate. 

fTfc^.^Lfy.rx'  Our  attention  has  been  called  to  a  great  number  of  cases  in  which  the 

court  has  treated  various  transactions  as  being  outside  section  4.  Most 
of  the  earlier  cases  were  what  I  may  call  "property  cases."  The^vere 
'^L^fjy  caseFin  which  either  the  person  who  made  the  promise  had  propsity 
which  he  w^ished  to  relieve  from  liabiHty,  or  there  was  property  wliich 
he  wished  to  acquire.  It  is  not  necessary  for  me  to  go  through  those 
cases,  but  I  cannot  agree  that  the  present  case  comes  within  any  of  that 
class.  The  defendant's  promise  was  not,  as  it  seems  to  me,  either  a 
new  contract  of  purchase,  or  a  new  contract  for  the  release  of  any 
property  which  either  was  his  or  in  which  he  had  an  interest. 

Our  attention  was  next  called  to  the  exception  which  has  been  es- 
tablished~By'what  I  may  call  the  "del  credere  cases,"  beginning  with 
Couturier  v.  Hastie,  8  Ex.  40,  and  coming  down  to  Sutton  &  Co.  v. 
Grey,  [1894]  1  Q.  B.  285.  It  has  been  said,  and  I  think  truly,  that  these 
cases  are  of  a  different  species  from  the  property  cases.  I  say  of  a 
dift'erent  species,  not  of  a  different  genus,  because  I  think  there  is  a 
wider  genus,  which  can  be  plainly  and  simply  defined,  within  which  both 
of  these  species  fall.  So  far  as  I  can  see,  the  authorities  have  left  us 
with  a  general  rule,  which  I  will  attempt  to  define  presently,  and  each 
of  these  two  classes  of  cases  falls  within  that  general  rule.  Injsach  of 
them,  I  think,  the  form  of  the  promise  given  by  the  promisor  has  never 
been  held  to  be  conclusive  of  the  matter.  He  may,  or  he  may  not, 
promise  in  terms  to  answer  for  the  debt  of  another ;  but,  whether  he 
does  so  or  not,  it  is  the  substance,  not  the  form,  which  is  regarded. 

Before  leaving  these  instances  I  wish  to  mention  one  other  class, 
which  I  do  not  treat  as  an  exception  from  section  4,  but  which,  I 
think,  does  not  come  within  the  section  at  all.    I  mean  the  cases  whicti 


y  t  Ivh»^C5^ 


^KH, 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER   CONTRACTS.  143 

have  been  spoken  of  as  "indemnity  cases."  Of  course  in  one  sense  all 
guarantees,  whetlTef  tTiey  come~within  section  4  or  not,  are  contracts  of 
indemnity.  But  the  difference  between  those  indemnities  which  come 
within  the  section  and  those  which  do  not  is  very  shortly  thus  ex- 
pressed in  the  notes  to  Forth  v.  Stanton,  Williams'  Notes  to  Saunders 
(Ed.  1871)  vol.  1,  p.  234 :  "These  cases  establish  that  the  statute  ap- 
plies only  to  promises  made  to  the  person  to  whom  another  is  already 
or  is  to  become  answerable." 

That,  to  my  mind,  is  an  accurate  definition  of  a  guarantee  or  mdem- 
nity  which  comes  within  section  4  of  the  statute,  as  distinguished  from 
an  original  liability  which  is  not  within  the  section,  and  which  has  no 
reference  to  the  debt  of  another,  but  creates  a  new  liability  which  is 
undertaken  by  the  promisor,  and  has  been  called  in  the  course  of  the 
argument  a  contract  of  indemnity.  I  will  not  go  through  these  cases  at 
length,  but  it  seems  to  me  that  Guild  &  Co.  v.  Conrad,  [1894]  2  Q.  B. 
885,  entirely  confirms  this  as  being  the  true  view  of  the  distinction 
between  an  indemnity  and  a  guarantee  which  comes  within  section  4. 
That  case  was  decided  by  Lindley,  Lopes,  and  Davey,  L.  JJ.  There 
the  defendant  had  orally  promised  the  plaintiff  that  if  he  would  accept 
certain  bills  for  a  firm  in  which  the  defendant's  son  was  a  partner,  the 
defendant  would  provide  the  plaintiff  with  funds  to  meet  the  bills,  and 
it  was  held  (affirming  the  judgment  of  Mathew,  J.)  "that  this  was  a 
promise  of  indemnity  and  not  of  guarantee,  and  therefore  not  required 
by  section  4  of  the  statute  of  frauds  to  be  in  writing."  Lindley,  L.  J., 
in  the  course  of  his  judgment  said  ( [1894]  2  Q.  B.,  at  page  892) :  "The 
authorities  are  Thomas  v.  Cook  (1828)  8  B.  &  C.  728;  32  R.  R.  520, 
and  Wildes  v.  Dudlow  (1874)  L.  R.  19  Eq.  198.  Thomas  v.  Cook 
appears  to  me  to  be  undistinguishable  from  this  case  if  the  facts  here 
are  such  as  I  take  them  to  be."  Then  the  Lord  Justice  cited  the  follow- 
ing passage  from  the  judgment  of  Parke,  J.,  in  Thomas  v.  Cook:  "This 
was  not  a  promise  to  answer  for  the  debt,  default,  or  miscarriage  of 
ancither  person,  but  an  original  contract  between  these  parties,  that 
the  plaintiff  should  be  indemnified  against  the  bond.  If  the  plaintiff, 
at  the  request  of  the  defendant,  had  paid  money  to  a  third  person,  a 
pron'use  to  repay  it  need  not  have  been  in  writing,  and  this  case  is  Tn 
substance  the  same."  And  Davey,  L.  J.,  said  ([1894]  2  Q.  B.,  at  page 
S9G) :  "In  my  opinion,  there  is  a  plain  distinction  between  a  promise  to 
pay  the  creditor  if  the  principal  debtor  makes  default  in  payment,  and 
a  promise  to  keep  a  person  who  has  entered,  or  is  about  to  enter,  into 
a  contract  of  liability  indemnified  against  that  liability,  independently 
of  the  question  whether  a  third  person  makes  default  or  not." 

It  seems  to  me  that  those  judgments  entirely  confirm  the  view  which 
is  taken  in  the  note  to  Forth  v.  Stanton,  Williams'  Notes  to  Saunders    y 
(Ed.  1871)  vol.  1,  p.  234,  which  I  have  read.    .  X 

In  my  judgment,  the  circumstances  of  the  present  case  show  plainly 
that  there  was  a  guaranty  of  the  payment  of  a  debt  for  which  the 
syndicate  was  primarily  liable,  and  not  an  original  promise  by  the  de- 


144  FORMATION.  (Part  1 

fendant  to  keep  the  plaintiffs  indemnified.  In  my  judgment,  a  con- 
tract of  indemnity  does  not  come  within  section  4,  but  I  think  there 
is  nothing  to  justify  us  in  holding  that  in  the  present  case  the  contract 
is  a  contract  of  indemnity.  In  my  opinion,  it  is  a  contract  of  guaranty 
— "a  promise  to  answer  for  the  debt  of  another." 
&L  /iiilvv/  f'  ^  ^^'^^^  "'^^^  §^°  ^^^^  ^°  those  cases  which,  so  far  as  the  words  of  the 
Jifi  ix,  contract  are  concerned,  might  come  within  section  4,  but  which  have 

been  held  not  to  come  within  it  because  of  the  object  of  the  contract. 
Whether  you  look  at  the  "property  cases"  or  at  the  "del  credere  cases," 
it  §eems  to  me  that  in  each  of  them  the  conclusion  arrived  at  really 
was  that  the  contract  in  question  did  not  fall  within  the  section  be- 
cause of  the  object  of  the  contract.  In  each  of  those  cases  there  was 
in  truth  a  main  contract — a  larger  contract — and  the  obligation  to  pay 
the  debt  of  another  was  merely  an  incident  of  the  larger  contract.  ^As 
I  understand  those  cases,  it  is  not  a  question  of  motive — it  is  a  ques- 
tion of  object.  You  must  find  what  it  was  that  the  parties  were  in  fact 
dealing  about.  What  was  the  subject-matter  of  the  contract?  If 
the  subject-matter  of  the  contract  was  the  purchase  of  property — the 
relief  of  property  from  a  liability,  the  getting  rid  of  incumbrances, 
the  securing  greater  diligence  in  the  performance  of  the  duty  of  a 
factor,  or  the  introduction  of  business  into  a  stockbroker's  office — in 
all  those  cases  there  was  a  larger  matter  which  was  the  object  of  the" 
contract.  That  being  the  object  of  the  contract,  the  mere  fact  that  as 
aiTTncident  to  it — not  as  the  immediate  object,  but  indirectly — the  debt 
of  another  to  a  third  person  will  be  paid,  does  not  bring  the  case  with- 
in the  section.  This  definition  or  rule  for  ascertaining  the  kind  of 
cases  outside  the  section  covers  both  "property  cases"  and  "del  credere 
>7  cases." 
*^Yo^\f>*^tyti  p<  Can  we  then  in  the  present  case  find  any  larger  contract?  I  cannot. 
^A,''^ H'u.^^Xfr*  It  seems  to  me  plain  upon  the  evidence  that  the  only  matter  which  was 
,.^*  present  to  the  mind  of  the  defendant,  and  was  presented  by  him  to 

Mr.  Winter,  was  this:  "Will  you  forbear  for  a  time?  Will  you  give 
the  syndicate,  which  I  believe  has  a  future  before  it,  an  opportunity  of 
turning  round?  I  believe  that  if  it  has  that  opportunity,  it  will  do  well 
and  will  be  able  to  pay  you.  And  to  induce  you  thus  to  forbear  I  will 
give  you  bills  which  shall  secure  the  payment  at  specified  perieds  of  the 
judgment  debt,  in  case  the  syndicate  does  not  pay  you  itself."  That, 
I  think,  is  the  true  effect  of  the  conversation,  and  it  seems  to  me  that 
was  the  whole  of  the  contract,  and  there  was  neither  a  purchase  nor  a 
del  credere  arrangement,  nor  anything  else  beyond  that  bargain.  And 
the  mere  fact  that  the  defendant  had,  as  he  seems  to  have  done,  finauc^d 
tl\e  syndicate  to  a  large  extent,  and  that  that  was  his  motive  for  th,us 
CQming  forward  and  bargaining  for  forbearance,  cannot  make_any 
difference  in  the  object  of  the  contract.  That  might  have  been  the 
motive  which  induced  him  to  make  himself  answerable  for  the  debt 
of  the  syndicate,  but  it  was  not  the  object  of  the  contract.    Theobject 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER  CONTRACTS.  14^ 

was  simply  to  obtain  the  forbearance  of  the  creditors  in  respect  of  the 

'iebt-  ~-  -  '         K 

"ITwas  suggested  that  the  true  definition  of  cases  which  do  not  come  jfj/i)M  fo-*^  ^*^ 
within  section  4  should  be,  not  those  in  which  the  obligation  to  pay  jt-.-r^'V-r^  )^'p- 
the  debt  of  another  is  an  incident  of  a  larger  contract,  but  those  in  fo  »>vt^ -f^  (^'^ 
\vhich  the  main  object  is  to  secure  the  promisor's  own  personal  inter-  dii^oy^**'-'''^^^ 
est.     But,  I  think,  if  such  a  definition  were  adopted,  there  would  be  '*^'  " 
nothing  left  to  come  within  section  4,  because  in  every  case  there" 
must  be  a  consideration  for  which  the  promisor  bargains  to  come  to 
him  from  the  promisee.     That  is  as  true  of  mere  forbearance  as  of 
anything  else.    If  the  contract  is  that  the  promisor  will  be  answerable 
for  the  debt  due  to  the  promisee  if  he  will  forbear,  if  the  main  object 
is  to  obtain  that  forbearance,  and  the  promisor  wishes  to  obtain  it,  that 
would  be  sufficient  to  take  the  case  out  of  the  statute.    In  my  opinion  so 
to  hold  would  be  simply  to  repeal  section  4.  ^ 

I  wish  to  say  a  word  about  Fitzgerald  v.  Dressier,  7  C.  B.  (N.  S.)  £,;«/j(^'*'^  • 
374,  which  was  decided  long  after  Couturier  v,  Hastie,  8  Ex.  40.  In  fx^^j^  l&yy** 
his  judgment  in  Fitzgerald  v.  Dressier,  Cockburn,  C.  J.,  quoted  the  note  ^  ~ 
to  Forth  V.  Stanton,  1  Wms.  Saund.  2 lie,  and  expressly  approved  of  it, 
subject  to  one  qualification.  The  passage  which  he  quoted  was  this: 
"The  fair  result  seems  to  be  that  the  question,  whether  each  particular 
case  comes  within  this  clause  of  the  statute  (section  4)  or  not,  depends, 
not  on  the  consideration  for  the  promise,  but  on  the  fact  of  the  original 
party  remaining  liable,  coupled  with  the  absence  of  any  liability  on  the 
part  of  the  defendant  or  his  property,  except  such  as  arises  from  his 
express  promise."  The  learned  judge  added:  "I  quite  concur  in  that 
view  of  the  doctrine,  provided  the  proposition  is  considered  as  em- 
bracing the  qualification  at  the  conclusion  of  the  passage ;  for,  though 
I  agree  that  the  consideration  alone  is  not  the  test,  but  that  the  party 
taking  upon  himself  the  obligation  upon  which  the  action  is  brought 
makes  himself  responsible  for  the  debt  or  default  of  another,  still  it 
must  be  taken  with  the  qualification  stated  in  the  note  above  cited,  viz., 
an  absence  of  prior  liability  on  the  part  of  the  defendant  or  his  prop- 
erty, it  being,  as  I  think,  truly  stated  there,  as  the  result  of  the  au- 
thorities, that,  if  there  be  something  more  than  a  mere  undertaking 
to  pay  the  debt  of  another,  as,  where  the  property,  in  consideration  of 
the  giving  up  of  which  the  party  enters  into  the  undertaking,  is  in 
point  of  fact  his  own,  or  is  property  in  which  he  has  some  interest, 
the  case  is  not  within  the  provision  of  the  statute,  which  was  intended 
to  apply  to  the  case  of  an  undertaking  to  answer  for  the  debt,  default, 
or  miscarriage  of  another,  where  the  person  making  the  promise  has 
himself  no  interest  in  the  property  which  is  the  subject  of  the  under- 
taking." 

1  wish  to  point  out  that  Cockburn,  C.  J.,  was  there  in  terms  dealing 
only  with  the  "property  cases"  as  an  instance — and  I  think  it  is  clear 
that  he  intended  to  deal  with  them  only  as  an  instance — of  a  general 
Hen.  Sub. — 10 


HG  FORMATION.  (Part  1 

Jljle,  I  have  attempted  to  define  that  general  rule,  and,  I  think,  that 
every  one  of  the  exceptions  which  is  to  be  found  in  the  decided  cases 
comes  within  the  rule,  as  I  have  defined  it. 

In  my  opinion  the  judgment  of  Mathew,  J.,  should  be  reversed,  and 
the  appeal  allowed. 

I  have  said  nothing  about  the  question  of  damages  because,  in  the 
view  which  we  take,  it  does  not  arise.  /\ 

§Ti RISING,  X^JT.  I  am  -of  the  same  opinion.  But,  as  the  case  is 
one  of  difficulty,  and  we  are  differing  from  ]\Iathew,  J.,  and  we  have 
heard  a  most  excellent  and  elaborate  argument,  I  will  add  a  few  words 
6i  my  own,  though  I  agree  entirely  with  what  has  been  said  by  Vaughan 
Williams,  L.  J. 
-^\^  t,^.>/A>^  In  my  opinion  the  decision  in  Guild  &  Co.  v.  Conrad,  [1894]  2  Q.  B. 
4i»«>  ^Y'\)t ^\>f  \  885,  does  not  apply.  It  is,  I  think,  impossible  to  arrive  at  the  conclu- 
'-'  , '^^'^f^lJ^-'^  sion  at  which  the  learned  judges  arrived  in  that  case,  namely,  that  the 
sv^  l^v^  defendant's  contract  was  to  pay  the  debt  whether  the  syndicate,  of 
'  /  which  he  was  a  director,  could  or  could  not  pay  it.  In  Guild  »&;  Co.  v. 
Conrad  it  was  found  that  the  contract  was  not  to  pay  if  the  foreign 
firm  did  not  pay,  because  there  was  no  expectation  at  that  time  that 
the  foreign  firm  would  be  able  to  pay,  but  the  contract  was  to  provide 
funds  to  enable  the  plaintiffs  to  meet  certain  acceptances.  In  the 
present  case  it  seems  to  me  that  the  transaction  in  contemplation  was 
to  give  time  to  the  syndicate  in  the  expectation  that  in  the  interval  they 
would  be  placed  in  funds  by  which  they  would  be  enabled  to  pay  all 
their  debts.  The  important  element  corresponding  to  that  which  ex- 
isted in  Guild  &  Co.  v.  Conrad,  namely,  the  absence  of  any  expectation 
that  the  syndicate  would  ever  be  able  to  pay,  is  here  wanting. 
r^  That  being  so,  we  have  to  consider  whether  the  contract  was  "to 
answer  for  the  debt,  default,  or  miscarriage  of  another  person"  with- 
in the  meaning  of  section  4  of  the  statute  of  frauds.  Undoubtedly  the 
decisions  run  fine  in  these  cases,  and  the  main  stress  of  the  argument 
has  been  an  attempt  to  extend  the  "doctrine  laid  down  in  Couturier  v. 
Hastie,  8  Ex.  40,  and  Sutton  &  Co.  v.  Grey,  [1894]  1  Q.  B.  285,  to  the 
present  case,  though  reliance  was  also  placed  on  some  earlier  authorities 
with  which  I  will  first  deal.  I  accept  the  passage  which  has  been  read 
from  the  judgment  of  Cockburn,  C.  J.,  in  Fitzgerald  v.  Dressltr,  7  C.  B. 
(N.  S.)  374,  as  stating  accurately  the  law  with  reference  to  two 
classes  of  cases,  of  which  Williams  v.  Leper,  3  Burr.  1887,  and 
Walker  v.  Taylor,  G  C.  &  P.  752,  are  the  types.  I  do  not  forget  that  in 
Williams  v.  Leper  a  promise  to  pay  rent  was  given  by  an  auctioneer 
who  had  possession  of  property  under  instructions  from  the  real  owner 
to  sell  it;  but,  when  the  reasons  assigned  by  the  learned  judges  for 
their  decision  are  examined,  it  appears  to  me  that  the  auctioneer  was 
treated  by  them  as  the  agent  of^the  owner,  and  as  having  antirority 
from  him  to  enter  into  a  contract  to  pay  the  rent  out  of  the  proceeds 
of  the  sale.    The  promise  must  be  taken  to  have  been  that  of  the  owfler. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  147 

and,  therefore,  the  case  is  brought  within  the  statement  of  the  law  to 
which  1  have  just  referred.  y. 

Again,  in  Walker  v.  Taylor  it  seems  to  me  that  the  transaction  really     C5)  J**-!^  W*vU 
was  a  purchase  by  the  defendant  of  a  right  of  the  plaintiff,  which  the         *  '^'i  '* 
defendant  thought  would  be  valuable  to  him.     Having  acquired  the 
fight  he  refused  to  pay,  and  it  was  held  that  the  case  did  not  fall  with- 
in the  statute.  )( 

I  come  then  to  Couturier  v.  Hastie,  in  which  it  was  held  that  a  con~N?  VmL^J^^^^ 
tract  bv  a  del  credere  agent  was  not  within  the  statute.  From  the  judg- 
ment of  Bowen,"L.  J.,  in  SuHon  &  Co.  v.  Grey,  69  L.  T.  (N.  S.)  354, 
355,  it  is  clear  that  he  regarded  Couturier  v.  Hastie  as  going  to  the 
very  verge  of  the  law,  and  he  referred  to  the  observations  upon  it 
made  by  Page  Wood,  V.  C,  in  Wickham  v.  Wickham  (1855)  2  K.  & 
J.  478,  at  page  487.  In  Sutton  &  Co.  v.  Grey,  [1894]  1  Q.  B.  285, 
there  was  a  contract  between  a  firm  of  brokers  and  the  defendant  of 
which  the  terms  were  that  he  should  introduce  clients  to  them,  and 
that  the  plaintiffs  should  transact  business  on  the  Stock  Exchange 
for  the  clients  thus  introduced,  and  that  as  between  the  plaintiffs 
and  the  defendant,  he  should  have  half  the  commission  earned  by  the 
plaintiffs  in  respect  of  any  transactions  by  them  for  any  clients  in- 
troduced by  him,  and  he  should  pay  to  the  plaintiffs  half  of  any  loss 
which  might  be  incurred  by  them  in  respect  of  those  transactions. 
The  plaintiffs  claimed  to  recover  from  the  defendant  half  the  loss 
which  they  had  incurred  in  Stock  Exchange  transactions  which  they 
had  entered  into  on  behalf  of  a  person  who  had  been  introduced  to 
them  by  the  defendant,  and  it  was  held  that,  the  defendant  having  an 
interest  in  the  transactions  equally  with  the  plaintiff's,  the  principle  of 
Couturier  v.  Hastie  applied.  Lord  Esher,  M.  R.  ([1894]  1  Q.  B.  285, 
at  page  289),  cited  the  above  quoted  passage  from  Fitzgerald  v.  Dress- 
ier, 7  C.  B.  (N.'  S.)  374,  and  commented  on  it  thus:  "The  learned 
judge  there  used  the  words  'has  himself  no  interest  in  the  property 
which  is  the  subject  of  the  undertaking'  because  he  was  deahng  with 
a  case  of  property ;  but  if  his  words  be  read,  as  I  think  they  should  be, 
'has  no  interest  in  the  transaction,'  he  is  adopting  that  interpretation  of 
Couturier  v.  Hastie  which  I  think  is  the  right  9ne."  It  is  upon  this 
passage  in  the  judgment  of  Lord  Esher  that  the  argument  for  the  ^  ^^ 
plaintiffs  in  the  present  case  has  been  really  founded.  But,  as  it  seems '^fvj^'^ 
to  me,  both  in  the  judgment  of  Cockburn,  C.  J.,  in  Fitzgerald  v.  Dress-  ^  h^^f«^^ 
ler,  and  in  the  judgment  of  Lord  Esher,  M.  R.,  in  Sutton  &_Co._v.  \^  „'^^ 
Grey,  [1894]  1  O.  B.  285,  the  word  "interest"  means  some  species, of  .  !^  H/^ 
interest  which  the  law  recognizes.  In  the  present  case  the  defendant  '^  ^^■'f'jf^ 
had  no  such  interest  in  the  property  which  was  about  to  be  seized  by 
the'sheriff.  He  was  a  director  of  the  syndicate  ^^-'lio-had, -no  doubt,  a 
deep  interest,  in  the  popular  sense  of  the  word,  in  its  proceedings.  He 
held  a  large  number  of  shares.  I  believe  he  was  the  largest  share- 
holder in  the  syndicate.     He  had  also  financed  the  syndicate,  but  he 


14S  FORMATION.  (Part  1 

had  nothing  in  the  nature  of  a  charge  on  their  property.     He  was  at 
the  utmost  a  general  creditor  of  the  syndicate. 

It  has  been  contended  that  we  ought  to  read  the  words  "interest_in 
the  transaction"  in  a  wide  sense,  and  as  importing  a  "business  interest" 
in  the  syndicate — that  kind  of  interest  which  a  creditor  and  a  share- 
holder of  a  company  has  in  its  prospects.  To  do  this  would,  I  think,  go 
a  long  way  to  repeal  section  4  of  the  statute  of  frauds,  and  to  extend 
the  doctrine  of  Couturier  v.  Hastie,  8  Ex.  40,  very  much  further  than 
I  am  prepared  to  extend  it. 

For  these  reasons  I  think  that  the  appeal  ought  to  be  allowed,  and 
the  judgment  of  Mathew,  J.,  reversed.  Y 

CozENS-ILvRDY,  L.  J.  I  agree.  It  seems  to  me,  for  the  reasons 
which  my  Lord  has  given  and  which  I  will  not  repeat,  that  this  was 
certainly  not  a  contract  of  indemnity.  Prima  facie  the  contract  falls 
within  section  4  of  the  statute,  unless  it  can  be  brought  within  some 
recognized  or  some  logical  exception.  One  great  pecuHarity  is  this, 
that  neither  the  plaintiffs  nor  the  defendant  had  possession  of  or  had 
any  interest  in  the  goods  of  the  syndicate.  But  it  has^  been  forcibly 
and  most  ably  argued  that  the  case  is  brought  within  the  recognized 
exceptions  from  the  section,  because  the  defendant,  though  he  had  no 
legal  right  to  or  interest  in  the  goods,  yet  had  in  a  business  sense  an 
interest  in  them.  It  has  been  argued  that  we  ought  to  look  at  the  ob- 
ject of  the  promise  which  the  defendant  made,  and  that  if  we  can  ceme 
to  the  conclusion  that  his  object  in  giving  the  promise  was  to  secure 
a  benefit  for  himself,  and  not  to  secure  forbearance  for  the  syndicate, 
then  we  ought  to  hold  that  the  case  is  not  within  the  statute  at  all.  ^ 
cannot  agree  with  that  argument.  It  seems  to  me  to  involve  a  confu- 
sion between  object  and  motive.  I  cannot  doubt  that  the  object  of  the 
promise  which  was  made  by  the  defendant  was  to  secure  the  forbear- 
ance of  the  plaintiffs,  for  three  months  and  six  months,  in  enforcing 
the  debt  due  from  the  syndicate. 
\jL,r^  t  ^  •^/\  ^^  ^^^^  ^^  ^*-*'  *^^  authorities  do  not,  as  it  seems  to  me,  in  any  way 
support  Mr.  Russell's  contention.  They  have  been  divided  conveniently 
into  three  classes.  The_iirst.  consists  of  what  have  been  called__''the 
property  cases."  I  do  not  think  they  can  be  dealt  with  more  accu- 
rately, and  certainly  not  more  shortly,  than  they  were  by  Williams, 
J.,  in  his  judgment  in  Fitzgerald  v.  Dressier,  7  C.  B.  (N.  S.),  at  page 
394,  where  he  said:  "At  the  time  the  promise  was  made  the  defend- 
ant was  substantially  the  owner  of  the  linseed  in  question,  which  was 
subject  to  the  lien  of  the  original  vendors  for  the  contract  price.  The 
effect  of  the  promise  was  neither  more  nor  less  than  this,  to  get  rid 
of  the  incumbrance,  or,  in  other  words,  to  buy  off  the  plaintiffs'  lien. 
That  being  so,  it  seems  to  me  that  the  authorities  clearly  establish 
that  such  a  case  is  not  within  the  statute."  And  he  referred  to  Wil- 
liams v.  Leper,  3  Burr.  1887,  Castling  v.  Aubert,  2  East,  325,  and 
Anstey  v.  Marsden  (1804)  1  B.  &  P.  (N.  R.)  124,  8  R.  R.  713. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER  CONTRACTS.  149 

Then  stress_has.J3.eeii-lai4-©a™what  have  been  called  "the  docuinent'^^'^  ''^'^•''^'''''^*^ 
caseg."  Those  cases  seem  to  me  to  stand  on  an  entirely  different  foot- 
ing. If  I  go  to  a  banker  or  to  another  person  who  holds  documents  as 
security  for  a  debt,  and  I  ask  him  to  hand  over  the  documents  to  me 
on  payment  of  the  debt,  that  is  simply-a^piirchase  of  the  security.  Al- 
though in  this  way  I  have  become  answerable  for  the  debt  of  another, 
that  is  not  the  main  object  of  the  contract. 

The  third  class  consists  of  those  cases  which  have  been  called  "the^^--^^'-'^-''^'^'' 
deLtredere  cases."  When  they  are  fairly  regarded,  they  seem  to  me 
to  amount  only  to  this :  That  a  contract,  e.  g.,  for  the  employment  of 
a  del  credere  agent,  need  not  be  in  writing,  although  it  incidentally  in- 
volves the  answering  for  a  debt  of  another  person..  In  other  words, 
if  the  court  can  find  that  there  is  a  main  contract,  the  object  of  which 
is  not  to  answer  for  the  debt  of  another,  that  contract  is  not  within 
section  4,  even  though  incidentally  it  may  result  in  a  liability  to  answer 
for  the  debt  of  another. 

For  these  reasons  I  agree  with  the  Lord  Justices,  and  think  that  the 
appeal  ought  to  be  allowed. 

Appeal  allowed. 


WHITE  V.  RINTOUL. 

(CJourt  of  Appeals  of  New  York,  1887.    108  N.  Y.  222,  15  N.  E.  318.) 

(^^Appeal  from  judgment  of  the  General  Term  of  the  Superior  Court 
of  the  City  of  New  York,  entered  upon  an  order  made  January  7,  1885, 
which  affirmed  a  judgment  in  favor  of  plaintiff'  entered  upon  a  verdict. 

I'his  action  was  brought  upon  an  alleged  verbal  promise  of  defend- 
ant to  pay  the  amount  of  two  notes  owned  by  plaintiff  and  made  by 
the  firm  of  Wheatcroft  &  Rintoul. 

The  material  facts  are  stated  in  the  opinion.^^ 

Finch,  J.    The  doctrine  prevailing  in  this  state  which  serves  to  dis-  jiWi-^l'A^i^f  c 
tinguish  between  original  and  collateral  promises  in  cases  arising  un-    i<uv ' 
der  the  statute  of  frauds  has  been  reached  in  three  stages.    Each  was 
a  definite  and  deliberate  advance  toward  a  more  faithful  observance 
of  the  statute,  and  an  abandonment  of  efforts  to  narrow  the  just  and 
natural  range  of  its  application.     When,  bv  some  authorities,  it  was 
said  that  a_yerbal  promise  to  pay  the  debt  of  another  was  always  col- 1 
lateral,  and  invalid  if  the  primary  debt  continued  to  exist  concurrently 
with  the  promise,  a  simple  and  easy  test  was  furnished  to  determine/ 
whether  the  statute  did  or  did  not  apply.    But  when  that  test  was  dis- 
carded, and  it  became  the  law  that  a  promise  to  pay  another's  debt 
might  be  original,  although  that  debt  subsisted  and  was  in  no  manner 
extinguished,  the  presence  of  such  continued  liability  raised  a  cloud 
of  doubt  and  ambiguity,  which  perhaps  will  never  be  entirely  dissipated. 

36  The  arguments  of  counsel  are  omitted. 


150  FORMATION.  (Part  1 

The  argument  in  the  present  case  has  so  reached  back  to  the  founda- 
tions of  the  controversy,  and  challenged  or  construed  what  has  been 
said  and  ruled,  as  to  make  both  useful  and  necessary  a  study  of  the 
path  which  the  courts  of  this  state  have  follow.Qii.    The  plaintiff  has 
recovered  upon  a  verbal  promise  to  pay  the  debt  of  another,  and  seeks 
Ce      ti^-l"     %  *°  maintain  his  position  in  part  upon  the  definition  of  an  original  prom- 
>*'  W^  ji^     ise  framed  in  the  old  and  familiar  case  of  Leonard  v.  Vredenburgh, 
,  trr>v*t*tv^    g  JqI^j^j   29,  5  Am.  Dec.  317.    That  definition  assumed  as  the  test_of 
"rr*^  »^*  an  original  promise  that  it  was  founded  on  a  new  or  further  consid- 

i-  eratlon  of  benefit  or  harm  moving  between  the  promisor  and  promisee. 

Tliere  was  found  in  this  some  inaccuracy  of  expression.  For  since 
every  promise  must  have  some  consideration  to  be  valid  at  common 
law,  and  that  necessary  and  inevitable  consideration,  wherever  the  debt 
to  be  paid  antecedently  existed,  is  always  "new"  and  "further,"  be- 
cause different  from  that  of  the  primary  debt,  and  since,  also,  such 
new  consideration  does  frequently  move  between  the  newly  contract- 
ing parties,  giving  benefit  to  promisor  or  harm  to  promisee,  it  became 
apparent  that  the  terms  of  the  definition  were  dangerously  broaTand 
capable  of  a  grave  misapprehension,  making  it  almost  possible  to  say 
that  a  promise  good  at  common  law  between  the  new  parties  was  good 
also  in  spite  of  the  statute. 
,  y  r  r     '^^^^  difficulty  was  disclosed  and  measured,  and  then  remedied  in 

-  ',{*AU7     ^lallory  v.  Gillett,  21  N.  Y.  412,  by  a  divided  court,  it  is  true,  but 
■J  y>^*^j    upon  a  prevailing  opinion  so  strong  in  its  reasoning  and  so  clear  in  its 
,\tt,^iAi^^M^  analysis  as  to  have  commanded  very  general  approval.    The  case  was 
ft*  W^^  ^       one  where,  in  reliance  on  the  promise  made,  the  promisee  had  released 
r  ^^t»>»»<^  fc,  to  his  debtor  a  lien  which  gave  his  debt  protection.    Within  the  lan- 
K^f  f  WrrP^    guage  of  the  rule  in  Leonard  v.  Vredenburgh  the  promise  was  original 
and  not  within  the  statute,  since  the  consideration  which  supported  it 
was  "new"  and  "further"  and  passed  between  the  newly  contracting 
parties,  and  consisted  in  the  harm  to  the  promisee  involved  in  the  sur- 
render of  his  lien.     But  the  promise  was  nevertheless  held  to  be  col- 
lateral, and  the  earlier  definition  modified,  so  as  to  require  that  the 
new  consideration  should  move  to  the  promisor  and  be  beneficial  to 
him.    Tliis^hange  shut  out  at  once  from  the  class  of  original  prom- 
ises all  those  fn  which  the  consideration  of  the  promise  wa?s  harm  to 
the  promisee,  and  the  resultant  benefit  moved  to  the  debtor,  instead 
of  the  promisor.     The  ground  of  the  doctrine  thus  asserted  was  ex- 
plained by  the  test  then  prevailing  in  Massachusetts,  declaring  ihe 
promise  original  where  its  leading  and  chief  object  is  to  subserve  or 
promote  some  interest  or  purpose  of  the  promisor  himself,  and  upon 
which  the  respondent  very  much  relies.     Nelson  v.  Boynton,  3  Mete. 
396,  37  Am.  Dec.  148.    That  this  expression  was  understood  to  mean, 
not  merely  some  moral  or  sentimental  object,  but  to  relate  to  a  legal 
interest  or  purpose  tangible  by  the  law  and  a  product  of  the  considera- 
tion received  from  creditor  or  debtor,  is  apparent  from  the  further  cur- 
rent of  the  explanation.    The  learned  judge  contrasts  a  case  in  which 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER   CONTRACTS.  151 

the  consideration  benefits  the  debtor,  but  in  it  the  promisor  has  no 
personal  interest  or  concern,  with  one  in  which  the  consideration  is 
the  product  of  some  new  dealing  between  creditor  or  debtor  and  prom- 
isor, and  in  which  the  latter  has  a  personal  interest.     That  is  what  he 
means  by  a  consideration  of  benefit  moving  to  the  promisor,  and  to  Vxu-i  j- 
obtain  which  is  the  object  of  the  promise.     But  the  rule  thus  stated  ^jjT^jj 
a;n:l  explained  was  again  narrowed  and  restricted.    In  Brown  v.  Weber,   -^^  A^i  tJi' 
38  N.  Y.  ISr,  it_was  asserted  that  a  promise  might  still  be  collateral,  "^^  f^vj^ 
evenJ:hough  the  new  consideration  moved  to  the  promisor  and  was  ^    .      ^TT^ 
betieficial  to  him.     It  was  distinctly  said  that  the  existence  of  those    r^'~"~^'l 
facts  would  not  in  every  case  stamp  the  promise  as  original,  but  the 
inquiry  would  remain  whether  such  promise  was  independent  of  the 
original  debt  or  contingent  upon  it.     The  court  added :    ''The  test  to 
be  appliedto  every  case  is  whether  the  party  sought  to  be  charged  is 
the  princjjpaT'de'btor  primarily  liable,  or  whether  he  is  only  liable  in 
case  of  the  _def ault  of  a  third  persori,  in  other  words  whether  he  is 
the  debtor,  or  whether  his  relation  to  the  creditor  is  that  of  surety  for 
the  performance  by  some  other  person  of  the  obligation  of  the  latter 
to  the  creditor." 

If  this  statement  was  not  needed  for  a  determination  of  the  case, 
or  the  generaHty  of  its  language  left  it  debatable  what  precise  limitation 
or  qualification  was  intended  to  be  added  to  the  rule  of  Mallory  v.      ^ 
Gillett,  both  difficulties  were  removed  by  the  recent  case  of  Ackley  v.^  ^*'^'^*^ 
Parmenter,  98  N.  Y.  435,  50  Am.  Rep.  693,  in  which  Rapallo,  J.,  states  L^c^^^*'^*^ 
with  precision  and  accuracy  the  doctrine  of  the  court.    The  debt  there    nfc^  ^JZ^ 
was  the  debt  of  one  Silliman,  and  the  verbal  undertakings  were  held 
to  be  within  the  statute,  unless  the  defendant,  before  making  the  prom- 
ise~  had  so  dealt  as  to  make  Silliman's  debt  his  own,  or  had  incurred 
a  duty  to  pay  the  amount  owing  from  Silliman  to  the  plaintiff.    It  was 
added,  relatively  to  one  possible  view  of  the  facts,  that  the  plaintiff's 
undertaking  was  to  pay  out  of  the  proceeds  of  the  stock,  and  his  duty 
to  pay  would  not  arise  until  he  had  converted  the  stock  into  money. 
"Consequently,"  it  was  concluded,  "at  the  time  of  the  alleged  promise 
he  was  under  no  present  duty  to  pay  and  the  promise,  though  founded 
on  a  good  consideration  (viz.,  the  adjournment  of  the  sale),  was  nev- 
ertheless an  undertaking  to  pay  the  debt  of  another." 

These  four  cases,  advancing  by  three  distinct  stages  in  a  common 
direction,  have  ended  in  establishing  a  doctrine  in  the  courts  of  this 
state  which  may  be  stated  with  approximate  accuracy  thus :  That 
where  the  primary  debt  subsists  and  was  antecedently  contracted,  the 
promise  to  pay  it  is  original  when  it  is  founded  on  a  new  considera- 
tion moving  tq^  the  promisor  and  beneficial  to  him,  and  such  that  the 
promisor  thereby  comes  under  an  independent  duty  of  payment  irre- 
spective of  the  liability  of  the  principal  debtor.  ^fJJ^^r    ^-.-^ 

The  question  in  the  present  case  was  raised  in  three  waysC'-^At  the    /    l±^ltt^ 
first  effort  to  prove  a  verbal  promise  to  pay  the  debt  due  plaintiff',  the    t^'"  ^ 
objection  was  made  to  the  evidence  that  if  any  promise  was  to  be  proved       ^ 


r 


152  FORMATION.  (Part  1 

it  must  be  in  writing.  The  objection  was  overruled  and  an  exception 
was  taken/'^After  the  conversation  had  been  stated,  which  cuhninated 
in  a  promise,  the^efendant  moved  to  strike  out  that  part  of  tlie  aiiS-V\:er 
which  detailed  the  verbal  promise.  That  motion  was  denied  and  the 
defendant  again  excepted^  3>^.t  the  close  of  the  plaintiff's  case  there  was 
a  motion  for  a  non-suit  upon  the  ground  that  the  promise  was  not  in 
writing  and  was,  therefore,  within  the  statute  of  frauds,  and  also 
upon  the  ground  that  there  was  no  evidence  that  the  promise  was  for 
the  promisor's  special  l;)enefit.  The  motion  was  denied,  and  again  an 
exception  was  taken,  '(finally,  at  the  close  of  the  evidence,  the  court 
was  asked  to  direct  d  verdict  for  the  defendant,  which  was  refused"and 
the  defendant  excepted.  I  do  not  think  that  any  of  these  exceptions 
were  waived  by  the  defendant's  subsequent  request  to  charge.  The 
case  went  to  the  jury  against  his  objection  and  upon  a  theory  to  which 
he  in  no  manner  assented;  but,  even  upon  that  theory,  to  which  the 
court  drove  him,  he  had  a  right  to  claim  that  he  was  not  liable,  and  ask 
a  charge  which  might  give  him  protection  without  at  all  waiving  his 
position  upon  the  law. 

We  are,  therefore,  to  bring  the  facts  of  the  case  to  the  test  of  the 
^^^  '  rule  above  stated,  and  in  doing  so,  we  are  to  take  them  from  defend- 

ant's own  lips,  to  treat  as  true  his  representations  as  detailed  by  his  ad- 
versary, and  to  draw  from  the  evidence  every  possible  inference  which 
is  favorable  to  the  plaintift"'s  case.    The  firm  of  Wheatcroft  &  Rintoul, 
of  which  defendant  was  not  a  member,  became  indebted  to  the  plaintiff 
in  the  amount  of  two  notes,  one  dated  June  1,  1880,  and  maturing 
September  4,  1880,  and  the  other  dated  July  1,  1880,  and  to  become  due 
October  4,  1880.     On  the  16th  of  August,  1880,  and  so  before  the 
maturity  of  either  note,  the  defendant  requested  the  plaintiff  to  forbear 
any  effort  at  their  collection  until  June  or  July,  1881,  promising,  if  the 
plaintiff  would  do  so,  to  pay  the  amount  of  the  notes.    The  plaintiff  did 
y   forbear,  and  now  sues  upon  the  promise.    The  courts  have  held  many 
^•"^■^^i^^Miiy*/^- times  that  a  promise  upon  consideration  of  forbearance  to  sue  the 
'<*  ^>rtvvy  •  '     debtor  is  not  original,  and  to  be  valid  must  be  in  writing. 
'•  In  Ackley  v.  Parmenter,  supra,  it  was  said,  "forbearance  or  indul- 

gence to  the  debtor,  even  at  the  request  of  the  promisor,  will  not  sup- 
port a  verbal  promise  by  a  third  party  to  pay  the  debt."  "  If  there 
were  nothing  more  of  the  case  than  has  been  thus  far  stated,  it  would 
^  be  very  clear  that  the  plaintiff  ought  to  have  been  non-suited.    But  there 
\-<^*i  |Cl<  ''are  further  facts  upon  which  it  was  found  that  the  sole  object  of  the 
X'fl<'wW^<*  defendant  was  to  subserve  some  purpose  of  his  own.     I  do  not  recog- 
ATv  >Ca,Cf5.J^  "^^^  ^'""^^  ^^  either  a  test  or  a  rule.     "Some  purpose"  might  rhean  one 
»^v/<-/  t'i,'i     ^^  morals  or  sentiment,  of  gratitude  or  pride,  and  to  subserve  such 
J.      .         j^^ purpose  might  be  the  sole  object  of  the  promise,  and  then  by  submitting 
'       ^*  the  question  to  the  jury,  it  would  be  easy  in  every  case  to  defeat  and 

/rJK^^Avfv^  evade  the  statute.  But  neither  the  court  below  nor  the  plaintiff's  coun- 
^♦'^'v*^  p*-^*"  sel  meant  so  lose  a  doctrine.  What  they  did  mean  was  that  on  the 
K^«  i^Ar'iWW'   facts  it  was  possible  to  say  that  the  forbearance  of  the  plaintiff'  to 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER  CONTRACTS.  153 

sue  was  not  merely  a  benefit  to  Wheatcroft  &  Rintoul,  but  that  de- 
fendant  was  so  situated,  relatively  to  that  firm,  that  the  plaintiff's'  de- 
lay-waT^a  benefit  to  the  defendant  personally,  which  he  contracted  for 
in  his  own  interest,  and  obtained  by  means  of  his  promise.  V 

One  member  of  the  debtor  firm  was  the  defendant's  son,  and  that  ' /TjJ,;tjl_^  i 
firm" was  somewhat  in  debt  and  not  managing  the  business  successfully      x\  M      i 
or  satisfactorily.    The  defendant  was  a  creditor  of  the  firm.     He  had       ^^  Jr^^^frt 
loaned  to  them  something  over  $5,000,  for  w-hich  he  held  as  security  a 
chattel  mortgage  on  the  fixtures  and  machinery  of  the  firm.     He  was, 
therefore,  to  some  extent  at  least,  a  secured  creditor.     He  represented  to 
plaintiff  that  he  had  advanced  all  the  money  for  the  business  of  the 
firm ;  that  he  was  determined  to  get  rid  of  his  son's  partner,  who  was 
drawing  money  that  was  his  money ;  that  the  business  was  not  paying, 
and  he  wanted  to  give  it  up,  or  he  was  going  to  conduct  it  alone  or 
through  his  son;  that  if  plaintiff  tried  to  collect  his  debt  he  would  not 
be  able  to  get  anything ;  that  there  was  a  chattel  mortgage  against  the 
property;   that  he  had  furnished  money  himself  for  which  he  had  a 
mortgage,  or  would  get  one,  and  plaintiff  could  not  get  anything ;  that 
the  only  way  and  the  best  way  would  be  to  give  the  firm  time ;  that  it 
was  late  in  the  season,  and  by  waiting  until  the  next  summer  they 
could  sell  their  beer ;  and  that  he  would  pay  plaintiff  for  the  two  notes. 
That  is  plaintiff's  account  of  the  conversation  given  on  his  direct-ex- 
amination.    On  his  cross-examination  he  added  that  defendant  said 
he  had  a  claim  or  a  confession  or  a  mortgage  or  some  security  for  the 
amount  of  money  due  him,  and  that  plaintiff  could  not  get  anything 
anyway,  and  that  the  money  that  was  due  defendant  was  the  first  to  be  y  -.     j^  1,  -i 
paid  out  of  the  firm.    Upon  the  basis  of  this  evidence  the  plaintiff  con-  f^      ^ .    •    .^ 
tends  that  the  defendant  had  a  direct  personal  interest  in  procuring  cv         .j   "^ ' 
a  forbTafaiite  to  sue  the  firm,  which  he  explains  in  his  brief  by  saying  '/*  '"^^' 

"that  if  the  plaintiff  pressed  the  collection  of  the  notes,  and  did  not  'VT'/m*^  «fr*v>.j 
wait  till  the  then  next  summer,  defendant  would  lose  his  money,"  ^'-<-'  */' 
which  had  been  loaned  to  the  firm.  But  I  do  not  discover  a  single  fact 
in  the  case  which  tends  to  any  such  conclusion.  I  liaYCjiot  overlooked 
the  jproof  that  the  plaintiff,  while  saying  nothing  of  the  sort  in  his  first 
derail  of  defendant's  words,  did  later  add  that  defendant  declared  he 
would  lose  his  money  if  plaintiff  forced  a  collection.  But  this  was 
m"erely  an  expression  of  an  opinion  or  fear,  not  only  without  anything 
to"^7^ti^y  it>  ^ut  in  direct  contradiction  of  every  fact  bearing  upon  the 
situation,  and  indicating  defendant's  relations  with  the  firm.  It  was  a 
fear  without  a  foundation — a  state  of  mind,  and  not  a  result  of  exist- 
ing facts  seen  in  their  legal  bearing.  The  defendant^  was  a  secured 
creditor  of  the  firm.  Delay  on  the  part  of  plaintiff  is  not  sHo\vnloTT3ve 
been  of  the  slightest  consequence  to  the  interest  of  defendant. 

It  is  not  pretended  that  his  security  was  inadequate.  Beyond  that  he 
asserted  that  he  was  to  be  first  paid,  and  that  plaintiff  could  get  nothing 
if  he  sued.  When  the  conversation  took  place  the  first  note  had  not 
matured,  and  could  not  be  sued  under  about  a  fortnight.    It  is  not  sug- 


154  FORMATION.  (Part  1 

gested  or  shown  that  defendant's  claim  was  not  due,  and  there  was 
ample  time,  if  further  security  was  needed,  to  sue  and  levy  in  advance 
of  plaintitt.     That  delay  by  the   latter  was  in  the  slightest   degree 
material  to  the  safety  of  defendant's  debt  is  a  purely  gratuitous  as- 
sumption.   The  evidence  is  all  to  the  exact  contrary.    The  motive  dis- 
closed  was  regard  for  his  son,  and  desire  that  his  business  credit  shoyfd 
not  be  damaged  by  a  failure.    The  purpose  for  which  he  sought  delay 
was  wholly  in  the  interest  of  that  son,  and  to  enable  him  to  market 
his  beer  the  next  summer,  and  so  procure  the  means  to  pay  the  plaintiff 
without  sacrifice  or  discredit.     The  debt  of  the  firm  was  in  no  sense 
defendant's  debt.     Xo  consideration  of  benefit  moved   to  him   from 
either  party,  and  least  of  all  had  there  been  any  new  dealing  with 
either  which  put  upon  him  a  duty  of  payment.     Before  the  promise 
was  made  he  owed  no  such  duty  and  came  under  no  such  obligation. 
The  doctrine  of  this  court  clearly  stamps  the  promise  as  collateral  and 
'^IVftn^Ki/       />void  for  want  of  a  writing.    Indeed,  the  proof  shows  that  the  plalntTTF 
\JLvh*  rrjj^  I     himself  did  not  mistake  its  character.    On  the  1st  of  September,  1880, 
iP^J^  tWvTwv    '^^  ^^^^  defendant  called  to  get  his  signature  to  a  paper  which  recited 
r  the  ownership  by  defendant  of  a  chattel  mortgage   on  property  of 

Wheatcroft  &  Rintoul,  and,  although  he  signed  it,  he  testified,  "My 
remark  that  I  did  not  want  to  sign  the  paper  was  caused  by  my  sur- 
prise that  the  man  should  ask  me  to  sign  that  paper  when  he  had  just 
guaranteed  my  debt."  Wheatcroft  was  present  at  that  interview,  and 
called  as  a  witness  for  plaintiff,  and  testified  that  he  thought  defendant 
said  to  plaintiff',  "I  have  already  promised  to  see  you  paid,"  and  added 
that  the  words  were  distinctly  impressed  upon  his  memory.  John 
Flintoff  was  also  present  at  that  conversation,  and  was  called  by  plain- 
tiff, relating  its  language  thus :  "  'But,'  said  Mr.  White,  'you  said  you 
would  see  me  paid,'  and  Mr.  Rintoul  assented  to  the  proposition.  He 
said,  'For  the  matter  of  that,  I  said  I  will  see  you  paid.'  "  So  that 
not  only  do  no  facts  appear  which  make  defendant's  safety  depend 
upon  plaintiff"s  forbearance,  but  the  very  promise  itself  by  the  plain- 
trff's  own  admission  and  the  recital  of  his  witnesses  was  a  guaranty^ 
the  firm's  debt  and  contingent  upon  non-payment  by  them.  The  case 
is  one  in  which  a  faithful  observance  of  the  statute  of  frauds  requires 
us  .to  say  that  the  promise  sued  on  is  void  for  want  of  a  wrftrng] 

The  judgment  should  be  reversed,  and  a  new  trial  granted,  costs 
to  abide  event.     All  concur. 
Judgment  reversed.^^ 

2  7  Accord:  Ames  v.  Foster,  106  Mass.  400.  8  Am.  Rep.  343  (1871);  Bvrcr 
y.  riickmau.  159  Ala.  .505,  4S  South.  G69  (1909) ;  Carleton  v.  Floyd,  192  Mai^. 
204.  78  X.  E.  12G  (190G). 

Contra:    Mitchell  v.  Griffin.  .58  lud.  5.59  (1877). 

In  ^^^1ite  V.  Rintoul  (the  principal  case)  the  promise  was  made  to  the  cred- 
itor after  the  original  credit  had  lieen  granted.  The  case  is  therefore  not  one 
or  Indemnity  but  of  a  pr(inii.=;e  made  to  the  creditor  upon  a  new  con.sideration, 
1.  e.,  a  detriment  to  the  promisee.  

The  c-ase  of  White  v.  Rintoul  contains  a  clear  description  of  the  steps  by 
which  the  rule  has  become  settled  in  New  Yorli  that  the  test  of  a  guaranty 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  155 

LAMKIN  V.  PALMER. 

(Court  of  Appeals  of  New  York,  1900.     164  N.  Y.  201,  58  N.  E.  123.) 

L Appeal  from  i  judgment  of  uie  Appellate  Division  of  the  Supreme 
Court  in  the  Fourth  Judicial  Department,  entered  December  30,  1897, 
affirming-  ^  judgment  in  i?yr>r  of  -plaintiff  entered  upon  a  verdict,  and 
an  order  denying  a  motion  for  a  new  trial. 

The  nature  of  the  action  and  the  facts,  so  far  as  material,  are  stated 
in  the  opinion. 

Haight,  J.  This  action  was  brought  to  recover  the  sum  of  $3,150 
upon  an  oral  promise  of  the  defendant  to  pay  the  plaintiff  that  sum  out 
of  tlie  proceeds  of  the  sale  of  the  property  of  the  J\I.  S.  Robinson 
Musee  Company. 

The  facts  are  somewhat  complicated,  but,  for  the  purpose  of  rais- 
ing the  questions  presented  upon  this  appeal,  they  may  be  briefly  stated 
as  follows :  The  plaintiff  was  an  employe  and  stockholder  in  the  M.  S. 
Robinson  jLLusee-Gernpany,  a  corporation  operating  theaters  m  the  city 
of  Buffalo  and  in  the  city  of  Rochester.  HgJiad  loanedjto^the  ptresi- 
dent  of  the  company,  M.  S.  Robinson,  to  be  used  by  the  company  in  the 
operation  of  its  theaters,  the  money  in  question.  The  Buft'alo  theater 
had  been  destroyed  by  fire,  and  tlie  defendant  had  become  obligated  to 
pax_certain  indebtedness  incurred  by  the  Rochester  theater.  He  had 
procured  from  a  person  in  Detroit  an  offer  to  purchase  from  him  the 

isjQot  the  non-existence  of  a  subsisting  liability,  but  that,  even  though  there 
niaj'  Ite  a  subsisting  liability,  the  second  promise  will  not  be  a  promise  to  pay 
the  debt  of  another,  if  such  new  promise  is  supported  by  a  new  consideration, 
consisting  of  a  benefit  to  the  promisor;  e.  g.,  material  delivered  and  used 
irr-the  defendant's  house  under  a  prior  subsisting  contract  between  the  builder 
and  the  plaintiff.'  Raabe  v.  Squier.  148  N.  Y.  81,  42  N.  E.  516  (1885).  See. 
also.  Bank  v.  Chalmers,  144  N.  Y.  432,  39  N.  E.  331  (1805).  Lamkin  v.  Palmer, 
1G4  N.  Y.  201,  5S  N.  E.  123  (1900). 

Thje  test  in  such  cases,  therefore,  in  New  York,  is  the  character  of  the  con- 
sideration and  the  contingent  or  absolute  nature  of  the  prorajse.  If  the  con- 
sideration consists  merely  of  a  detriment  to  the  promisee.  White  v.  Rintoul 
(where  the  consideration  for  the  defendant's  promise  consisted  in  nothing  but 
the  plaintiff's  forbearance  to  sue)  establishes  that  such  a  consideration  is  in- 
sufficient, and  that  the  second  promise  is  within  the  statute.  Nor  is  merely 
a  receipt  .of  property  by  the  promisor  from  the  promisee  an  effective  con- 
sideration,' unless  the  title  becomes  absolutely  vested  in  the  promisor,  and, 
further,  not  unless  the  promisor  personally  obligates  himself  to  discharge  the 
debt,  and  not  merely  to  apply  the  assets  in  his  hands  to  its  extinguishment. 
Therefore  merely  putting  property  in  the  hands  of  another,  who  thereupon 
promises  the  creditor  to  apply  that  property  to  the  payment  of  the  debt,  is  not 
such  a  consideration  as  will  take  the  case  out  of  the  statute.  Ackley  v.  Par- 
menter,  OS  N.  Y.  425,  50  Am.  Rep.  603  (1885).  On  the  other  hand,  in  New 
York,  where  the  title  to  the  property  absolutely  passes  to  the  promisor,- who 
personally  obligates  himself  to  the  creditor  to  discharge  the  prior  deljt,  the 
promisor' is  held  liable,  "irrespective  of  the  liability  of  the  principal  debtor." 
Bank  v.  Chalmers,  144  N.  Y.  432,  30  N.  E.  331  (1,80.5). 

The  writer  submits,  however,  that  the  statute  should  apply  neither  whore 
the  defendant  becomes  liable  at  all  events,  because  there  the  defendant  is  a 
detttor,  nor  where  the  defendant  agrees  to  sell  and  account,  for  then  he  is 
^n  accountant.    See  note  to  Williams  v.  Leper,  p.  135. 


'if^  '-^ 


156  FORMATION.  (Part  1 

Rochester  property,  and  was  endeavoring  to  procure  the  consent  of  the 
stockholders  for  the  sale  to  him  of  such  theater,  to  the  end  that  he 
might  accept  the  offer  of  the  Detroit  gentleman  and  effect  a  sale  to  him, 
arid  then  appropriate  the  proceeds  to  the  payment  of  the  debts  of  the 
Rochester  theater  which  he  had  become  obligated  to  pay.    The  defend- 
ant, in  order  to  induce  the  plaintiff  to  sign  the  consent,  made  the  agree- 
ment  upon  which  this  action  is  founded.    The  defendant,  by  his  answer, 
denied  many  of  the  allegations  of  the  complaint,  and  then  alleged : 
"That  the  agreement  referred  to  in  the  complaint,  if  made  at  all, 
was  made  without  consideration,  and  the  same,  not  being  in  writing, 
was  void  by  the  statute  of  frauds  of  the  state  of  New  York."    Upon 
the  trial,  at  the  conclusion  of  the  plaintiff's  evidence,  the  defendant 
moved  for  a  nonsuit  upon  the  grounds  that  the  plaintiff  had  failed  to 
establish  a  cause  of  action,  that  the  contract  proven  was  made  abso- 
'^/,-W  ^"^^^y  without  any  consideration,  and  that  it  was  void  under  the  statute 
of  frauds.    The  motion  was  denied,  and  an  exception  was  taken.    The 
same  motion  was  renewed  at  the  conclusion  of  the  evidence,  v7Tfh  a 
•Ifke  ruling  and  exception. 
v^t^^ew^^dL       ^^^  ^^^  °^  ^^^  opinion  that  these  exceptions  do  not  raise  any  ques- 
*^tc.  6  JcT.t     ^^'^^  which^ThTs  court  has  the  power  to  review.     Ordinarily  the  ques- 
i^^'\fj^l^^^t  '^^o"  ^5  *^  whether  the  contract  is  void  under  the  statute  of  frauds  is  a 
^  ^  question  of  law,  which  may  be  reviewed  in  this  court  under  an  ex- 

ception taken  to  a  refusal  to  non-suit  upon  that  ground;  but  in  this 
case  the  question  is  dependent  upon  the  determination  of  a  fact  at  issue 
under  the  pleadings,  and  that  is  as  to  whether  there  was  a  consideration 
sufficient  to  sustain  the  contract.  If  there  was  a  new  and  distinct  con- 
sideration, moving  to  the  defendant  and  beneficial  to  him,  the  prornise 
to  pay  was  not  within  the  statute.  Leonard  v.  Vredenburgh,  8  Johns. 
29,  30,  0  Am.  Dec.  317 ;  Raabe  v.  Squier,  148  N.  Y.  81,  42  N.  E.  516. 
The^question,  therefore,  is  as  to  whether  there  was  a  new  and  distinct 
consideration  moving  to  the  defendant  out  of  which  he  expected  to 
derive  a  benefit.  This  called  for  a  determination  of  a  question  of 
fact,  which  has  been  settled  by  the  verdict  and  the  unanimous  affirm- 
ance of  the  judgment  entered  thereon  by  the  Appellate  Division. 
Szuchy  V.  Hillside  Coal  &  Iron  Co.,  150  N.  Y.  219,  44  N.  E.  974 ; 
Amherst  College  v.  Ritch,  151  N.  Y.  282,  45  N.  E.  876,  ST  L.  R.  A. 
305 ;  Ayres  v.  D.,  L.  &  W.  R.  R.  Co.,  158  N.  Y.  254,  53  N.  E.  22 ; 
Reed  v.  McCord,  160  N.  Y.  330,  54  N.  E.  737;  Cronin  v.  Lord,  IGl 
N.  Y.  90,  55  N.  E.  397 ;  Lewis  v.  Long  Island  R.  R.  Co.,  162  N.  Y. 
52,  56  N.  E.  548. 

In  submitting  the  case  to  the  jury  the  court  refused  to  charge  the  de- 
^r^y,  Pendant's  request  to  the  effect  that  it  was  not  necessary  that  every 
stockholder  should  give  his  consent  either  in  writing  or  orally  in  order 
lo  enable  the  trustees  to  make  a  valid  sale  of  the  property  of  the  cor- 
poration. Assuming,  for  the  purpose  of  this  case,  that  the  request  pre- 
sented a  sound  proposition  of  law,  we  are  of  the  opinion  that  no  error 
was  committed  by  the  refusal  of  the  court  to  so  charge,  for  the  reason 


;    ■tv^T^ 


J 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  157 

that  it  had  no  appHcation  to  the  facts  of  this  case.  The  plaintiff  had 
furnished  money  to  be  used  in  carrying"  on  the  business  of  the  corpora- 
tion. He  was  a  creditor  and  had  the  right  to  seek  indemnity  from  the 
assets  of  the  company.  The  defendant  was  seeking  a  transfer  of  the 
assets  of  the  company,  so  that  he  could  convert  the  same  into  money 
and  pay  off  the  debts  that  he  had  become  obligated  to  pay.  The  plain- 
tiff, byjiis_consent,  released  his  right  to  follow  the  assets  for  the  satis- 
faction of  his  claim,  and  accepted  the  promise  of  the  defendant  to  pay 
him  out  of  the  proceeds  of  the  sale.  The^  contemplated  purchaser 
refused  to  conipjete^ the  purchase  unless  the  claim  of  the  plaintiff  was 
settledor  his  consent  to  the  transfer  obtained.  The  sale  was  for 
$12,000.  The_transaction  was,  therefore,  beneficial  to  the  defendant, 
for  it  enabled  him  to  relieve  himself  of  a  greater  portion  of  the  obliga- 
tions assumed  by  him  to  the  other  creditors.  The  question  of  consid- 
eration to  support  the  agreement  was  not,  therefore,  dependent  solely 
upon  the  consent  of  the  plaintiff  as  stockholder.  ^^ 

The  other  exceptions  to  which  our  attention  has  been  called  were 
properly  disposed  of  by  the  Appellate  Division. 

The  judgment  should  be  affirmed,  with  costs. 

Parker,  C.  J.,  and  O'Brien,  Bartlett,  Vann,  Landon,  and  CuL- 
LEN,  JJ.,  concur. 

Judgment  affirmed. 


A 


BAILEY  V.  MARSHALL;. 

(Supreme  Court  of  Pennsylvania,  1896.    174  Pa.  603,  34  Atl.  326.) 

Assumpsit  on  a  v«;baj_ promise-    Before  Waddell,  P.  J.    The  facts 
appear  by  the  opinion  of  the  Supreme  Court.     The_CQ_urt  entered  a"* 
compulsory  non-suit^  which  it  subsequently  refused  to  take  off.  \  -*'^'''V 

Error  assigned  was  in  refusing  to  take  off  non-suit.  ^ 

Mr.  Justice  Dean.  Whether  the  debt  in  controversy  be  that  of  him  P^^.  yjl^iry^ 
who  has  assumed  to  pay  it,  or  of  another,  is  in  most  cases  a  question  j^^i^^^Cr")  t;  ^ 
of  fact.  There  can  be^o  precise  legal  definition  of  liability  under  the 
act  of  26th  of  April,  1855  (P.  L.  308),  which  will  determine  in  all  Cases, 
perhaps  in  but  very  few,  the  answerability  of  him  who  promises  to  pay. 
The  act  says  :  "No  action  shall  be  brought  whereby  to  charge  *  *  * 
the  defendant  upon  any  special  promise  to  answer  for  the  debt  or 
default  of  another  unless  the  agreement  *  *  *  shall  be  in  writing." 
This  is  clearly  meant  to  relieve  an  alleged  guarantor  or  surety ;  it  was 
never  intended  to  relieve  him  who  had  a  personal  beneficial  interest  in 
the  assumption.  There  cannot  be  a  better  construction  of  this  statute 
than  in  Nugent  v.  Wolfe,  111  Pa.  471,  4  Atl.  15,  56  Am.  Rep.  291, 
where  we  held  the  present  Chief  Justice  rendering  the  opinion,  that: 
"It jsjiiffiGultrif-not  impossible,  to  formulate  a  rule,  by  which  to  deter- 
mine in  every  case,  where  a  promise  relating  to  the  debt  or  liability 
of  a  third  person  is  or  is  not  within  the  statute ;   but  as  a  general  rule. 


158  FoiiMATiON.  (Part  1 

when  the  leading  object  of  the  promise  or  agreement  is  to  become 
sj^uarantor  or  surety  to  the  promisee  for  a  debt,  for  which  a  third  party 
is  and  continues  to  be  primarily  liable,  the  agreement,  whether  made 
before  or  after  or  at  the  time  with  the  promise  of  the  principal,  is 
within  the  statute,  and  not  binding  unless  evidenced  by  writing.  On 
the  other  hand,  when  the  leading  object  of  the  promisar.is  to-subserve 
some  interest  or  purpose  of  his  own,  notwithstanding  the  effect  is  to 
pay,  or  discharge  the  debt  of  another,  his  promise  is  not  withiri~tlie' 
sktute." 
Y^  Applying  these  principles  to  the  facts  in  the  case  before  us,  to  what 
conclusion  do  they  impel  us?  In  Septeniber,  1892^ Mary  E.  Bailey  held 
a  note  against  Davis  Pennock  in  sum  of  $1^000,  with  power  of  attorney 
to  confess  judgment.  At  this  time,  Marshall,  the  defendant,  entered 
a  judgment  against  Pennock  for  $5,000,  issued  execution,  and  levied 
on  all  the  real  and  personal  property  of  Pennock.  The  amount  actually 
due  and  payable  on  his  $5,000  judgrnent  did  not  exceed,  as  appeared 
afterwards  from  his  own  statement,  $200.  The  plaintiff  was  standing 
there  with  her  judgment  ready  for  entry,  on  which  she  could  immedi- 
ately issue  execution,  seize  and  bid  upon  the  property.  Just  at  this 
juncture,  Marshall,  knowing  her  rights,  sent  for  her  and  said :  "I  will 
stand  by  thee  and  see  thee  is  paid  every  cent  if  thee  says  nothing  and 
does  nothing."  She  accepted  his  proposition,  neither  entered  her  judg- 
ment, nor  took  any  steps  to  collect  it.  The  sheriff's  sale  went  on,  and 
Marshall  bought  the  larger  part  of  the  real  and  personal  property,  and 
was  credited  on  his  purchase  with  the  amount  of  his  own  judgment. 
T  fr  ^v  )  r  We  notice  by  the  testimony  that  Marshall  denies  the  statement  of 
!  [  I  Mrs.  Bailey.  We  express  no  opinion  as  to  the  credibility  of  the  witness. 
The  question  is,  if  the  jury  believed  Mrs.  Bailey's  testimony,  would 
the  court  have  been  warranted  in  granting  the  compulsory  nonsuit 
on  the  ground  that  the  promise  was  to  answer  for  the  debt  or  defaulT" 
of  another?  What  was  the  leading  object  of  Alarshall  in  making  the' 
promise  by  which  he  lured  her  to  inaction  ?'~CIearly,  it  was  not  to  pay 
Pennock's  debt,  nor  Mrs.  Bailey's  claim.  His  sole  purpose  was_to 
silence  her  as  an  antagonistic  bidder  at  the  sheriff's  sale.  This  was  no 
benefit  to  Pennock,  the  debtor.  It  was  an  a-hantaq-e  to~Marshall, 
andne  reaped  the  full  fruits  of  it.  She  was  silenced  by  Ifis  promise, 
and  he  got  the  property  at  his  own  figure.  His  leading  object  was  to 
subserve  his  own  interest;  in  fact,  he  had  no  other  object.  Having  ac- 
complished it,  he  is  now  called  upon  to  answer,  not  for  Pennock's  debt, 
but  for  his  own,  and,  if  ]\Irs.  Bailey  be  believed,  he  ought  to  pay. 

The  decree  of  the  court  below  entering  compulsory  non-suit  is  re- 
versed, and  procedendo  awarded. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FKOM   OTHER   CONTRACTS.  159 


GUILD  &  CO.  V.  CONRAD. 

(Court  of  Appeal,  on  Appeal  from  the  Queen's  Bench  Division.     [1894]  2 

Q.  B.  885.) 

LiNDLEY,  L.  J.^^  This  case  is  one  of  considerable  difificulty  and  very 
near  the  Hne.  The  question  is,  What  is  the  nature  of  the  promise  which 
the  defendant  made  to  the  plaintiff?  It  appears  that  the  real  plain-A  ^^^.''^T 
tiff,  Mr.  Binney,  is  a  merchant  who  was  in  correspondence  with  a 
Demerara  firm  of  Conrad,  Wakefield  &  Co.,  one  of  the  partners  in 
which  was  a  son  of  the  defendant ;  and  by  a  letter  of  June,  1888,  the 
defendant  agreed  that,  if  the  plaintiff  would  give  credit  to  tire,  Dem- 
erSfa  hrm  to  the  extent  of  i5,000.,  the  defendant  would  indemnify  the 
plamtiff  to  that  extent.  There  is  no  question  that  that  was  a  guar- 
antee in  the  proper  sense  of  the  term;  that  is  to  say,  it  was  an  under- 
taking by  the  defendant  to  be  responsible  for  the  Demerara  firm  for 
£5,000.  This  was  in  writing:  but  by  a-venbaLffliarantee  the  amount 
was  enlarged  afterwards,  in  March.  1891,  to  £6,000.  The  plaintiff 
claimed  that  enlarged  amount  under  this  verbal  guarantee ;  but  the 
learned  judge  below  has  decided  this  claim  in  favor  of  the  defendant, 
and  no  appeal  has  been  brought  in  respect  of  that  decision.  As  time 
went  on,  the  Demerara  firm  got  overdrawn ;  and  at  last,  in  Decem- 
ber, 1891,  the  plaintiff  was  so  reluctant  to  accept  their  bills  that  he 
eventually  declined  to  do  so ;  and  an  interview  then  took  place  between 
the  plaintiff  and  defendant  and  Wakefield,  a  member  of  the  Demerara 
firm.  This  interview  took  place  on  December  31,  1891,  when  bills  of 
that  firm  for  £5,950.  were  about  to  become  due,  but  which  the  plain- 
tiff would  not  accept;  and  in  the  following  January  a  second  inter- 
view took  place  in  consequence  of  some  further  bills  to  the  amount  of 
£5,280.  One  of  the  difficult  points  in  this  case  is  to  find  out  what 
took  place  at  those  interviews.  The  promises  said  to  have  been  made 
were  verbal  only,  Wakefield,  one  of  the  parties  present  at  the  inter- 
views, is  dead.  The  testimony  of  the  plaintiff  and  the  defendant  upon 
the  subject  differ  entirely.  The  plaintiff's  version  is  to  the  effect  that 
the  defendant  undertook  to  indemnify  Eim  against  those  bills  if  he, 
the'plaininf,  would  accept  them.  The  defendant's  version  is  that-he 
did  not  "gTve  any  such  undertaking;  and  that  was  the  controversy 
which  was  before  the  jury.  The  jury  has  decided  that  controversy 
in  favor  of  the  plaintiff.  They  have  found,  after  hearing  the  evidence,, 
tha^=tile  defendant  is  wrong ;  that  he  did  in  fact  make  a  promise  to 
find  the  funds  for  both  batches  of  bills,  and  to  indenmify  the  plain- 
tiff against  them. 

I  do  not  now  consider  the  question  of  the  form  of  the  promise — 
whether  it  imposed  a  primary  or  a  secondary  liability.  I  pass  that  by 
for  the  moment.    But  the  struggle  on  the  main  point  resulted  in  favor    V 

2  8  The  statement  of  facts  is  omitted  in  consequence  of  the  full  statement, 
in  the  opinion. 


IGO  FORMATION.  (Part  1 

bi^inft/  of  the  plaintiff.  The  jury  were  then  discharged,  and  it  was  arranged 
that  any  other  questions  which  might  arise  in  the  case  should  be  left 
to  the  judge.  The  judge  then  addressed  his  mind  to  the  question 
whether  the  promise  found  by  the  jury  to  have  been  made  by  the  de- 
fendant was  in  such  a  shape  that  the  statute  of  frauds  rendered  it 
nugatory  unless  it  was  in  writing,  or  whether  it  was  such  that  the 
statute  of  frauds  did  not  apply  to  it.  The  question  whether  that  was 
brought  before  the  jury  seems  a  little  uncertain.  The  learned  judge, 
having  seen  the  witnesses  and  read  the  correspondence,  came  to  the  con- 
clusFonlhat  the  promise  was  to  the  effect  I  will  state  presently.  I  will 
read  the  learned  judge's  own  words.  At  the  end  of  his  judgment  he 
says  the  defendant's  promise  "was  not  a  contract  to  pay  if  the  foreign 
firm  did  not  pay,  because  there  was  no  expectation  at  that  time  that 
the  foreign  firm  would  be  able  to  pay.  The  contract  was  to  find  funds 
to  enable  the  plaintiff  to  meet  these  acceptances."  Now,  whether  the 
,jury  meant  that  or  not  is  doubtful.  The  question  is  one  of  fact,  and 
if  it  was  not  decided  by  the  jury  then  it  was  left  to  the  finding  of  the 
judge,  and  I  have  read  what  his  finding  was.  Ought  we  to  differ  from 
that  finding?  We  are  urged  to  say  that  the  judge  was  wrong  in  his 
finding;  that  the  evidence  did  not  come  up  to  that;  and  that  the  de- 
fendant's promise  was  merely  a  contract  to  pay  the  plaintiff  if  the 
Demerara  firm  did  not  pay.  That,  in  my  opinion,  is  a  difficult  ques- 
tion. The  evidence  is  loose  unquestionably;  but  I  cannot  bring  my 
mind  to  say  that  it  cannot  bear  the  construction  which  the  learned 
judge  put  upon  it.  The  nature  of  the  promise  is  all-important;  be- 
cause, if  it  was  a  promise  to  pay  if  the  Demerara  firm  did  not  pay.Jtben 
it  is  void  under  the  statute  of  frauds  as  not  being  in  writing.  Butjf, 
on  the  other  hand,  it  was  a  promise  to  put  the  plaintiff  in  funds  in 
any  event,  then  it  is  not  such  a  promise  as  is  within  the  statute  of 
frauds. 

~  I  think  that  the  learned  judge  has  taken  the  true  view,  though  it  is 
very  near  the  line.  I  cannot  help  thinking  that  the  true  result  of  those 
interviews  was  this — that  the  defendant  did  promise  the  plaintiff  that, 
if  he  would  accept  those  batches  of  bills,  he,  the  defendant,  would  take 
care  that  they  should  be  met,  and  that  he  himself  would  provide  funds 
to  meet  them ;  and  it  was  on  the  faith  of  that  promise  tliat  the  plain- 
ly tiff  accepted  those  bills.  If  this  is  the  real  contract,  and  if  the  learned 
w.^.'-^-"-  ''^  judge  is  right  in  saying  that  the  contract  was  not  a  contract  to  pay  if 
the  Demerara  firm  did  not  pay,  but  was  a  contract  to  pay  in  any  event, 
then,  in  my  opinion,  the  authorities  show  that  the  statute  of  frauds 
does  not  apply.  The  authorities  are  Thomas  v.  Cook,  8  B.  &  C.  'J  .-8, 
and  Wildes  v.  Dudlow,  Law  Rep.  19  Eq.  198.  Thomas  v.  Cook  ap- 
pears to  me  to  be  undistinguishable  from  this  case,  if  the  facts  here 
are  such  as  I  take  them  to  be.  There  a  man  named  Cook  and  a  man 
named  Morris  had  been  in  partnership ;  and  on  the  dissolution  of  the 
partnership  it  was  agreed  that  Cook  should  pay  the  partnership  debts, 
and  it  was  also  agreed  that  a  bond  of  indemnity,  executed  by  W.  Cook, 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  161 

since  deceased,  and  two  other  persons,  should  be  given  to  Morris  to 
save  him  harmless  from  the  payment  of  those  debts.  It  being  neces- 
sary that  two  sureties  should  be  found  to  join  in  the  bond,  the  plaintiff 
agreed  to  become  one  of  the  sureties  on  a  promise  by  the  defendant 
to  indemnify  him,  the  plaintiff,  from  all  liability  by  reason  of  his  join- 
ing in  the  bond.  The  decision  was  as  follows:  After  pointing  out 
that  jMorris  was  a  creditor,  Bayley,  J.,  said  this :  "Here  the  bond  was 
given  to  Morris  as  the  creditor;  but  the  promise  in  question  was  not 
made  to  him.  A  promise  to  him  would  have  been  to  answer  for 
the  default  of  the  debtor.  But  it  being  necessary  for  W.  Cook,  since 
deceased,  to  find  sureties,  the  defendant  applied  to  the  plaintiff  to  join 
him  in  the  bond  and  undertook  to  save  him  harmless.  A  promise  to 
indemnify  does  Jiot,-  as  it  appears  to  me,  fall  within  either  the  w^rds 
or  the  policy  of  the  statute  of  frauds."  Then  Parke,  J.,  said :  "This 
was  not  a  promise  to  answer  for  the  debt,  default,  or  miscarriage  of 
another  person,  but  an  original  contract  between  these  parties,  that  the 
plaintiffs  should  be  indemnified  against  the  bond.  If  the  plaintiff,  at 
the  request  of  the  defendant,  had  paid  money  to  a  third  person,  a 
promise  to  repay  it  need  not  have  been  in  writing,  and  this  case  is  in 
substance  the  same."  )(  ^Jr-.'^hS  <■■'/■.')  -r  v, 

I  need  not  refer  to  other  cases  which  have  followed  that ;  but  I  must  j  LY^^.ci/>  f*  f 
notice  the  argument  which  has  been  addressed  to  us  that  Thomas  v.  ./A  L  f  *■ 
Cook,  8  B.  &  C.  728,  is  bad  law.  Unquestionably  it  was  not  followed  .  ^  ' 
by  the  Court  of  Queen's  Bench  in  Green  v.  Cresswell,  10  Ad.  &  E. 
453,  and  Cripps  v.  Hartnoll,  31  L.  J.  (N.  S.)  Q.  B.  150,  2  B.  &  S. 
697 ;  but,  notwithstanding  the  criticism  of  the  learned  judges  in  those 
cases,  Thomas  v.  Cook,  supra,  was  set  on  its  feet  again  by  the  decision 
of  the  Court  of  Exchequer  Chamber  in  the  latter  case,  32  L.  J.  (N.  S.) 
Q.  B.  381,  4  B.  &  ,S.  414,  and  it  has  since  held  its  ground,  and  after 
the  decision  in  Eastwood  v.  Kenyon,  11  Ad.  &  E.  438,  it  is  ijupossible 
to  hold  that  a  promise  made  by  the  defendant  to  the  plaintiff  to  indem,- 
nifyjhe  plaintiff  against  a  debt  due  from  him  to  a  third  person  is  witlv 
in  the  statute,  and  therefore  required  to  be  in  writing.  In  my  opin- 
ionjhejiecision  in  Thomas  v.  Cook,  supra,  was  right,  and  it  is  treated 
as  good  law  in  Hargreaves  v.  Parsons,  13  M.  &  W.  561,  and  it  is  sup- 
ported in  Reader  v.  Kingham,  13  C.  B.  (N.  S.)  344.  The  modern  cases 
of  Wildes  V.  Dudlow,  Law  Rep.  19  Eq.  198,  and  In  re  Bolton  (1892) 
W.  N.  163,  8  Times  L.  R.  668,  are  equally  good  law.  Such  being  the 
case,  it  follows  that  the  main  defense  here — namely,  that  the  promise 
is  bad  as  not  being  in  writing  within  the  statute  of  frauds — ^breaks 
down. 

[The  Lord  Justice  then  dealt  with  certain  other  points  urged  on 
behalf  of  the  appellant  upon  the  facts  of  the  case,  and  held  that  those 
points  failed.    The  Lord  Justice  continued :]  V' 

The  main  questions  are,  What  was  the  promise?     And,  secondly, 
whether  the  promise  was  such  as  is  required  by  the  statute  of  frauds 
Hen. Sub. — 11 


102  FORMATION.  (Part  1 

to  be  in  writing.    The  promise  is,  in  m}^  opinion,  clear;  and  the  court 
below  has  found  that  the  promise  was  a  promise  to  indemnify,  and 
therefore  not  within  the  statute  of  frauds.     That  decision  is,  in  my 
opinion,  right,  and  therefore  the  appeal  must  be  dismissed.^' 
Appeal  dismissed.^* 


III.  Promises  Made  upon  the  Extinction  of  the  Original 
Debt — Novations 

ROE  V.  HAUGH. 

(Court  of  Exchequer,  1703.     1  Salk,  29.) 

A.  was  indebted  to  B.  and  C.  in  consideratione  quod  B.  accipere 
vellet  ipsum  C.  fore  debitorem  ipsius  B.  pro  viginti  libris  debit,  eidem 
B.  per  A.  in  vice  &  loco  ejusdem  A.  super  se  assumpsit,  &  eidem  B. 
promisit,  quo  ipse  easdem  20  L.  eidem  B.  solvere  vellet.  Whereupon 
B. '^executor  brought  an  assumpsit  versus  C.  averring  that  B.  accepted 
hrni  fore  ^ieblt'oFenT  ipsius  B.  without  saying  that  A,  was'dfschafged ; 
and  on  non  assumpsit,  verdict,  and  judgment  pro  quer.  and  judgment 
affirmed  in  Cam.  Scaccar.  where  they  held,  it  being  after  verdict  they 
ought  to  do  what  they  could  to  help  it,  and  therefore  they  would  not 
take  it  as  a  promise  only  on  the  part  of  C.  because  as  such  it  could 
not  bind,  except  A.  was  discharged ;  but  they  construed  it  as  a  Trratual 
promise,  viz. :  That  C.  promised  B.  to  pay  the  debt,  and  B.  promised 
in  consideratione  inde  to  discharge  A.  By  which  means,  if  B.  sues 
A.  he  subjects  himself  to  an  action  of  debt  for  the  breach  of  his- 
promise. 

2  9  Lopes  and  Davey,  L.  J  J.,  delivered  concurring  opinions,  which  are  omit- 
ted. 

8  0  In_EQgland,  the  doctrine  of  the  principal  case  had  been  previously  rec- 
Qgnized^.in  Adams  v.  Dansey,  6  Bingham.  .50<>  (1830). 

Accord  (on  point  that  a  promise  to  indemnify  is  not  within  the  statute): 
Conliey  v.  Hopkins.  17  Johns.  (X.  Y.)  113  (1S19) ;  Cbapin  v.  Merrill,  4  Wend. 
(N.  T.)  C>57  (1830);  Tighe  v.  Morrison.  116  N.  Y.  263.  22  N.  E.-164,  5  L.  R. 
A.  617  (1889) ;  Sweet  v.  Colleton,  96  Mich.  391,  55  N.  W.  984  (1893) ;  Garner 
V.  Hudffins  et  al..  46  Mo.  399.  2  Am.  Rep.  .^20  fl870). 

Accord:  Wills  v.  Shinn,  42  N.  J.  Law,  138  (1880). 

In  Wilson  v.  Ilendee,  74  N.  J.  Law.  640,  66  Atl.  413  (1907),  a  promise  bj_one 
indorser  to  another  to  save  the  latter  harmless,  where  the  maker  of  the  note 
gave  security  to  protect  the  defendant,  was  held  not  to  be  withlA  the  statute. 
Bnt  see  Wilkie  v.  Marshall,  77  X.  J.  Law.  272,  72  Atl.  30  (1909). 

In  Pennsylvania,  it  is.  Nugent  v.  Wolfe,  111  Pa.  471,  4  Atl.  15,  56  Am. 
Rep.  291  (1886). 

Accord:  Chapin  v.  Lapham.  20  Pick.  (Mass.)  467  (1838). 

In  Kansas,  semble  not.     Patton  v.  Mills.  21  Kan.  163  (1878). 

In  Illinois,  it  is  not.    Resseter  v.  Waterman.  151  111.  169,  37  X.  E.  875  (1894). 

Also  in  Hartley  v.  Sandford.  66  N.  J.  Law,  627,  50  Atl.  454.  55  L.  R.  A.  206 
(1901). 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER   CONTRACTS.  163 

It  was_affioned_byjthe^ opinion  of  four  judges  against  three,  viz. : 
Treby,  Lechmere,  Nevil,  and  Powys,  to  affirm;  and  Ward,  PowEi,!*, 
and  Blencoe,  to  reverse.f 


MERIDEN  BRITANNIA  CO.  v.  ZINGSEN. 

(Commission  of  Appeals  of  New  York,  1872.    48  N.  Y.  247,  8  Am.  Rep.  549.) 

y  Appeal  from  judgment  of  the  ocucral  Term  of  the  Superior  Court 
of  the  City  of  New  York,  affirming  a' -judgment  entered  upon  the  re- 
port of  referee  in  favor  of  the  plaintiff. 

This^actionJ^brought  to  recover  a  balance  claimed  to  be  due  upon 
a  contract  bv~whicK  defendant  assumed  to  pay  the  debt  of  a  third 
person. 

The  defense  is  that  the  agreement  is  void  under  the  statute  of  frauds,.^ 
Found  among  other  things  as  follows:  p, 

On^'e  31st  day  of  January,  1861,  one  L.  H.  Mattison  was  indebted 
to  the  plaintiff  in  the  sum  of  $1,580.07,  which  indebtedness  the  said 
Mattison  was  unable  to  pay. 

A_XerbaX.  agreement  was  |3ade_between  said  Mattison  and  the  de- 
fendant, Godfrey  N.  Zingsen,  that  li  Zingsen  would  settle  said  debt 
wifh~pTamtiff,  so  that  Mattison  could  be  released,  Mattison  would  pay 
said  Zingsen  the  amount  thereof  as  follows,  viz.,  $1,000  cash,  and  the 
balance  in  notes  without  indorsement. 

An  agreement  was  thereupon  made  in  writing  between  said  plain- 
tiff and  said  defendant  as  follows,  viz.: 

"New  York,  January  31,  1861. 

"I-  agree  to  furnish  to  the  Meriden  Manufacturing  Company  an 
assortment  of  plated  forks  and  spoons  per  L.  H.  Mattison's  price  list, 
at  70  per  cent,  discount,  to  settle  claim  against  L.  H.  Mattison,  to  be 
delivered  in  months  of  February  and  March.  Oval  tip'd  and  Olive  not 
to  be  ordered. 

"The  plain  and  tip'd  goods  not  to  exceed  ^  of  the  amount.  The 
spoons  and  forks  to  be  silver  plated  like  sample  shown. 

"[Signed]     G.  N.  Zingsen." 

"This  is  to  certify  that  we  agree  to  give  our  claim  against  L.  H. 
Mattison  up  to  G.  N.  Zingsen  as  soon  as  he  has  delivered  to  us  the 
amount  at  70  per  cent,  discount,  in  spoons  and  forks  as  per  agreement. 

"[Signed]      Meriden  Britannia  Company, 
"H.  C.  Wilcox." 

H.  C.  Wilcox  was  the  agent  of  the  company.  The  said  written  in- 
struments were  made  and  delivered  at  one  and  the  same  time. 

t  Accord:  Bird  v.  Gammon.  3  Bing.  N.  C.  883  (1837). 

"The  partj'  who  alleges  such  agreement  for  the  discharge  of  the  old  debt  Is 
bound  to  prove  a  distinct  agreement  to  that  effect." — Staples  v.  Davis,  75  N. 
H.  383,  74  Atl.  872  (1909). 

See  the  essay  on  Novation  by  Professor  Ames  in  G  H.  L.  R.  184. 


164  FORMATION.  (Part  1 

About  the  same  date,  Mattison,  according  to  his  agreement  with 
defendant,  paid  him  $1,000,  and  gave  to  him  notes,  payable  at  various 
dates,  amounting  in  the  aggregate  to  $594.50. 

On  or  about  the  same  date  the  plaintiff  released  Mattison  from  the 
said  claim  against  him.  Defendant  had  delivered  to  the  plaintiff,  pur- 
suant to  the  agreement,  plated  ware  to  the  amount  of  $l,225.19.;_and 
a  balance  amounting  to  $354.88  remained  due  to  the  plaintiff,  for  which 
sum,  with  interest,  the  referee  ordered  judgment  in  favor  of^  the 
plaintiff. 

Earl,  C.  There  are  two  theories,  upon  either  of  which  this  judg- 
ment can  be  upheld.  We  may  treat  the  defendant's  agreement  as  one 
to  pay  and  discharge  the  debt  of  Mattison. 

This  agreement  the  defendant  claims  to  be  void  under  the  statute 
of  frauds,  which  provides  that  "every  special  promise  to  answer  for 
the  debt,  default  or  miscarriage  of  another  person"  shall  be  void,  un- 
less such  promise  be  in  writing,  expressing  the  consideration  thereof 
and  subscribed  by  the  promisor. 

It  is  not  every  verbal  promise  to  pay  the  debt  of  another  that  is  void 
within  this  statute.  There  are  many  exceptions,  as  disclosed  by  the 
numerous  cases  upon  the  subject. 

A  promise  to  pay  the  debt  of  a  third  person  is  not  within  the  statute, 
where  it  is  agreed  between  the  parties,  the  creditor,  debtor  and  prom- 
isor, that  the  debt  shall  be  extinguished  and  the  creditor  shall  look  only 
to  the  promisor  for  payment  upon  the  new  promise.  In  such  case  no 
other  person  remains  liable  for  the  debt  but  the  promisor,  and  his  un- 
dertaking is  not  collateral  but  original  to  pay  his  own  debt,  and  not  to 
answer  for  the  debt  of  another.  There  is  then  what  is  known  in  the 
civil  law  as  a  delegation,  and  the  creditor  takes  a  new  debtor,  who  is 
called  the  delegated  debtor. 

In  Anstey  v.  Marden,  4  Bosanquet  &  Puller,  124,  Chief_Justice 
Mansfield  says  that  he  did  not  see  "how  one  person  could  undertake 
for  the  debt  of  another,  when  tlie  debt  for  which  he  was  supposed^to 
undertake  was  discharged  by  the  very  bargain."  In  Mallory  v.  Gillett, 
21  N.  Y.  412,  Chief  Judge  Comstock,  after  a  very  able  review  of  many 
cases  arising  under  the  statute  of  frauds,  gives  a  classification  of  the 
cases  not  within  the  statute,  and  of  such  cases  are  these :  "When  the 
original  debt  becomes  extinguished,  and  the  creditor  has  only  the  new 
promise  to  rely  upon ;  for  example,  when  such  new  undertaking  is  ac- 
cepted as  a  substitute  for  the  original  demand."  In  Throop  on  the 
Statute  of  Frauds,  at  pages  318,  322,  370,  374,  will  be  found  a  very 
able  and  discriminating  review  of  the  cases  upon  this  subject,  and  the 
author  lays  down  these  rules:  "A  promise  to  assume  an  antecedent 
liability  of  a  third  person  is  without  the  statute,  if  the  third  person's 
liability  had  become  extinct  at  the  time  when  that  of  the  promisor  came 
into  existence,  or  if  the  third  person's  antecedent  liability  to  the 
promisee  is  discharged  in  consideration  of  its  assumption  by  the 
promisor." 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  165 

And,  in  this  case,  it  was  distinctly  agreed  between  the  three  parties — 
the  creditor,  debtor  and  promisor — that  in  consideration  that  the  father 
of  the  debtor  would  pay  the  promisor  $1,000  in  money,  and  the  debtor 
give  him  his  own  notes  for  the  balance,  the  promisor  would  pay  the 
claim  of  the  creditor  in  plated  ware,  in  the  months  of  February  and 
March  thereafter,  and  the  creditor  should  release  the  debtor.  It  was 
obviously  contemplated  by  the  parties  that  all  this  should  be  done  at 
the  same  time.  In  pursuance  of  this  agreement  the  promisor  executed 
the  written  undertaking  to  the  creditor,  and  either  then  or  soon  after, 
the  creditor  released  the  debtor,  and  the  $1,000  was  paid  and  the 
debtor's  notes  given  to  the  promisor,  and  the  notes  were  subsequently 
paid.  Hence  this  case  is  clearly  within  the  rules  above  stated,  and  the 
promise  of  the  defendant  is  not  within  the  statute  of  frauds.  But  if  /\9y>^(^^--r^' 
this  is  not  the  true  theory  upon  which  this  case  should  be  disposed  of,  P'-^Mf  l/y 
then  there  is  another  theory,  equally  fatal  to  the  defense  of  the  de-  H'^^f<&iu^  ^ 
f  endant.  A-fc'  oj^oc^y 

The  two  instruments  dated  January  31,  18G1,  executed  at  the  same 
time^relating  to  the  same  subject-matter,  must  be  construed  together 
as  if  they  constituted  but  one  instrument;  and  then,  as  claimed  bv  the 
defendant,  they  show  a  sale  of  the  plaintifif's  demand  against  Mattison 
to_the  defendant  in  consideration  of  the  plated  ware  to  be  delivered  to 
the  plaintiff  by  the  defendant.  Upon  this  assumption,  the  defendant 
claims  that  the  plaintiff  must  be  defeated,  because  he  has  never  assign- 
ed or  offered  to  assign  his  demand  to  the  defendant,  and  has  placed  it 
out  of  his  power  to  do  so,  as  he  released  Mattison. 

According  to  this  construction  of  the  agreement  between  the  parties, 
the  defendant  was  to  deliver  the  plated  ware  from  time  to  time  during 
the  months  of  February  and  March,  and  as  soon  as  he  had  delivered 
the  whole  of  it  the  plaintiff  was  to  give  up  to  him  his  demand  against 
Mattison.  They  were  not  dependent  agreements.  Performance  on 
one  part  was  not  a  condition  precedent  to  performance  on  the  other. 
The  plaintiff  was  clearly  not  bound  as  a  condition  precedent  to  assign 
the  claim  before  the  defendant  was  bound  to  deliver  the  plated  ware. 
He  was  not  bound  to  assign  it  until  after  the  defendant  had  fully 
performed  on  his  part.  Hence,  this  case  is  fully  within  the  rule  laid 
down  in  Morris  v.  Sliter,  1  Denio,  59.  In  that  case  the  action  was  in 
covenant  by  the  vendor  for  the  purchase  money  upon  a  contract  for  the 
sale  of  land.  The  purchaser  was  to  pay  the  price  of  the  land  in  five 
years  from  the  date,  with  interest  annually,  and  to  pay  the  taxes  on 
the  land,  and  the  vendor  covenanted  that  "after"  the  purchaser  "shall 
have  paid  the  above  sums  of  principal  and  interest,  at  the  time  and  in 
the  manner  above  specified,  and  shall  have  performed  the  agreement 
above  mentioned,"  he  would  sell  and  convey  the  land.  Chief  Justice 
Bronson  says :  "Where  it  appears,  from  the  terms  of  the  agreement  or 
the  nature  of  the  case,  that  the  things  to  be  done  were  not  intended 
to  be  concurrent  acts,  but  the  performance  of  one  party  was  to  precede 
that  of  the  other,  then  he  who  was  to  do  the  first  act  may  be  sued. 


IGG  FORMATION.  (Part  1 

although  nothing  has  been  done  or  offered  by  the  other  party.  He  has 
not  made  perfornianceby  the  other  party  a  condition  precedent  to  his 
liability,  but  lias  trusted  to  a  remedy  by  action  on  the  agreement. 

Here  the  defendant,  after  he  had  performed,  could  have  sued  the 
plaintiff  upon  his  agreement  to  assign,  and  could  have  recovered  such 
damages  as  he  could  have  proved.  And  the  plaintiff  having  put  it 
out  of  his  power  to  assign  the  claim,  the  defendant  could  probably 
have  set  up  his  claim  for  damages  as  a  counterclaim  in  this  action 
But  what  damages  has  the  defendant  sustained?  What  possible  good 
could  an  assignment  do  him?  The  referee  has  found  that  Mattison  has 
fully  paid  to  the  defendant  the  whole  amount  of  the  claim.  And  hence, 
the  discharge  of  the  claim  by  the  plaintiff  can  work  no  possible  harm 
to  the  defendant.  And  the  discharge  could  work  no  harm,  even  J f 
Mattison  had  not  paid  the  defendant,  because,  before  the  discbarge 
was  executed,  Mattison  became  obligated  to  pay  the  amount  directly  to 
the  defendant,  and  that  obligation  the  plaintiff  never,  in  any  way, 
interfered  with  or  discharged. 

Hence,  upon  the  whole  case  I  can  see  no  reason  to  doubt  that  the 
judgment  below  was  fully  authorized  by  the  facts  of  the  case,  and  it 
should  be  affirmed,  with  costs.    All  concur. 

Judgment  affirmed. ^^ 

Accorfl:    Booth  v.  Eishmie.  60  N.  T.  2P,S.  19  Am.  Rep.  171  flST.T) :    TTrqu- 


/- 


hart  V.  Bravton,  12  R.  I.  169  (1878);  Edenfield  v.  Canady.  60  Ga.  456  (1878) 
Howell  V.  Field.  70  Ga.  592  (18S3) ;  Welch  v.  Kenny.  49  Cal.  49  (1874) ;  Helms 
V.  Kearns,  40  Ind.  124  (1872);  Lee  v.  Porter.  18  Mo.  App.  377  (ISS"*)  :  Pro- 
venchee  v.  Piper.  68  N.  H.  31.  36  Atl.  552  (1894) ;  McT^aren  v.  Hutchinson. 
22  Cal.  187.  83  Am.  Dec.  59  (1863) :  Howell  v.  Harvey.  65  W.  Va.  310.  64  S. 
E.  249.  22  L.  R.  A.  (N.  S.)  1077  (1909) ;  Raabe  v.  Squier,  148  N.  Y.  81,  42  N. 
E.  516  (180.")  :    Clifford  v.  Luhring,  69  111.  401  (1873). 

Compare  Mannetti  v.  Doese.  48  App.  Div.  .567.  62  N.  Y.  Supp.  918  (1900). 

Wliere^ii  partially  executed  contract  between  the  plamtiff  and  a  third  per- 
sou  has  been  rescinded  by  the  plaintiff,  an  absolute  parol  promise  of  the  ae^ 
fendant  will  render  huu  liable  to  pay  for  the  completion  of  that  coutracfTT^y 
the  plaintiff.  Thus,  where  a  contractor  named  Dickey  contracted  with  Ttmn- 
ty  commissioners  to  erect  a  courthouse,  and  one  Slagle  to  manufacture  300,000 
bricks  for  Dickey,  and  Slagle,  the  plaintiff,  refused  to  allow  Dickey  any 
more  bricks  without  money,  whereupon  an  agreement  was  made  with  the 
commissioners  that  they  would  pay  for  future  delivery  if  Slagle  would  con- 
tinue to  deliver  bricks,  the  promise  ^as  held  not  to  be  withifi  the  statute. 
Jefferson  County  v.  Slagle,  66  Pa  202  (1871) ;  Merriman  v.  McManus,  102 
Pa.  102  (1883). 

Compare  Brown  v.  Weber,  38  N.  Y.  187  (1868). 

OnJJie  other  hand,  where  the  prior  partially  executed  contract  is  not  re- 
scinded, but  the  plaintiff,  after  a  parol  promise  of  the  defendant,  "Keep  on 
to  work  just  as  you  have  been  to  work;  we  will  see  you  paid."  work&-for 
and  is  paid  bv  a  third  party,  the  defendant  is  not  liable.  Lewis  v.  Lumber 
&  Mfg.  Co.,  156  Pa.  217,  27  Atl.  20  (1893). 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  161 


IV.  Assignment  of  ths  Original  Debt  by  Promisee  or  Creditor 

ISRAEL  V.  DOUGLAS  et  al. 
(Court  of  Common  Pleas,  Easter  Term,  1789.     1  H.  Bl.  239.) 

The  material  facts  of  this  case  were  as  follows : 

The  defendants,  who  were  partners,  were  indebted  to  one  Delvalle, 
a  broker,  in  £64:.  9s.  for  brokerage,  and  Delvalle  was  indebted  to  the 
plamtift  in  £40.  on  a  promissory  note.  Delvalle  afterwards  applied  to 
the  plaintiff,  to  lend  him  a  further  sum,  which  the  plaintiff  refused  to 
advance  without  security ;  whereupon  Delvalle  gave  him  an  order  on 
the  defendants,  for  the  sum  in  which  they  were  indebted  to  him  (Del- 
valle) for  brokerage.  This  order  was  sent  by  the  plaintiff  to  the  de- 
fendants, in  November,  1787,  with  a  request  that  they  would  ac- 
knowledge their  having  given  him  credit  for  it.  The  defendant 
Douglas  answered  that  they  would  pay  the  money  which  they  owed 
to  Delvalle  to  no  other  person  but  the  plaintiff,  but  objected  to  the 
amount  of  the  sum  contained  in  the  order,  which  they  desired  to  have 
rectified.  Another  order  was  then  sent  to  them,  which  Douglas  again 
objected  to  do,  promising  at  the  same  time  to  pay  the  plaintiff  what 
they  really  owed  to  Delvalle,  and  requesting  an  order  to^pay  or  give 
credrttojtlie_plaintiff  for  so  much  in  their  hands  as  was  in  facFdiie  to 
Delvalle.  An  order  in  this  form  was  accordingly  sent  them,  which 
they  accepted,  in  consequence  of  which  the  plaintiff  advanced  £70.  to 
Delvalle,  who  afterwards  becoming  a  bankrupt,  the  defendants  refused 
to  pay  the  money  to  the  plaintiff  according  to  the  order.  On  which 
refusal  this  action  was  brought.  The  declaration  contained  four 
counts:  (1)  Money  had  and  received.  (2)  Money  paid,  etc.  (3) 
Money  lent,  etc.  (4)  An  account  stated.  Verdict  k>r  the  plaintiff;") 
which  on  a  former  day  Lawrence,  Serjt.,  confended  was  not  supported  I, 
by  evidence  under  the  form  of  action  which  the  plaintiff  had  chosen, 
and  therefore  obtained  a  rule  to  sh_ow_  cause  why  it  should  not  be  _set 
asjde,  and  a  new  trial  granted. 

On  this  day,  Mr.  Justice  Heath,  who  tried  the  cause,  stated  the 
evidence  to  the  same  eft'ect  as  above,  and  cited  the  case  of  Fenner  v. 
Mears,  Hil.  19  Geo.  Ill,  C.  B.,  2  Blac.  1269.^^ 

Lord  Loughborough.  The  point  made  at  the  trial  was  that  the 
plaintiff'  had  misconceived  his  action.  Now,  where  a  party  has  not 
the  substantial  justice  of  the  case  on  his  side,  the  court  will  not  favor 
any  action  which  he  may  bring.  But,  where  justice  is  clearly  with 
him,  they  will,  if  possible,  allow  him  to  maintain  the  action  he  has 
brought,  because  the  only  effect  of  a  refusal  would  be  to  make  him 
adopt  another  form  of  action.    In ^e  present  case  it  is  admitted  that 

8  2  The  arguments  of  counsel  are  omitted 


»:\ 


/ 


168  FORMATION.  (Part  1 

the__glaintifiJias.tlie  law-Avith  him  in  some  . action.     But  it  has  been 
argued  that  Delvalle  ought  to  have  brought  the  action.    Yet  I  cannot 
conceive  'why  that  should  prevent  the  plaintiff  from  having  his  remedy. 
Vfc'/f '.<K/w^^   It  was  also  said  that  Delvalle's  action  should  have  been  for  work  and 
^f^**^  labor.     But,  to  admit  this,  we  must  strain  a  point,  and  suppose  that 

Delvalle  had  really  performed  work  and  labor  for  the  defendants. 
For,  in  general,  the  demand  which  a  broker  has  upon  his  employer  is 
for  the  difference  of  money  on  account  between  them  for  premiums, 
etc. ;  so  that  if  he  were  to  rest  solely  on  a  count  in  his  declaration  for 
work  and  labor,  without  the  common  money  counts,  he  would  be  in 
danger  of  a  non-suit. 

It  was  farther  contended  that  the  money  was  in  point  of  fact  owing 
by  the  defendants  to  Delvalle ;  that  their  undertaking  was  to  him ; 
that  in  reality  no  money  w^as  had  or  received  by  them  to  the  use  of  the 
plaintiff.  But  Delvalle  had  paid  for  premiums  on  account  of  the  de- 
fendants, which  created  a  debt  from  them,  and  which  he  might  have 
set  oft*  against  any  similar  demand  of  theirs  against  him.  XhisL-debt 
is,with  the  consent  of  the  parties,  assigned  to  the  plaintiff.  Douglas 
has  due  notice  of  it,  and  assents,  by  which  assent  he  becomes  with  his 
partner,  liable  to  the  plaintiff.  He  makes  no  objection  to  an  order 
from  Delvalle  to  pay  his  money  to  the  plaintiff,  but  only  to  the  amount 
of  the  sum  to  be  paid.  He  insists  that  the  whole  demanded  by  Del- 
valle was  not  due,  and  therefore  requires  a  looser  order,  on  the  faith 
that  he  would  pay  the  balance;  on  his  failure  to  pay,  his  promise 
attached,  so  as  to  make  the  defendants  liable  to  an  action. 

Then  the  question  is  whether,  when  Israel  brings  an  action  in  his 
own  name  against  the  defendants,  this  shall  not  be  considered  as  money 
^f*»*s/Y  had  and  received  by  them  to  his  use?    Now,  when  Douglas  had  admit- 

'(''^\  ted  the  money  to  be  due,  he  was  that  moment  estopped,  as  it  were,  from 

saying  that  it  was  not  due.  I  also  think  the  action  might  be  maintained 
on  the  account  stated.  Delvalle  gives  an  order  to  pay  to  the  plaintiff  a 
liquidated  balance ;  the  only  dispute  is  concerning  the  amount  of  that 
balance.  Douglas  says,  "I  will  pay  you  according  to  the  sum  which 
shall  appear  to  be  due."  He  is  here  again  estopped  from  denying  the 
eft'ect  of  his  promise.  I  am  therefore  of  opinion  that  the  verdict  is 
right,  and  ought  not  to  be  set  aside.  '  ]/ 

_GouLD,  J.  This  case  is  like  that  of  a  man  having  money  due  to  him 
^  . , ,. .  ,  ,  ,. ,  in  his  hands,  which  I  order  him  to  pay  to  another.  Now  if  I  pay  money 
to  you  for  another  person,  it  is  money  had  and  received  by  you  to  his 
use.  But  where  is  the  real  and  substantial  difference,  whether  I  in 
fact  pay  money  to  you  for  a  third  person,  or  whether  I  give  you  an 
order  to  pay  so  much  money,  to  which  you  expressly  assent  ?  In  reason 
and  sound  law,  it  is  money  had  and  received  to  the  use  of  such  third 
person.  If_my  debtor  tenders  me  money,  which  I  give  back  to  him, 
and  tell  him  to  pay  to  another,  he  then  in  point  of  fact  receives  mjon^- 
to  the  use  of  the  other.  But  is  there  any  real  difference  between  sm:h 
a  case  and  the  present?    As  to  the  account  stated,  I  think  thaf  count 


^» 


kf, 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  169 

also,  all  the  circumstances  considered,  comes  within  the  fair  compass  of 
the  case ;    but  I  have  not  the  least  doubt  as  to  the  count  for  money 
^    had  and  received.  *       /  .        ^ 

^        Ht-ath^  J.     I  think,  in  mercantile  transactions  of  this  sort,  such  an   ^  ' 
undertaking  may  be  construed  to  make  a  man  liable  for  money  had 
and  received.  / 

/^       Wilson,  J.    It  is  highly  necessary  that  the  forms  of  actions  should  be  '^  /Tlt''''"^   '/  ■ 
kept  distinct.    Courts  of  justice  have,  in  my  opinion,  already  gone  quite '**^""'  "'*'^ 
far  enough  in  extending  the  favourite  count  for  money  had  and  re-    b  .  *r^       jy 
ceived.    But  I  know  of  no  case  where  they  have  gone  so  far  as  to  allow     ^' 
that  count  to  be  maintained  where  no  money  has  in  fact  been  received 
by  the  defendant.    Here  it  by  no  means  appears  that  money  was  had  or 
received  by  the  defendants.     I  am  also  of  opinion  that  this  demand 
between  the  parties  being  for  brokerage  was,  from  the  nature  of  it, 
the  subject  of  an  action  for  work  and  labor.    Now,  though  it  be  true 
that  where  a  man  is  my  debtor  he  holds  my  money,  yet  I  cannot  accede 
to  this  as  a  general  proposition,  that  whenever  a  man  is  my  debtor  I  am 
entitled  to  bring  an  action  against  him  for  money  had  and  received. 
A  tailor  might,  according  to  this  rule,  bring  an  action  for  money  had 
and  received  against  a  man  who  had  not  paid  him  for  a  suit  of  clothes. 
For  my  idea  is  that  where  no  money  has  been  actually  had  and  re- 
ceived, no  action  for  money  had  and  received  can  be  supported.     In 
the  case  of  Fenner  v.  Mears,  money  was  in  fact  received  by  the  de- 
fendant;   there  the  action  might  clearly  be  maintained.     So  here  it 
would  have  been  proper  if  it  could  be  shown  that  money  was  received 
by  Douglas  to  the  use  of  Delvalle. 

I  thought  it  necessary  to  say  thus  much  because  my  Brother  Gould, 
whose  opinion  I  very  highly  respect,  and  whose  very  dictum  would  at 
all  times  make  me  doubtful  of  my  own  judgment,  has  expressed  his 
sentiments  decidedly  in  favor  of  this  count  for  money  had  and  received. 
I  do  not,  indeed,  mean  to  say  positively  that  the  action  will  not  lie, 
particularly  as  I  agreeinopinion  with  the  rest  of  the  court  as  to  the 
count  on  the  insimul  computassent ;  bim  very  muchdo.ubt  the  posi- 
tion,  which  has  been  so  strongly  laid  down,  that  the  acknowledgment 
of~the  defendant  Douglas,  of  the  money  being  due  to  Delvalle,  was 
evidence  of  money  actually  had  and  received  by  him ;  for  I  am  not 
inclined  to  favor  an  implication  which  is  contrary  to  fact. 
Rule  discharged. ^^ 

33  Accord:  Lord  Holt  in  Ward  v.  Evans,  2  Ld.  Raym.  928  (1702),  held  that 
indebitatus  assumpsit  would  lie  on  the  ground  that  the  defendant  having 
money  in  his  hands  it  amounts  to  a  receipt  of  so  much  by  the  defendant. .to 
the  plaintiff's  use.  Fenner  v.  Meares,  2  Wm.  Bl.  12G9  (1779)  :  Andrews  \. 
Smifh;  2  Cr.,  M.  &  R.  627  (1835) ;  Lacy  v.  M'Neile,  4  D.  &  R.  7  (1824) ;  Dixon 
V.  Hatfield.  2  Ring.  439  (1825);  Calliins  v.  Chandler,  36  Mich.  320,  24  Am. 
Rep.  593  (1877). 

Qontra:  In  Wharton  v.  Walker.  4  Barn.  &  C.  163  (1825).  Bayley,  J.,  said: 
"In  the  present  case  no  money  was  ever  had  and  received  by  the  defendant 


170  FORMATION.  ^Part  1 

COMPTON  V.  JONES. 
(Supreme  Court  of  Xew  York,  1825.    4  Cow.  13.) 

On  demurrer,  Tlie  declaration  was  in  assumpsit:  The  1st  count 
stated,  that  on  the  4th  oTTebruary,  1823,  the  defendant  made,  etc.,  his 
certain  deed,  etc.,  dated,  etc.,  and  dehvered  the  same  to  one  S — H. 
Wood,  by  which  he,  for  value  received,  promised  to  pay  Wood,  or 
bearer,  $500,  in  four  equal  annual  installments  from  that  date ;  ^hal 
Wood  afterwards,  etc.,  for  a  valuable  consideration  to  him  (Wood) 
paicTTassigned  and  transferred  the  deed,  etc.,  to  the  plaintiff,  thereby 
constituted  him  the  bearer  thereof,  and  authorized  and  directed  him  to 
demand  and  receive  of  the  defendant  the  contents  of  the  deed,  etc., 
for  his  own  benefit;  that  afterwards  and  before  the  payment,  etc.,  the 
plaintiff  gave  notice  to  the  defendant  of  the  assignment,  etc. ;  that,  in 
consideration  of  the  premises,  afterwards,  etc.,  in  consideration  that 
the  plaintiff  would  accept  and  agree  to  the  defendant's  promise  in.  the 
declaration  after  mentioned,  the  defendant  promised  the  plaintiff  to 
pay  him  the  money  mentioned  in  the  deed,  averring  that  $250  had  be- 
come due  before  the  commencement  of  the  suit. 
%^*<  -s  •  General  demurrer  and  joinder.^^* 

^  Savage,  C.  J.,  remarked,  thatHvhat  was  said  by  the  court  in  the 
authority  cited  by  the  defendant's  counsel,  was  intended  of  a  casewhere 
the  action  was  brought  by  the  party  to  the  specialty.  And  the  whole 
court  were  clear,  that  the  action  was  sustainable,  being  on~a~prorr>isf! 
to  the  assignee.  '' 

Judgment  for  the  plaintiff.*' 

to  the  use  of  any  person,  which  objection  existed  in  Israel  v.  Douglas,  anct 
has  caused  the  propriety  of  that  decision  to  be  since  doubted.*' 

In  .Liversiage  v.  Broadbent.  4  H.  &  N.  G03  (18.">9).  will  be  found  an  elftbor- 
ately  argued  and  reasoned  opinion  of  the  Exchequer,  deciding  exactly  contra 
tqrisrael  v.  Douglas. 

S.ee  Professor  Ames'  essqy  on  Novation.  6  Harvard  Law  Review.  1S4,  188. 

See^Kote^u- American  cases  in  University  of  Pa.  Law  Review,  April,  1909 
(57  AmTT^iaw  Tleg.  472),  iinnotatiim  a  Vermont  case.  Barre  Granite  Co.  v. 
Fraser,  82  Vt.  .55,  71  Atl.  828  (HXt9). 

The  early  English  cases  as  represented  by  the  principal  case  solved^  the 
problem  by  ffeattng  ft  as  the  assignment  of  a  debt  without  frtlowing  any  "ob- 
jection to  exist  on  the  score  of  the  doctrine  of  consideration.  The  origTTmi 
English  view  required  no  novation  to  have  occurred,,  and  hence  the  creditor 
to  whom  the  assignment  of  the  debt  was  made  could  sue  his  original  debtor  if 
the  latter's  debtor  did  not  carry  out  the  assignment  and  pay.  Cuxou  v.  Char- 
ley, 3  B.  &  C.  591  (1824).     See  Roberts  v.  Rowe,  75  N.  H.  36  (190S). 

3  4  The  argument  of  counsel  is  omitted. 

3  5  But  cf.  Blunt  V.  Boyd,  3  Barb.  209  (1848),  where  the  defendant  promised 
the  de^btor,  X..  to  pay  the  plaintiff  a  debt  due  from  X.  to  the  plaintiff.  The 
defendant  was  himself  indebted  to  X.  Held,  that  the  promise  was  within 
the  statute. 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM  OTHER  CONTRACTS.  171 

DE  BARRY  v.  WITHERS  &  PETERSON. 

(Supreme  Court  of  Pennsylvania,  1863.     44  Pa.  356.) 

Error  to  the  District  Court  of  Philadelphia. 

This  was  an  actkm_Qf_assumpsit,  brought  November  19,  1859,  by 
Withers  &  Peterson  against  John  De  Barry. 

The  plaintiffs'  declaration  averred  that  whereas,  heretofore,  to  wit, 
on  the  15th  day  of  August,  A.  D.  1856,  at  the  county  aforesaid,^e 
defendant  drew  his  certain  bill  of  exchange  of  the  date  last  aforesaid, 
dtfected  toMessrs.  William  L-  Manderson  &  Co.,  bankers,  Third  street, 
Philadelphia,  of  said  county,  and  thereby  requested  the  said  William 
ly.  Manderson  &  Co.,  30  days  after  the  date  thereof,  to  pay  to  the  order 
of  himself,  the  said  defendant,  the  sum  of  $5,000  for  value  received, 
and  to  charge  the  same  to  the  account  of  flour  per  Revere,  and  the  said 
defendant  thereafter,  to  wit,  on  the  day  and  year  last  aforesaid,  and  at 
the~county  aforesaid,  indorsed  the  said  bill  of  exchange,  and  delivered 
the  same,  then  and  still  unpaid,  to  the  said  plaintiffs. 

THat  afterwards,  to  wit,  on  the  17th  day  of  September,  in  the  year 
last  aforesaid,  and  at  the  county  aforesaid,  the  said  bill  of  exchange 
was  presented  to  the  said  William  L.  Manderson  &  Co.  for  payment 
thereof,  and  the  said  William  L.  Manderson  &  Co.  were  then  and  there 
requested  to  pay  the  said  sum  of  money  specified  therein,  according 
to  the  tenor  and  effect  of  the  said  bill  of  exchange,  and  of  the  said 
indorsement  thereon;  but  the  said  WiHiam  L.  Manderson  &  Co.  did 
not  then  pay  the  said  sum  of  money,  or  any  part  thereof,  nor  have  they 
at~any  time  since  pai.d  the  same,  or  any  part  thereof,  but  wholly  refused 
so  to  do,  of  all  which  said  several  premises  the  said  defendants  there 
afterwards,  to  wit,  on  the  day  and  year  last  aforesaid,  at  the  county 
aforesaid,  had  notice,  by  means  whereof  the  said  defendant  became 
liable,  and  in  consideration  thereof,  then  and  there  promised  the  said 
plaintiff  to  pay  him  the  said  sum  of  money  specified  in  the  said  bill  of 
exchange,  when  thereunto  afterwards  requested,  yet  the  said  defend- 
ant, although  often  requested,  etc.,  disregarding,  etc.,  did  not  nor 
wpuld  pay  to  the  said  plaintiff  the  said  sum  of  money  specified  in  the 
said  bill  of  exchange,  or  any  part  thereof,  but  to  pay  the  same  or 
any  part  thereof,  hath  hitherto  wholly  neglected  and  refused,  etc. 

This  was  followed  by  the  common  counts  for  goods  sold  and  de- 
livered, goods  bargained  and  sold,  work  done,  and  materials  furnished, 
money  lent,  had  and  received,  on  an  account  stated,  and  for  forbear- 
ance of  plaintiffs. 

With  this  narr.  a  copy  of  the  instrument,  viz.,  a  bill  drawn  by  De 
Barry,  August  15,  1856,  for  $5,000,  on  WiUiam  L.  Manderson  &  Co., 
bankers.  Third  street,  Philadelphia,  to  his  own  order,  at  30  days,  to  be 
charged  to  account  of  flour  per  Revere,  and  indorsed  by  him,  was  filed 
by  the  plaintiff. 


172  FORMATION.  (Part  1 

To  this  an  affidavit  of  defense,  as  also  a  bill  of  discovery,  was  filed  by 
the  defendant. 

The  defendant  also  pleaded  the  general  issue. 

By  leave  of  thejCQurtthe-plaintiffs  filed  an  .amended. couQt  in  which, 
after  setting  forth  the  drawing  and  indorsing  of  the  bill  above  mcn=^ 
tioned,  they  averred  that  afterwards,  to  wit,  on,  etc.,  at  the  county,  etc., 
the  defendant  took  the  said  draft  to  the  office  of  the  said  William  L. 
Manderson  &  Co.,  who  then  and  there  had  no  funds  or  property  of  the 
said  defendant,  then  and  there  promised  and  agreed  to  and  with  the 
said  William  L.  Manderson  &  Co.,  that  if  they  the  said  William_L. 
Manderson  &  Co.  would  accept  said  draft  for  the  accommodation  of 
said  defendant,  he,  the  said  defendant,  in  consideration  thereof,  would~" 
take  up  said  draft  at  maturity,  and  the  said  William  L.  Manderson  & 
Co.  then  and  there,  at  the  special  instance  and  request  of  the  said  de- 
fendant, and  without  having  any  funds  or  property  of  said  defendant 
in  their  hands,  and  solely  for  the  accommodation  of  the  said  defendant, 
accepted  the  said  draft  and  delivered  the  same  so  accepted  to  said  de- 
fendant. That  afterwards,  on  the  maturity  of  said  draft,  to  wit,  on  the 
17th  day  of  September,  in  the  year  last  aforesaid,  and  at  the  county 
aforesaid,  the  said  defendant  made  default  in  the  payment  of  the, said 
draft,  and  the  said  William  L.  ]\Ianderson  Si  Co.  then  and  there,  to 
wit,  on  the  day  and  year  last  aforesaid,  paid  the  sum  of  $5,000  in  the 
safa  draft  mentioned  and  took  up  the  said  draft,  whereby  a  right  of 
action  accrued  to  the  said  WilHam  L.  Manderson  &  Co.,  and  against 
the  said  defendant,  upon  the  said  draft  for  the  recovery  of  the  said 
sum  of  $5,000,  and  by  means  whereof  the  said  defendant  then  and 
there  became  liable  to  pay  to  the  said  William  L.  ]\Ianderson  &  Co.  the 
said  sum  of  $5,000  in  the  said  draft  mentioned,  whenever  he  should 
be  thereunto  afterwards  requested.  That  afterwards,  to  wit,  on  the 
day  and  year  last  aforesaid,  and  at  the  county  aforesaid,  the  said 
William  L^  Manderson  &  Co.,  for  a  valuable  consideration,  theTeieiote 
hadTruTreceived,  transferred  and  delivered  tlie  said  draft  to  the  plam- 
tiffs,  and  assigned  to  the  said  plaintiffs  their  said  cause  of  action  which 
had^  therefore  accrued  to  the  said  William  L.  Alanderson  &  Co.  upon 
the'~said  draft,  for  the  recovery  from  the  said  defendant  of  said  sum 
of  $5,000  as  aforesaid,  by  means  whereof  the  said  defesdant  then  and 
there  became  liable  to  pay  the  said  plaintiff  the  said  sum  of  $5,000  in 
the  said  draft  mentioned  whenever  he  should  be  thereunto  afterwards 
requested;  and  being  so  liable,  the  said  defendant,  in  consideration 
thereof,  afterwards,  to  wit,  on  the  day  and^year  last  aforesaid,  and  at 
the  county  aforesaid,  undertook  and  then  and  there  faithfully  prom- 
ised the  said  plaintiffs  to  pay  them  the  said  sum  of  money  in  the  s~aid 
draft  mentioned,  when  he,  the  said  defendant,  should  be  thereunto 
afterwards  requested. 
.  f  To  this  count  the  defendant's  counsel  demurred,  for  the  following 
m^^/     reasons: 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  173 

(1)  No  cause  of  action  is  alleged  in  the  said  count  upon  which  the 
plaintiffs  can  recover  in  their  own  names. 

(2)  The  alleged  consideration  for  the  transfer  of  the  instrument 
of  writing  sued  on,  from  Manderson  &  Co.  to  the  plaintiffs,  is  insuffi- 
ciently set  forth. 

(3)  It  is  not  alleged  in  said  count  that  means  were  not  furnished  by 
the  defendant  to  William  L.  Manderson  &  Co.  to  take  up  said  instru- 
ment of  writing  at  maturity. 

(4)  The  instrument  sued  upon  is  not  a  bill  of  exchange — being  pay-  i 
able  out  of  a  particular  fund — and  is  therefore  improperly  declared  I 
upon  as  such. 

The  court  below  gave  judgment  for  plaintiffs  on  the  demurrer,  on 
which  the  damages  were  assessed  by  a  jury. 

The  defendant  thereupon  sued  out  this  writ,  averring  that  thexourt 
below  erredlh  allowing  the  plaintiff  to  amend  his  narr.  by  filing  a  third 
count,  containing  an  entirely  new  cause  of  action-.ipverruling  the  de- 
murrer,  ani^f  assessing  the  damages  by  a  jury  that  "never  was  or  could 
have"  been  summoned  for  that  purpose." 

Read,  J.  An  accommodation  acceptor,  haying  paid  a  bill  for  which 
no  funds  are  provided  by  the  drawer,  is  entitled  to  recover  the  amount 
from  the  drawer,  for  the  law,  in  the  absence  of  any  express  contract, 
impfles  a  contract  to  indemnify.  But  whether  the  action  be  for  ni'oney 
paid,  or  specially  for  not  indemnifying  the  plaintiff,  still  it  is  only  a 
choseTn  action,  which  is  assignable  in  equity,  and  therefore  the  suit 
must  be  in  the  name  of  the  assignor  for  the  use  of  the  assignee.  But 
as""the  assignee  is  the  real  owner,  it  would  seem  but  just,  if^the^debtor 
chooses  expressly  to  promise  to  the  assignee  to  pay  the  debt  to  him, 
th'at  the  assignee  might  sustain  an  action  against  him  in  his  own  name, 
and  this  was  the  view  taken  in  the  early  English  cases  of  Fenner  v. 
Meares,  2  W.  Bl.  Rep.  1269  ;  Israel  v.  Douglas,  1  H.  Bl.  Rep.  239.  It 
would  seem,  however,  that  in  England  the  rule  at  present  is  to  require 
the  consideration  of  forbearance,  or  some  other  new  consideration,  to 
enable  the  assignee  to  proceed  in  his  own  name.  1  Chit.  PI.  15 ;  Ad- 
dison on  Contracts,  984. 

In  America,  however,  the  early  English  doctrine  has  been  adopted, 
and  this  is  clearly  the  sound  rule ;  for  it  is  a  promise  to  pay  to  the  real 
owner  of  the  debt,  requiring  no  other  consideration  than  the  fact  that 
the  debtor  is  morally  and  equitably  bound  to  pay  it  to  his  actual  cred- 
itor, and  is  not  allowed  to  discharge  himself  by  paying  it  to  any  other 
person.  This  was  the  decision  in  Massachusetts  as  early  as  1813,  in 
Crocker  v.  Whitney,  10  Mass.  316,  and  reaffirmed  in  Mowry  v.  Todd, 
12  Mass.  281.  In  Maryland,  in  AUstan  v.  Contee,  4  Har.  &  J.  351,  a 
case  argued  by  the  present  venerable  Chief  Justice  of  the  United 
States,  the  same  doctrine  was  held,  and  reaffirmed  in  Barger  v.  Collins, 
7  Har.  &  J.  213.  So  in  New  Hampshire.  Currier  v.  Hodgdon,  3  N.  H. 
82 ;  Thompson  v.  Emery,  7  Foster,  269.  And  in  Vermont.  Moar  v. 
Wright,  1  Vt.  57;    Bucklin  v.  Ward,  7  Vt.  195.     Such  also  is  the 


174  FORMATION.  (Part  1 

case  in  Maine.  Smith  v.  Berry,  6  Shepley,  122 ;  Norris  v.  Hall,  & 
Shepley,  332. 

In  New  York  the  same  rule  prevailed  prior  to  the  Code,  which  di- 
rects that  suits  shall  be  in  the  names  of  the  real  parties  in  interest. 
Compton  V.  Jones,  4  Cow.  13 ;  De  Forrest  v.  Frary,  6  Cow.  151 ; 
Dubois  V.  Doubleday,  9  Wend.  317 ;  Jessel  v.  Williamsburgh  Ins.  Co., 
3  Hill,  88.  In  the  Revision  of  Swift's  Digest,  vol.  1,  p.  438,  the  law 
in  Connecticut  is  thus  stated :  "The  assignment  of  a  chose  in  action 
will  be  a  good  consideration  for  the  promise  of  the  debtor  to  pay  to 
the  assignee,  who  may  maintain  an  action  in  his  own  name  on  sucli 
promise."  Which  is  also  the  settled  law  of  Tennessee.  Mt.  Olivet 
Company  v.  Shubert,  2  Head,  116. 

This  rule,  so  reasonable  in  itself,  and  so  consonant  to  our  ideas  of 
justice,  decided  the  present  case,  for  the  only  real  question  before  us 
was- whether  the  additional  count  disclosed  a  sufficient  cause  of  action. 
There  is  nothing  in  the  other  assignments  of  error. 

Judgment  affirmed.^* 


HARGRAVES  v.  PARSONS.] 
(Court  of  Exchequer  of  Pleas,  1844.    13  Mees.  &  W.  560.) 

Assumpsit.^^  *  *  *  ^]^Q  cause  was  tried  before  Creswell,  J.,. 
at  the  last  Liverpool  Assizes.  The  plaintiff  proved  tivo^wxltten  con- 
tracts between  the  defendant  and  Parker,  dated  August  18,  1843, 
l5cing  each  of  them  for  the  purchase  by  the  defendant  from  Parker 
of  the  "put  or  call"  of  fifty  Havre  &  Rouen  shares,  at  any  time  be- 
fore  18th  February,  1844;  "20s.  to  be  paid  down,  to  put  or  caTTat 
32s.  6d.  per  share  premium."  The  "puts  or  calls"  were  in  the  follow- 
ing terms: 

"Liverpool,   18th  August,  1843. 

"To :  I,  Charles  Stewart  Parker,  of  Liverpool,  mer- 
chant, in  consideration  of  the  sum  of  f  50.  paid  to  nTe,  the  receipt  of 
which  I  hereby  acknowledge,  do  hereby  agree,  on  behalf  of  myself,  my 
heirs,  executors,  and  administrators,  to  deliver  or  not  deliver  (at  your 
option)  to  you,  or  to  your  order,  ten  days'  clear  notice  being  given,  at 
any  time  on  or  before  the  18th  of  February,  1844,  fifty  shares  in  the 
Havre  &  Rouen  Railway,  at  the  rate  of  £1.  12s.  6d.  per  share  premium ; 
and  it  is  agreed  that  you  are  to  be  entitled  to  all  advantages  which  are 
now  due,  and  may  accrue  upon  the  said  shares  from  this  day  up  to  the 
time  the  said  shares  may  be  called ;   it  being  expressly  understood  that 

36  Accord:  Esllng  v.  Zantzinger,  13  Pa.  50  (1850). 
8  7  The  report  of  the  case  has  been  abridged. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FBOM  OTHER  CONTRACTS.  175 

the  said  sum  of  i50.  is  my  property,  whether  the  said  shares  are  called 
or  not.  C.  S.  Parker." 

The  shares  rose,  and  on  the  22d  of  November  following  the  defend- 
ant resold  these  two  calls  to  Messrs.  Henry  Davies  &~C5:7-share 
bickers,  who  acfed~Ior  the  plaintiff ;  22s.  6d.  to  be  paid  down,  and  to 
put  or  call  at  fl.  12s.  6d.  per  share  premium,  on  or  before  the  18th 
of  February;  the  bought  note  expressing  that  "the  buyer  was  to  be 
entitled  to  all  dividends  and  other  advantages,  and  you  [the  defendant] 
to  guarantee  the  seller;"  and  the  defendant  indorsed  on  the  calls, 
which  he  delivered  addressed  in  blank  to  Messrs.  Davies  &  Co.,  the 
following_eng-agement : 

"Gentlemen :  In  consideration  of  i81.  5s.,  I  undertake,  on  behalf 
of  myself,  my  heirs  and  executors,  to  fulfil  the  terms  of  the  within 
contract.  George  Parsons. 

"Messrs.  Henry  Davies  &  Co." 

The  shares  continued  to  advance  in  price,  and  on  the  16th  Feb- 
ruary, the  price  being  then  at  £6.  premium,  Mr.  Davies,  one  of  the 
partners  in  the  firm  of  Henry  Davies  &  Co.,  met  the  defendant  in  the 
Stock  Exchange  room  at  Liverpool,  and  "called"  the  100  shares,  i.  e., 
required  the  delivery  of  them  by  the  defendant  on  the  18th  of  Febru- 
ary ;  at  the  same  time  asking  the  defendant  whether  it  would  suit  him 
to  deliver  them  in  Paris.  The  defendant  said  he  would  inquire,  and 
called  to  them  a  Mr.  Middleton,  who  was  Parker's  share  broker,  and 
was  then  in  the  room,  and  gave  him  notice  that  the  plaintiff  had  called 
the  shares;  and  hy  the  assent  of  all  the  parties,  it  was  arranged  that 
the_shaxe&- should  be  delivered  by  Parker  at  Messrs.  Lafitte  &  CoT's, 
in__Paris^jQn  the  2d  of  March.  No  writing  passed  QH  this  occasion.  A 
few  days  afterwards,  however,  Parker  failed  to  a  large  amount,  zn& 
the  shares^vere  not  delivered  on  the  2d  March,  pursuant  to  the  agi-ee- 
nient.  Messrs.  Davies  &  Co.,  after  giving  formal  notice  to  the  defen3"- 
ant,  on  the  2d  of  April,  to  deliver  them,  bought  in  the  100  shares  at 
Paris,  at  700  francs  per  share ;  and  in  this  action  the  plaintiff  claimed 
to  recover  from  the  defendant  the  sum  of  £618.,  the  difference  be- 
tween the  price  so  paid  and  that  at  which  the  options  were  purchased 
from  the  defendant. 

Several  objections  w-ere  taken  for  the  defendant.     *     *     * 

[Parke,  B.  The  question  is,  whether  this  is  not  to  be  construed  as 
an  original  agreement  by  the  defendant  for  the  delivery  of  the  shares 
on  the  2d  of  March.  There  was  no  privity  between  the  plaintiff  and 
Parker.    We  will  consult  the  learned  judge.] 

Cur.  adv.-^oilt. 

The  judgment  of  the  court  was,  on  the  10th  of  December,  deliver- 
ed by 

Parke,  B.  In  this  case  a  motion  was  made  by  Mr.  Watson  for  a 
nonsuit,  on  a  point  reserved,  or  for  a  new  trial  for  misdirection,  in  )  "^^-^^ 


V 


176  FORMATION.  (Part  1 

a  case  tried  before  my  Brother  Creswell,  at  Liverpool.  The  court 
wished  to  refer  to  the  learned  judge's  notes,  to  ascertain  the  facts 
more  perfectly,  and  understand  the  objection  raised. 

\  It  was  an  action  by  the  plaintiff  against  the  defendant  upon  two 
contracts  made  by  him  with  the  plaintiff,  on  the  assignment  of  two 
other  contracts  between  the  defendant  and  Parker,  for  taking  from 
or  delivering  to  the  defendant,  at  his  option,  certain  shares  in  a  foreign 
railway,  at  a  fixed  premium,  on  or  before  the  18th  February,  ISii; 
and  the  defendant  agreed  to  guarantee  the  delivery  by  Parker  to  the 
plaintiff.  There  were  counts  on  each  agreement,  and  also  on  a  varia- 
tion of  that  agreement  by  a  subsequent  one,  by  which  it  was~stipurated, 
that  the  shares,  instead  of  being  delivered  in  England,  on  the  18th 
February,  should  be  delivered  in  France  on  the  2d  March,  by  Parker. 
Several  issues  were  raised  on  each  count.  One  was  on  the  allegation  in 
the  third  and  fourth  counts  in  the  declaration,  that  the  defendant 
guaranteed  the  performance  of  the  new  agreement  by  Parker.  An- 
other, that  no  notice  was  given  to  Parker  to  deliver  the  shares.  An- 
other plea,  the  sixth,  was  that,  after  the  notice  to  Parker,  it  was  agreed 
between  the  plaintiff  and  Parker,  without  the  knowledge  or  consent  of 
the  defendant,  that  the  delivery  should  be  postponed,  and  the  issue 
thereon  was,  that  it  was  not  so  agreed  modo  et  forma.  It  appeared  at 
the  trial  that  notice  was  given  by  the  plaintiff  to  the  defendant,  before 
the  18th  February,  to  deliver  the  shares  on  that  day,  and  the  like 
notice  by  the  defendant  to  Parker's  broker,  but  that,  at  the  request  of 
the  plaintiff,  the  defendant  procured  Parker's  broker  to  agree  to  de- 
liver at  Paris  on  the  2d  March  instead.    This  agreement  was  by  parol. 

A  Three  objections  were  made  by  Mr.  Watson,  at  the  close  of  the 
plaintifTs  case,  and  reserved  by  the  learned  j.udge.  The  first  and  most 
important  was,  that  a  note  in  writing  was  necessary  under  the  statute 
of  frauds,  because  the  agreement  or  guarantee  by  the  defendant,  for 
the  performance  by  Parker  of  the  new  agreement,  was  a  promise  to 
answer  for  the  debt  or  default  of  Parker.  Th^  learned  judge  inti- 
mated his  opinion,  that  this  was  not  a  case  within  the  statute",  BuFwas 
aji  original  promise. 

^  And  we  are  of  the  same  opinion.  The  statute  applies  only  to  prom- 
ises made  to  the  persons  to  whom  another  is  already,  or  is  to  become, 
answerable.  It  must  be  a  promise  to  be  answerable  for  a  debt  of,  or  a 
default  in  some  duty  by,  that  other  person  towards  the  promisee.    This 

•  was  decided,  and  no  doubt  rightly,  by  the  Court  of  Queen's  Bench, 
in  Eastwood  v.  Kenyon,  11  Ad.  &  Ell.  438,  3  P.  &  D.  276,  and  in 
Thomas  v.  Cook,  8  B.  &  C.  728,  3  Man.  &  R.  444.  In  this  case  Parker 
had  not  contracted  with  the  plaintiff,  nor  was  it  intended  that  he 
should ;  there  was  no  privity  between  them ;  the  nonperformance  oT~~ 
Parker's  contract  with  the  defendant  would  be  no  default  towards  the 
plaintiff,  and,  consequently,  the  undertaking  by  the  defendant  was 
no  promise  to  answer  for  the  default  or  miscarriage  of  Parker  in  any" 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER   CONTRACTS.  177 

debtor  duty  towards  the  plaintiff.     It  was  an  original  promise  that  a 
certain  thing  should  be  done  by  a  third  person.    *    ♦    *    There  must, 
therefore,  be  no  rule. 
Rule  refused.^* 


V.  Debts  Created  for  Benefit  of  a  Third  Party 
MORRISON  &  CO.  V.  HOGUE. 

(Supreme  Court  of  Iowa,  1878.     49  Iowa,  574.) 

Appeal  from  Appanoose  Circuit  Court. 

Thg  plaintiffs  hold  a  promissory  note  executed  by  one  Yandeveat  as 
principal  and  one  Fowler  as  surety.  The  action  is  brought  to  collect 
of  the  defendant  the  amount  of  the  notcCl/The  plaintiffs  aver  in  their 
petition  that  the  defendant  agreed  with  Vandevent  to  pay  it.  '  ^hey 
averlliat  the  defendant  purchased  land  of  Vandevent,  and  agreed  to 
pay  the  note  as  a  part  of  the  consideratio]({.  vThgy^alsoaver  that  Fow- 
ler, the  surety,  had  brought  an  action  in  attachment  agamsTA^ande- 
vent^jtnd  that  it  was  agreed  between  the  defendant,  plaintiffs,  and 
Vandevent,  that  if  the  attachment  was  released  defendant  would  pay 
the  plaintiffs  the^  amount  of  the^note  out  of  "the  considerattofT'cyf  the 
land,  and  that  the  attachment  was  released  in  pursuance  of  such  agree- 
menfT^The  defendant  demurred  to  the  plaintiffs'  petition,  and  the  de- 
murrer was  overruled. 

The  defendant  then  answered,  denying  the  agreement  as  to  the  re- 
lease of  the  attachment,  and  averring  that  he  was  to  pay  the  note  as 
a  part  of  the  consideration  of  the  land,  but  only  upon  the  following 
condition :  He  was  to  pay  first  certain  other  indebtedness  of  Vande- 
vent and  expenses,  the  amount  of  which  was  not  then  definitely  known, 
and  the  balance,  if  any,  he  was  to  apply  on  the  note  held  by  plain- 
tiffs ;  and  he  avers  that  there  was  a  small  balance  which  he  has  ap- 
plied on  the  note.  The  court  held  that  the  defendant's  agreement  is' 
within  the  statute  of  "frauds,  and  rendered  judgment  for  defendafTt, 
thr"ainount  involved  is  less  than  $100,  and  the  circuit  court  certifies 
that  the  question  as  to  whether  the  agreement  is  within  the  statute 
of  Traudsjs  one  upon  which  the  opinion  of  the  Supreme  Court  is  "He- 
si  ted.-  The  plaintiffs  appeal.  ^ 

A.DAMS,  J.  Two  a_gri££m£nts  are  averred  in  the  petitioif,  -one  as 
made  between  the  defendant  and  Vandevent,  to  pay  the  note  as  part 
of  the  consideration  of  the  land,  artdtne  other  as  between  the  defend- 
ant, Vandevent,  and  the  plaintiff,  to  pay  the  note,  not  only  as  a  part 

3  8  Accord:    Calkins   v.   Chandler,  36   Mich.   320.   24   Am.   Rep.   593  (1877); 
MilksTTTlich,  80  N.  Y.  269,  36  Am.  Rep.  615  (1880).     See  Clark  v.  Jones,  85 
AJa.  127,  4  South.  771  (1SS7). 
Hen.  Sub.— 12 


A 


178  FORMATION.  (Part  1 

of  the  consideration  of  the  land,  but  also  in  consideration  of  the  re- 
lease of  the  attachment.  Neither  agreement,  we  think,  is  within  the 
statute  of  frauds.  In  either  case  the  payment  wa^lolje  made^out  of 
tEe^consideration  of  the  land,  and  in  making  such  payment  the  de- 
fendant would  be  paying  his  own  debt.  In  holding^die  agreements 
lo  be  within  the  statute  of  frauds  we  think  the  court  erred. 

Whether  the  evidence  is  not  such  that  judgment  should  have  been 
for  the  defendant,  notwithstanding  the  error,  we  do  not  determine. 
We  deem  it  our  province  to  pass  merely  upon  the  question  certified 
to  us. 

Reversed.. 


FARLEY  V.  CLEVELAND. 

(Supreme  Court  of  New  York,  1825.    4  Cow.  432,  15  Am.  Dec.  387.) 

Affirmed  by  Court  of  Errors,  9  Cow.  639. 

On  error  from  the  Washington  common  pleas.  Farley  sued  Cleve- 
land in  the  court  below,  declaring  specially-  that  otieJ\Ioon  on  the  22d 
November,  1815,  gave  the  plaintiff  a  promissory  note  for  $100,  with 
interest,  payable  the  1st  June  thereafter;  that  on  the  1st  January. 
1817,  Cleveland,  in  consideration  of  15  tons  of  hay  (value  $150)  sold 
and  delivered  by  ]\Ioon  to  him,  at  his  instance,  promised  to  pay~rtTe 
note  of  Aloon  to  Farle_^\ 

On  the  trial,  the  plaintiff  offered  to  prove  thfi-joote,  and  that,  in  the 
spring  of  1817,  Moon  absconded,  just  before  which  the  defendant 
promised  to  pay  Moon's  note  to  the  plaintiff,  in  consideration  of  15 
tons  of  hay,  worth  $10  per  ton,  to  be  delivered  by  Moon  to  him;  that 
the  hay  was  thereupon  delivered  to  the  defendant,  and  in  considera- 
tion thereof  he  2IomisecL.tlie_£laintiff,  by  parol,  to  pay  the  note ;   that 
the  next  day  Mooii^abscondecl. 
r      The_common  pleas  nonsuited  the  plaintitY,  on  the  ground,  thaLlhe 
]  promise,  being  to  pay  the  debt  of  another  and  not  in  writing,  was  void 
[>>?''v'  ^  within  the  statute  of  frauds,  and  that  was  the  only  question  rriade  on 
(  the  argument  here.^® 

Curia,  per  Savage,  C.  J.  That  part  of  the  statute  which  relates 
to  this  case  is  as  follows:  "No  action  shall  be  brought  whereby  to 
charge  the  defendant  upon  any  special  promise  to  answer  for  the  debt, 
default  or  miscarriages  of  another  person,  unless  the  agreement  upon 
which  such  action  shall  be  brought,  or  some  memorandum  or  note 
thereof,  shall  be  in  writing,"  etc.  Our  statute  is  a  transcript  of  the  29 
Car.  II.  The  English  decisions,  therefore,  upon  that  statute,  are  en- 
titled to  consideration.  We  have  been  referred  to  several,  before 
V  noticmg  which,  the  three  classes  of  cases  mentioned  by  Kent,  C.  J., 
in  Leonard  v.  Vredenburgh,  8  Johns.  29,  5  Am.  Dec.  317,  should  be 

»»  The  argument  of  counsel  is  omitted. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  179 

attended  to.  These  are:_  (1)  Where  the  promise  of  the  defendant 
is  collateral  to  the  principal  promise,  but  made  at  the  same  time ;  _X^)_ 
where  the  collateral  promise  was  subsequent  to  the  original  indebted- 
ness and  was  made  upon  no  other  consideration  but  the  liability  of 
the  original  debtor;  (3)  where  the  promise  arises  out  of  some  new 
consideration  of  benefit  or  harm,  moving  between  the  newly  contract- 
ing parties,  or,  as  expressed  by  Mr.  Roberts  (Rob.  on  Frauds,  232), 
"If  it  spring  out  of  any  new  transaction,  or  move  to  the  party  prom- 
ising upon  some  fresh  and  substantive  ground  of  a  personal  concern 
to  himself."  The  first  class  needs  no  other  consideration  than  the 
original  debt  to  which  it  is  collateral ;  the  second  does ;  and  the  third 
is  not  within  the  statute  at  all.  Injhe  two  first  cases  the  consideration 
must  be  in  writing,  as  well  as  the  promise;  in  the  third,  all  may,  rest 
\rr2arql,  as  in  ordinary  cases., '  g>wC^  Y^*^'' 

Buckmyr  v.  Darnall,  2  Ld.  Raym.  1085,  belongs  to  the  first  class. /-^^-f-^^^l,. 
The  defendant  had  promised  the  plaintiff  to  return  his  horse,  if  he  ^ 
would  let  him  to  one  English,  to  ride  to  Reading.  This  was  held  to 
be  collateral,  because  English  was  liable  on  the  original  bailment ;  and 
hence  it  must  be  in  writing.  So,  also,  in  Jones  v.  Cooper,  Cowp.  227, 
the  promise  was  to  pay  the  plaintiff,  if  the  debtor  did  not,  which  was 
clearly  within  the  statute.  In  Matson  v.  Wharam,  2  T.  R.  80,  the 
defendant  applied  to  the  plaintiff  to  sell  goods  to  one  Coulthard,  and 
said,  "I  will  see  you  paid."  This  was  held  to  be  void,  being  merely 
by  parol.  In  Anderson  v.  Hayman,  1  H.  Bl.  120,  the  defendant  said, 
"use  my  son  well,  charge  him  as  low  as  possible,  and  I  will  be  bound 
for  the  payment  of  the  money,  as  far  as  £800.,  of  il,000."  The  goods 
were  charged  to  the  son.  The  promise  was  held  to  be  collateral  and 
void,  being  by  parol. 

In  this  court,  the  case  of  Leonard  v.  Vredenburgh,  as  decided,  be- 
longs to  the  third  class.  The  defendant  promised  in  writing  to  guar- 
anty a  note  of  one  M.  Johnson,  for  $500,  on  which  the  guaranty  w^as 
written.  /  (juJU^erf^i^ 

The  case  of  Fish  v.  Hutchinson,  2  Wils.  94,  belongs  to  the  sec-  cA^„^tJulo 
ond  class.  The  plaintiff  had  sued  one  Vickars,  and  the  defendant  in 
consideration  that  the  plaintiff  would  stay  his  action,  proiViised  to  pay 
him  the  money  owing  to  him  by  Vickars.  The  court  decided  this 
promise  to  be  within  the  statute,  as  the  original  debt  was  still  subsist- 
ing. So  also  in  the  case  of  Jackson  v.  Rayner,  in  this  court  (12  Johns. 
291),  the  defendant  in  the  court  below  promised  the  plaintiff  below 
(w^ho  had  sued  the  defendant's  son),  that  he,  the  defendant,  would 
pay  the  debt,  as  he  had  taken  his  son's  property,  and  meant  to  pay 
his  honest  debts.  The  court  decided  that  a  promise  in  writing  was 
necessary,  and  emphasized  the  fact  that  the  original  debt  of  the  son 
was  still  subsisting.  This  case  was  decided  on  the  authority  of  Simp- 
son v.  Patten,  4  Johns.  422,  which  will  be  hereafter  noticed.  VKlt^-fWY*' 

The  third  class,  mentioned  by  Kent,  C.  J.,  as  not  within  the  statute,    --  -  '    '■ 
has  been  illustrated  by  the  following  cases :   In  Read  v.  Nash,  1  Wils. 


180  FORMATION.  (Part  1 

305,  one  Tuack,  the  plaintiff's  testator,  had  sued  one  Johnson  for  an 
assault  and  battery,  and  the  cause  being  at  issue,  the  defendant  prom- 
ised, that,  if  Tuack  would  withdraw  the  record,  he  would  pay  him  £50. 
and  the  costs.    This  was  held  an  original  promise,  and  that  here  was 
no  debt,  default  or  miscarriage.     In  Williams  v.  Leper,  3  Burr.  1886, 
the  plaintiff  was  proceeding  to  distrain  the  goods  of  one  Taylor,  his 
tenant,  for  three  quarters'  rent,  being  £45.,  when  the  defendant,  who 
was  agent  for  Taylor's  creditors,  to  sell  the  goods  under  an  assign- 
ment of  them,  promised  the  plaintiff  to  pay  the  rent  in  arrear,  if  he 
would  desist  from  distraining.     It  was  contended  that  this  promise 
should  have  been  in  writing,  and  that  Taylor  still  remained  liable  till 
actual  satisfaction.     Lord   Mansfield   said  the  landlord  had  a  legal 
pledge ;   he  had  a  lien  upon  the  goods ;    and  that  the  statute  did  not 
apply.     The  case  of  Simpson  v.  Patten,  4  Johns.  422,  came  here  on 
certiorari.    Patten  had  sued  Simpson  in  the  court  below  on  a  prom- 
ise, that  if  he.  Patten,  would  forbear  to  sue  one  J.  S.,  Simpson  would 
pay  the  amount  of  J.  S.'s  note,  as  soon  as  he  could  sell  an  acre  of  land 
of  J.  S.,  which  he,  Simpson,  \vas  authorized  to  sell.     Simpson  had 
sold  the  land,  and  a  recovery  was  had  on  the  parol  promise.     This 
court  reversed  the  judgment,  saying  that  a  promise  to  pay  the  debt  of 
a  third  person  must  be  in  writing,  notwithstanding  it  is  made  on  suf- 
ficient consideration.    They  said  nothing  about  this  promise  being  an 
original   undertaking.     In   support   of  their  opinion   they   cite   some 
of  the  above  cases,  and  King  v.  Wilson,  2  Str.  873,  where  Raymond, 
C.  J.,  held  that  a  parol  promise  to  pay  the  debt  of  another,  in  con- 
sideration of  forbearance,  was  void  by  the  statute  of  frauds  and  per- 
juries.    In  the  cases  of  Simpson  v.  Patten  and  Jackson  v.  Rayner 
there  was  a  good  consideration,  that  of  indefinite  forbearance,  and 
in  both  cases  funds  of  the  original  debtor  were  placed  in  the  hands  of 
the  defendants,  by  which  they  had  the  means  of  performing  their 
promises;    but  the  original  debt  was  still  subsisting.     The  case  of 
Slingerland  v.  Morse,  7  Johns,  463,  was  very  much  like  the  case  of 
Williams  v.  Leper.    The  plaintiff  had  distrained  the  goods  of  his  ten- 
ant, and  the  defendants  promised  in  writing  to  deliver  them  six  days 
after  demand,  or  pay  $450.    It  was  contended  that  the  writing  should 
have  contained  a  consideration  according  to  Sears-v.  Brink,  3  Johns. 
210,  3  Am.  Dec.  475,  considering  the  case  as  within  Chief  Judge  Kent's 
second  class ;  but  the  undertaking  was  held  to  be  original.    The  plain- 
tiff had  a  lien  which  he  relinquished;    and  as  this  took  the  case  out 
of  the  statute,  no  writing  was  necessary.    Skelton  v.  Brewster,  8  Johns. 
376,  came  here  on  certiorari.    Brewster  had  levied  on  the  property  of 
one  W.  S.  by  virtue  of  an  execution.    W.  S.  delivered  all  his  goods  to 
Skelton,  who,  in  consideration  of  this,  and  that  the  plaintiff  would  dis- 
charge W.  S.  from  the  execution,  promised  to  pay  $25.    In  this  case 
the  court  said:  "The  promise  of  the  defendant  below  to  pay  the  judg- 
ment against  a  third  person,  was  founded  on  a  new  and  distinct  con- 
sideration, which  was  the  delivery  of  the  goods  of  such  person,  and 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  181 

the  plaintiff's  discharge  of  the  judgment" — and  they  held  it  an  original 
promise.  This  case  differs  from  Simpson  v.  Patten  and  Jackson  v. 
Rayner  in  no  essential  particular,  except  that,  in  those  cases,  the  orig- 
inal debtor  remained  liable.  In  this  case  he  was  discharged.  In  those 
cases  the  promises  were  held  to  be  within  the  statute ;  in  this,  not.  It 
would  seem,  therefore,  that  the  liability  of  the  original  debtor  was  a 
controlling  fact. 

But  in  Gold  &  Sill  v.  Philins^  10  Johns.  412,  the  liability  of  the 
original  debtor  was  overlooked,  or  not  deemed  important.  In  that 
case  the  plaintiffs  had  a  demand  against  one  Aaron  Wood.  Wood  sold 
his  farm  to  the  defendants,  and  they  agreed  to  pay  Wood  a  certain 
sum.  The  rest  of  the  consideration  was  composed  of  Wood's  debts, 
which  the  defendants  agreed  to  pay;  and  among  them  was  the  de- 
mand of  the  plaintiffs.  The  defendants  wrote  to  the  plaintiffs  as  fol- 
lows :  "Gentlemen :  An  arrangement  has  been  made  between  us  and 
Aaron  Wood,  by  which  we  are  to  be  accountable  to  you  for  the  bal- 
ance due  from  him  to  you,  on  account."  The  court  say :  "The  prom- 
ise of  the  defendants  was  not  within  the  statute  of  frauds.  It  had 
no  immediate  connection  with  the  original  contract,  but  was  founded 
on  a  new  and  distinct  consideration.  The  distinction  noticed  in  Leon- 
ard V.  Vredenburgh  applies  to  this  case,  and  takes  it  out  of  the  statute. 
The  defendants  made  the  promise  in  consideration  of  a  sale  of  lands 
made  to  them  by  Wood;  and  they  assumed  to  pay  the  debt  of  the 
plaintiffs,  as  being,  by  arrangement  with  Wood,  part  payment  of  the 
purchase  money.  Here  was  a  valid  assumption  of  the  debt  of  Aaron 
Wood."  In  this  case  the  original  debtor  was  not  discharged,  and  the 
property  purchased  of  Wood  had  passed  to  another  person  who  had 
made  a  similar  promise.  In  the  case  of  Myers  v.  Morse,  15  Johns. 
425,  the  plaintiffs  were  liable  as  tndbrsers  of  one  H.  M.  They  also 
held  a  note  drawn  by  H.  M.  and  indorsed  by  the  defendant,  on  which 
he  was  liable.  It  was  agreed  by  the  plaintiffs  that  they  would  not 
hold  the  defendant  liable  on  the  note  held  by  them,  in  consideration 
whereof  he  promised  to  indemnify  the  plaintiffs  against  one-third  of 
any  loss  which  they  might  sustain  as  indorsers  of  H.  M.  This  was 
held  to  be  an  original  promise,  founded  upon  the  new  consideration 
moving  between  the  newly  contracting  parties.  The  case  of^Olmstead 
v.  Greenly,  18  Johns.  12,  was  this :  The  plaintiff  was  liable  as  indorser 
for  B.  &  H.  for  $1,000.  B.  owed  the  plaintiff  $150,  and  it  was  agreed 
between  the  plaintiff,  defendant  and  B.,  that  B.  should  place  in  the 
defendant's  hands,  in  cash,  $600,  and  in  goods,  $1,500,  and  that  the 
defendant  should  pay  the  note  indorsed  by  the  plaintiff,  and  indem- 
nify him  against  all  damages  and  costs  by  reason  of  that  indorsement,, 
and  should  also  pay  the  plaintiff  the  debt  due  him  from  B.  The 
plaintiff  averred  that  B.  had  the  money  and  goods,  and  that  the  plain- 
tiff caused  them  to  be  put  in  the  defendant's  hands  for  the  purposes 
mentioned.  The  court  said  this  is  not  a  case  within  the  statute  of 
frauds.     It  is  not  a  mere  collateral  undertaking,  on  the  part  of  the 


382  FORMATION.  (Part  1 

defendant,  to  pay  the  debt  of  Bristol,  but  was  an  original  contract 
on  an  independent  consideration,  received  by  the  defendant  by  the 
procurement  of  the  plaintiff.  The  plaintiff  has  the  same  ground  of  ac- 
tion, as  if  he  had  delivered  his  own  goods  to  the  defendant  as  the 
/.  consideration  of  the  promise. 
''^'AL^'.<,-\fUf"  These_cases  do  not  eniii:£l):.^ree,  unless  they  are  distinguishable 
by  the  circumstance  that  in  some  of  them  forbearance  to  sue  the 
original  debtor  is  the  whole,  or  a  principal  part,  of  the  consideration 
for  the  promise,  and  in  the  others,  the  whole  consideration  is  some- 
thing new,  moving  to  the  party  making  the  promise.  Thus,  in  Simp- 
son V.  Patten  and  Jackson  v.  Rayner,  the  promise  was  founded,  as 
well  upon  the  forbearance  of  the  plaintiffs  to  sue  the  original  debtor, 
as  upon  the  property  of  the  debtor  being  placed  in  the  hands  of  the 
defendants,  out  of  which  the  debts  might  be  paid ;  but  in  the  cases  of 
Gold  v.  Philips,  INIyers  v.  Morse,  and  Olmstead  v.  Greenly,  no  allusion 
is  had  to  the  effect  to  be  produced  upon  the  original  debtor.  The  prom- 
ise in  those  cases  was  predicated  upon  the  value  received  by  the  de- 
fendants, either  from  the  plaintiffs  or  the  original  debtor. 
/^  The,  rase  under  consideration  is,  in  principle,  very  much  like  the  case 
of.  Gold  v.  Philips.  The  defendant  had,  in  that  case.  purchaseJIand 
of  the  original  debtor,  which  was  the  consideration  moving  to  the  de- 
fendant. In  this  the  defendant  purchased  hay,  which  was  the  con- 
sideration moving  to  him.  So,  too,  Olmstead  v.  Greenly.  The  orig- 
inal debtor  placed  money  and  goods  in  the  defendant's  hands,  with 
which  he  promised  to  make  certain  payments,  and  to  pay  the  plaintiff's 
debt.  It  was  averred  that  this  was  done  by  the  procurement  of  the 
plaintiff,  which  is  the  only  difference  between  that  case  and  this,  if  the 
hay  was  not  absolutely  sold  by  ]\Ioon  to  the  defendant.  In  all  these 
cases,  founded  upon  a  new  and  original  consideration  of  benefit  to 
the  defendant,  or  harm  to  the  plaintiff,  moving  to  the  party  making 
the  promise,  either  from  the  plaintiff  or  the  original  debtor,  the  sub- 
sisting liability  of  the  original  debtor  is  no  objection  to  the  recovery. 

I  am,  therefore,  of  opinion,  that  the  court  below  erred,  that  the 
judgment  be  reversed,  and  a  venire  de  novo  awarded. 

Judginent  reversed.*** 

4  0  The  following  cases  (in  none  of  which  was  there-a  novation)  are  in  ac- 
cord with  the  principal  cnse:  EUwood  v.  Monk.  5  "Wend.  235  (1830T  See 
Barker  v.  Bucklin.  2  Denio.  45.  4.3  Am.  Dec.  720  (1846) ;  Barker  v.  Bradley. 
42  N.  Y.  31G,  1  Am.  Rep.  521  (ISTO).  Compare  Bank  v.  Chalmers,  144  N. 
T.  432,  39  N.  E.  331  (180.5) ;  Huber  v.  Ely,  45  Barb.  169  (1805) ;  Smart  v. 
Smart,  97  N.  T.  559  (1SS5),  assignment  of  lease  and  sale  of  stock  of  Roods; 
Kaabe  v.  Squier,  148  N.  Y.  81,  42  N.  E.  516  (1895),  goods ;  Thorp  v.  Keokuk, 
etc..  Co.,  48  N.  Y.  253  (1872),  land:  Seaman  v.  Hasbrouck.  35  Barb.  151  (1861), 
land :  Townsend  v.  Long.  77  Ba.  143.  18  Am.  Rei).  438  (1875) ;  Taylor  v.  Pres- 
ton, 79  Pa.  436  (1876),  land :  Wvnn's  Adm'r  v.  Wood.  97  Pa.  216  (1881),  stock 
in  trade;  Hall  v.  Lmcoln  Savings,  etc..  Co.,  220  Pa.  485,  69  Atl.  994  (1908), 
money;  Arnold  v.  Stedman,  45  Pa.  186  (1863),  abandonment  of  lien  on  realty; 
Stoudt  V.  Hine,  45  Pa.  30  (1863):  Dearborn  v.  P.irks.  5  :\Ie.  81.  17  Am.  Dec, 
206  (1827),  land;  Maxwell  v.  Haynes.  41  Me.  559  (lSr.O).  "fixings"  in  the 
woods;    Brown  v.  Strait,  19  111.  88  (1857),  mill;    Rabbermann  v.  Wiskamp, 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  133 

MASON  V.  HALL. 
(Supreme  Court  of  Alabama,  1857.     30  Ala.  599.) 

Appeal  from  the  Circuit  Court  of  Monroe,  tried  before  Hon.  C.  W. 
Rapier. 

The  complaint  in  this  case  was  in  these  words : 

"Lucy  H.  Mason  v.  Thomas  Hall. 

"The  plaintiff  claims  of  the  defendant  $155,  due  for  the  hire  of  a 
negro  man,  named  Ambrose,  for  the  year  1854,  which  sum  of  money, 
with  interest  thereon,  is  now  due." 

"On  the  trial,"  as  the  bill  of  exceptions  states,  "the^laintijf  intro- 
duced proof  to  show  that,  on  1st  January,  185-4,  she  hired  a  negro 
man  to  James  Hall  for  the  term  of  one  year,  for  $155,  and  took  from 
him  a  note,  with  security,  for  said  sum  of  money.  It  was  proved,  also, 
that  said  James  Hall,  early  in  the  year  1854,  hired  said  slave  to  de- 

54  111.  179  (1870),  contract  assigned  to  defendant;  Wilson  v.  Bevans,  58  111. 
232  (1871),  personalty  and  interest  in  a  lease  of  a  farm  ;  Mathers  v.  Carter, 
7  111.  App.  225  (1880),  surrender  of  the  defendants'  bond  to  the  defendants ; 
Woodward  v.  Wilcox,  27  Ind.  207  (18G6) ;  Johnson  v.  Knapp.  36  Iowa,  610 
(1873),  horses;  Chamberlin  v.  Ingalls,  38  Iowa,  300  (1874),  land;  Botkin  v. 
Middlesborough,  etc..  Co..  23  Kv.  Law  Rep.  1964.  66  S.  W.  747  (1902).  land; 
Small  V.  Schaefer.  24  Md.  143  (1866).  bonds;  Wag.  St.  Mo.  p.  1000,  §  3;  Bess- 
hears  V.  Rowe,  46  Mo.  501  (1870),  land ;  Beardslee  v.  Morgner,  4  SIo.  App. 
139  (1877) ;  Keyes  v.  Allen,  65  Vt.  667,  27  Atl.  319  (1893),  chattel  mortgage, 
the  court  saying  that  the  transaction  Ls  "an  independent  undertaking,  not- 
withstanding the  continuance  of  the  original  liability" ;  Sweatmau  v.  Parker, 
49  Miss.  19  (1873),  notes  of  a  third  person  indorsed  to  defendant,  the  promise 
being  made  to  the  plaintiff,  but  the  court  saying,  obiter,  that  the  same  result 
would  follow,  though  the  promise  were  made  to  the  indorser ;  Emerson  v. 
Slater,  63  U.  S.  28,  16  L.  Ed.  360  (1859).  real  estate  and  bonds;  Putney  v. 
Farnham,  27  Wis.  187,  9  Am.  Rep.  459  (1870).  personalty ;  Fanning  v.  Murphy, 
126  Wis.  538,  105  N.  W.  1056,  4  L.  R.  A.  (N.  S.)  666,  110  Am.  St.  Rep.  946 
(1906)  ;  Piano  Mfg.  Co.  v.  Burrows,  40  Kan.  361,  19  Pac.  809  (1888),  harvest- 
ing machine ;    Hooper  v.  Hooper,  32  W.  Va.  526,  9  S.  E.  937  (1889),  laud. 

Byjlie_±ernia  of  the  bailment  the  defendant  may  agree  to  pay  a  given  sum 
to  the  plaintiff  at  all  events.  The  defendant  is  then  a  debtor.  Whitcomb  v. 
Kephart,  50  Pa.  85  (1865) ;  Clay  v.  Tyson,  19  Xeb.  530.  26  X.  W.  240  (1SS6), 
wherein  the  court  says:  "The  agreement  *  *  *  made  with  the  sou  was 
a  new  and  independent  contract,  based  upon  a  valuable  consideration,  by 
which  plaintiff"  in  error  created  a  new  debt,  which  he  agreed  to  pay.  not  to 
the  son,  his  original  creditor,  but  to  defendant  in  error.  *  *  *  n  then  be- 
came a  debt,     *     *     *     and  was  not  within  the  statute  of  frauds." 

Ajiis£USsion  of  the  English  cases  will  be  found  in  the  author's  paper:  "A 
New  and  Old  Reading  on  the  Fourth  Section  of  the  Statute  of  Frauds."  Uni- 
versity of  Pennsylvania  Law  Review,  and  American  Law  Register,  vol.  57,  pp. 
611-<K.4  (1009). 

The  author  has  elsewhere  traced  the  history  of  the  action  of  account  in 
fa,vdr~QfjLhe  beneficiary  under  a  contract.  See  "History  of  the  Beneficiary's 
Action  in  Assumpsit,"  Select  Essays  in  Anglo-American  Legal  History,  vol.  3, 
p.  339:    also  American  Law  Register,  vol.  47  O.  S.  (56  X.  S.)  pp.  73-87. 

In  Dearborn  v.  Parks,  5  Me.  81,  17  Am.  Dec.  206  (1827),  the  Supreme  Judi- 
cial Court  of  Maine  said:  "In  cases  of  this  description,  although  the  promisor 
undertakes  to  pay  the  debt  of  another,  yet  he  thereby  pays  his  own  debt :  and 
that  constitutes  the  operative  motive  and  inducement,  by  which  he  is  actu- 
ated. To  him  it  must  be  a  matter  of  indifference  whether  he  pajs  directly  to 
his  creditor  or  to  his  assignee.     He  pays  no  more,  and  he  can  be  holdeu  to 


fc-^T' 


184  FORMATION.  (Part  1 

fendant,  Thomas  Hall,  who  was  his  father;  that  defendant  agreed 
wiflr^aid  James  Hall  that  he  would  pay  plaintiff  the  hire  of  said  ne- 
gro, to  wit,  $150,  and  that  said  James  Hall  would  pay  $5  of  the  hire; 
that  the  plaintiff  still  held  the  note  of  said  James  Hall;  and  that  said 
James  Hall  had  left  the  country  in  the  early  part  of  the  year  18o4. 
There  was  no  evidence  that  plaintiff  had  offered  to  give  up  the_ijote 
of  said  James  Hall  to  any  person.  This  was,  in  substance,  all  the 
"  evidence;  and  upon  this  state  of  facts  the  court  charged  the  jury  that 
the  plaintiff  could  not  recover,  as  the  promise  to  pay  thc-liiie  was 
not  made  to  her,  and  accepted  by  her,  and  the  note  of  James  HaTT  de- 
livered up."  The  plaintiff  excepted  to  this  charge,  and  was  compelled 
to  take  a  nonsuit,  which  she  now  moves  to  set  aside,  assigning  the 
charge  of  the  court  as  error. 

Walker,  J.  Tliere  are  three  questions  in  this  case :  (1)  Whether 
a  promise  by  one  to  pay  the  debt  of  another,  made  upon  a  new  and 
valuable  consideration  beneficial  to  the  promisor,  is  within  the  statute 

pay  but  once.  These  are  not  cases  within  the  meaning  of  the  statute,  which 
requires  evidence,  not  susceptible  of  being  easily  perverted  by  fraud  or  per- 
jury, before  one  man  can  be  held  obliged  to  pay  the  debt  of  another  and  trust 
to  lais  solvency  for  reimbursement.  But  if  the  original  debtor  has  paid  him 
an  adequate  consideration  therefor,  either  by  the  discharge  of  a  debt  due  to 
himself,  or  by  depositing  money  with  him  for  the  express  purpose,  and  the 
party  thereupon  promises  to  pay  as  directed,  why  should  not  the  undertaking 
inure  to  him  for  whose  benefit  it  is  intended?  As  this  cannot  operate  to  the 
injury  of  the  promisor,  there  is  no  reason  why  the  law  should  require  evi- 
dence of  a  more  certain  character  to  prove  the  substitution  than  to  prove  the 
promise  directly  to  him  from  whom  the  consideration  moved.  We  are  there- 
fore of  opinion  that  this  is  not  a  case  within  the  statute  of  frauds,  and  that, 
according  to  the  authorities,  the  alleged  want  of  privity  constitutes  no  suflQ- 
cient  objection  to  a  recovery  on  the  part  of  the  plaintiff." 

In  Taylor  v.  Preston,  79  Pa.  436  (1876),  the  Supreme  Court  of  Pennsylvania 
said:  "Is  the  contract  here  alleged  within  the  prohibition  of  the  statute  of 
frauds  of  the  26th  of  April,  1S55?  It  is  to  be  borne  in  mind  that  the  defend- 
ants were  acquiring  property  for  their  own  use.  They  were  contracting  to 
serve  the  purposes,  not  of  the  plaintiff,  but  of  themselves.  And  the  agree- 
ment, if  it  was  made,  to  pay  Young,  was  not  only  a  stipulation  to  pay  a  debt 
which  Preston  owed,  but  a  stipulation  to  pay  the  price  of  property  they  had 
bought.  In  no  ordinary  sense  did  they  become  sureties  or  guarantors  for 
Preston.  Buying  the  land,  the  promise  to  pay  for  it,  whatever  the  form,  was 
a  promise  to  pay  their  own  debt.  To  hold  the  statute  applicable  to  a  case  like 
this,  it  is  believed,  would  be  both  a  violation  of  principle  and  a  departure 
from  authority." 

Contra:  Emerick  v.  Sanders,  1  Wis.  77  (1853);  Butterfield  v.  Hartshorn, 
7  >r.  H".  345,  26  Am.  Dec.  741  (1834) ;  Lang  v.  Henry,  54  N,  H.  57  (1873), 
containing  the  dictum  that  if  a  demand  precedes  the  suit  recovery  may_J)e 
had,  but  not  otherwise ;  Palmetto  Mfg.  Co.  v.  Parker,  123  Ga.  798,  51  S.  E. 
714  (1905) ;  Strauss  v.  Garrett.  101  Ga.  307.  28  S.  E.  850  (1897).  under  a  pe- 
culiar provision  of  Georgia's  Code  1895,  §§  2693,  2694,  making  the  statute  in- 
operative in  cases  "where  there  has  been  performance  on  one  side,  accepted 
bv  the  other  in  accordance  with  the  contract" ;  Furbish  v.  Goodnow,  98  Mass. 
296  (1867). 

The  last  case  is  adversely  criticised  in  Browne  on  the  Statute  of  Frauds  (.5th 
Ed.)  §  214.  Curtis  v.  Brown,  5  Cush.  (Mass.)  4S8  (18.50) ;  Brightman  v.  Hicks, 
108  Mass.  246  (1871).  But  see  the  early  Massachusetts  cases:  Carnegie  v. 
Morrison,  2  Mete.  381  (1841);  Brewer  v.  Dyer.  7  Cush.  340  (1851).  See.  also, 
Clapp  V.  Lawton,  31  Conn.  95  (1862) :  Halstead  v.  Francis,  31  Mich,  lia 
(1875) ;   Styron  v.  Bell,  53  N.  C.  222  (1S60). 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER  CONTRACTS.  185 

of  frauds ;  (2)  whether  a  suit  can  be  maintained  upon  such  a  promise 
by  him  forwbose  benefit  it  was  made;  (3)  whether,  if  suit  can  be 
maintained  upon  such  a  promise,  the  declaration  may  be  upon  the 
promise  made  to  the  plaintiff's  debtor,  describing  it  as  if  it  had  been 
made  to  himself.  ^ 

The  first  of  those  three  questions  is  clearly  settled  in  the  negative  <f..^>>  ^^"^^^ 
by  the  previous  decisions  of  this  court.     McKenzie  v.  Jackson,  4  Ala.   '•  '    '  ' 

230 ;  Brown  v.  Barnes,  6  Ala.  694 ;  Martin  v.  Black,  21  Ala.  721 ; 
HoUingsworth  v.  Martin,  23  Ala.  591;  Cameron  v.  Clarke  &  Smith, 
11  Ala.  259.  A  , 

Upon  the  second  question  there  is  some  conflict  of  authority;  but  iu>»*^^*^^ 
the  weight  of  authority,  both  in  England  and  America,  is  decidedly  in  ^  *-^r*f-^<^  • 
favor  of  the  proposition  that,  where  a  parol  promise  is  made  to  one 
for  the  benefit  of  another,  an  action  may  be  maintained  upon  it  by  him 
for  whose  benefit  it  was  made.  Such,  upon  the  authorities,  and  upon 
the  reason,  convenience,  and  justice  of  the  rule,  we  think  is  the  law. 
It  is  no  objection  to  the  maintenance  of  the  suit  by  him  for  whose  ben- 
efit the  promise  is  made  that  an  action  might  also  be  brought  by  him 
to  whom  the  promise  was  made.  We  deem  it  only  necessary  to  cite 
the  authorities  in  support  of  the  foregoing  proposition.  Bell  v.  Chap- 
lain, Hardres,  321 ;  Arnold  v.  Lyman,  17  Mass.  400,  9  Am.  Dec.  154 ; 

1  Comyn's  Digest,  303 ;    1  Chitty  on  Pleading,  5 ;    Barker  v.  Bucklin, 

2  Denio  (N.  Y.)  45,  13  Am.  Dec.  726;  Master,  Wardens,  and  Com- 
monalty of  Feltmakers  v,  Davis,  1  Bos.  &  Pul.  98 ;  4  Am.  Jurist,  No. 
43,  October,  1839,  pp.  16  to  20 ;  Hitchcock  v.  Lukens,  8  Port.  333 ; 
Hall  v.  Marston,  17  Mass.  575 ;  Carey  v.  Evans,  29  Ala.  99 ;  Hucka- 
bee  V.  May,  14  Ala.  263 ;   Hoyt,  Ford  &  Robinson  v.  Murphy,  18  Ala. 

316.  Xf.y^y^>^^J- 

Upon  the  third  question  we  are  constrained  to  decide  against  the  |u->^^vri>yc,J^« 
appellant.  Where 'a  promise  is  made  by  one  person  to  pay  the  debt 
of  another,  it  is  necessary  to  declare  specially,  unless  the  case  be  one 
in  which  the  action  for  money  had  and  received  can  be  maintained. 
Mason  v.  Munger,  5  Hill  (N.  Y.)  613 ;  Beers  v.  Culver,  1  Hill  (N.  Y.) 
589;  Quin  v.  Hanford,  1  Hill  (N.  Y.)  82;  Huckabee  v.  May,  14  Ala. 
263.  The  complaint  is  upon  a  hiring  by  the  plaintiff  to  the  defend- 
ant. The  cause  of  action  is  a  promise,  in  consideration  of  a  hiring 
by  a  third  person,  to  pay  a  debt  of  such  third  person  to  the  plaintiff. 
There  was  no  hiring  by  the  plaintiff  to  the  defendant.  There  is  a 
fatal  variance  between  the  complaint  and  proof.  For  this  reason  we 
cannot  avouJ^lroiding  that  the  charge  of  the  -court  below  is  free  from 
error,  though  it  is  manifest  from  the  facts  before  us  that  the  plain- 
tiff has  a  just  and  legal  cause  of  action  against  the  defendant 
The  judgment  of  the  court  below  is  affirmed. 


186  FORMATION.  (Part  1 

WRIGHT  V.  SMITH. 
(Supreme  Court  of  Appeals  of  Virginia,  1886.    81  Va.  777.) 

Error  to  judgment  of  hustings  court  of  Petersburg,  rendered  July 
30,  1884,  in  an _action_of  trespass  on  the  case  in  assumpsit,  wherein 
W.  D.  Smith  was  plaintiff  and  C.  Wright  &  Son  were  defendants. 
With  the  declaration  was  filed  an  account  of  item:,  whereof  the  first 
was  as  follows:  "September  15,  1881.  To  amount  admitted  by  C. 
Wright,  trading  as  C.  Wright  &  Son,  as  payable  by  him  to  W.  D. 
Smith,  as  a  settlement  had  between  them  this  day,  $998.99."  Smith  had 
been  partner  in  trade  with  F.  H.  Wright.  Upon  dissolution"i5rfirm, 
September  15,  1881,  it  owed  him  $998.9_9.  C.  Wright  &  Son;bought 
the  firm's  goods  and  promised  to  pay  this  sum  to  Smith,s^iving  their 
note  at  Smith's  request,  to  "Mrs.  W.  D.  Smith."  The  mo«€y  put  into 
the  firm  by  Smith  was  held  by  him  as  his  homestead,  and  he  testified 
that  the  note  was  made  payable  to  his  wife  under  a  mistake  as  to  the 
legal  ownership  of  the  fund.  The  note  never  was  delivered  to  or 
known  of  by  her.  It  was  lost  and  included  in  the  account,  and  the 
facts  connected  with  set  forth  thereinTI  Weight  demurred  to  the  dec- 
laration. His  demurrer  was  overcwic^  There  was  VerHTcf Tor  Smith 
and  judgment  accordingly,  to  which  Wright  obtained  a  writ  of  error 
and  supersedeas. 

Lewis,  P.,  delivered  the  opinion  of  the  court.*^    *    *    * 

It  appears  from  the  evidence  of  the  plaintiff  that  the  promise  was 
founded  on  a  new  and  orighial  consideration,  namely,  the  stock  of 
goods  belonging  to  the  firm  of  which  the  defendant  became  the  ptrr- 
chaser,  and  hence  is  not  within  the  statute  of  frauds.  Tindal  v.  Tou^- 
berry,  3  Strob.  (S.  C.)  177,  49  Am.  Dec.  637;  Cooper  v.  Chambers, 
15  N.  C.  261,  25  Am.  Dec.  710 ;  Hopkins,  Brother  &  Co.  v.  Richard- 
son, 9  Grat.  485,  494. 

Lacy  and  Fauntleroy,  JJ.,  dissented.*'^ 

Judgment  affirmed. 


BERRY  V.  DOREMUS. 
(Supreme  Court  of  New  Jersey,  1SG3.     30  N.  J.  Law,  399.) 

In  assumpsit.     On^case  stated  for  advisory  opinion  of  this  court. 

James  Mead,  in  1849,  sold  a  house  and  lot,  in  New  York,  to  Jacob 
G.  Doremus,  the  defendant,  for  $5,000 ;  and  the  said  defendant  there- 
upon, and  in  part  consideration  of  the  purchase,  promised  the  said 
r^Iead  that  he  would  pay  to  Hannah   Ryerson,  the  plaintiff's  intes- 

*i  The  opinion  is  reprinted  only  so  far  as  it  deals  with  the  statute. 

•*2  There  were  other  questions  in  the  case,  and  the  ground  of  dissent  Is  not 
given. 

Aipord:  Skiuker  v.  Armstrong,  86  Va.  1011.  11  S.  E.  977  (1S90).  But  com- 
pare >royes'  Ex'r  v.  Humphreys,  11  Grat.  636  (1854). 


Ch.  4)       SURETYSHIP  DISTINGUISHED   FROM   OTHER  CONTRACTS.  187 

tate,  to  whom  he  was  indebted  for  board,  the  sum  of  $100  per  annum, 
after  the  death  of  said  Mead,  so  long-  as  the  said  Hannah  Ryerson 
should  live.  Jacob  Mead  died  in  1849,  and  Hannah  Ryerson  in  1857. 
After  the  death  of  Hannah,  her  administrator,  Henry  H.  Berry, 
brought  this  action  to  recover  the  amount  due  on  said  promise. 

On  the  trial  at  the  Morris  circuit,  the  plaintiff  having  rested  his 
cause,  the  defendant  moved  to  nonsuit  on  six  several  grounds,  as  stated"^- 
below  in  the  opinion  of  the  court.*^     The  nonsuit  was  granted,_and  I  _^^ 
thej:ircuit  court  certified  the  case  to  this  court  for  their  advisory  qpin-  [        "^ 
ion,  whether  the  nonsuit  was  rightly  granted  upon  any  of  the  grounds 
taken!  ^ 

Vredenburgh,  J.  This  is  an  action  of  assumpsit,  brought  by  the  f^^ 
plaintiff  against  the  defendant,  upon  a  promise  alleged  to  have  been 
made  by  the  defendant  to  the  plaintiff's  intestate,  on  the  2d  day  of 
April,  1849,  by  which  the_defendant,  in  consideration  of  a  sale  to  him, 
by  onejames  Mead,  of  the  house  and  lot  No.  33  Leonard  street,  in 
the  city  of  New  York,  at  the  price  of  $5,000,  promised  Mead  to  pay 
the  said  intestate,  as  part  of  the  said  purchase  money,  $100  a  year, 
after  said  Mead's  death,  during  her  natural  life.  The  plaintiff,  on 
the  trial,  proved  the  execution  and  delivery  of  the  deed  for  the  said 
premises  by  Mead  to  the  defendant,  on  the  said  2d  day  of  April,  1849, 
the  promise  to  Alead,  by  the  defendant,  to  pay  the  intestate,  as  before 
stated,  in  consideration  of  board  owing  by  Mead  to  her,  the  death  of 
Mead,  on  the  5th  of  April,  1849,  and  the  death  of  the  intestate,  on 
the  13th  February,  1858.  y 

The  plaintiff  thereupon  rested;  whereupon  the  defendant  moved  for 
a  nonsuit,  upon  the  following  grounds : 

Because  it  is  an  agreement  to  pay  the  debt  of  another,  and  not  in 
writing,  and  void  under  the  statute  of  frauds.    *     *    * 

Because  it  was  an  attempt  to  create  a  trust,  and  not  being  in  writ- 
ing, is  void  by  the  statute  of  frauds.     *     *     *  v 

The  fourth  ground  assigned  for  granting  the  nonsuit  was,  because  '  '^  '•■^•"i  <**^ '  p 
the  agreement  of  the  defendant  was  to  pay  the  debt  of  another  per-  ^  ^"^^  ^  '^^yy^ 
son,  and  not  in  writing,  and  so  void  under  the  statute  of  frauds.  JBut 
this  agreement  of  the  defendant  was  evidently  not  one  to  pay  the 
debt_o^f_another.  It  was  an  agreement  to  pay  his  own  debt*  He,  by 
taking  the  deed,  became  indebted  to  the  grantor,  and  his  agreement 
was  to  pay  a  part  of  his  indebtedness  to  the  grantor,  to  his  order  or 
appointee.  It  was  the  same,  in  legal  effect,  as  agreeing  to  pay  so 
much  of  the  consideration  of  the  deed  to  the  grantor  himself.  By  so 
doing  he  was  not  paying  the  debt  of  Mead,  but  his  own  debt  to 
Mead.    *    *    *  Xri■\^Jr,^^4^ 

The  sixth  ground  urged  for  a  nonsuit  was  because  it  was  an  at- 
tempt to  create  a  trust,  and  not  being  in  v.-riting,  is  void  by  the  stat- 
es Only  so  much  of  the  opinion  is  here  printed  as  relates  to  the  statute  of 
frauds. 


c,  ,_ 


188  FORMATION.  (Part  1 

ute  of  frauds.  But  I  cannot  see  what  trust  was  here  attempted  to  be 
created.  It  was  an  ordinary  deed  of  bargain  and  sale  for  the  consid- 
eration therein  expressed.  The  defendant  agreed  to  pay  the  consid- 
eration as  the  grantor  prescribed.  The  grantee  assents  to  the  terms 
of  payment,  among  which  was  the  agreement  to  pay  part  of  the  con- 
sideration money  to  the  intestate,  in  place  of  paying  it  to  the  grantor 
himself.  There  was  no  more  trust  created  in  agreeing  to  pay  the  in- 
testate than  in  agreeing  to  pay  the  grantor  himself.  There  was  no 
other  trust  than  there  always  is  between  the  vendor  and  vendee,  when 
the  vendee  agrees  to  pay  the  consideration  at  a  future  time,  or  in  the 
vendee  agreeing  to  pay  the  vendor  for  a  pound  of  sugar  the  next 
day.  The  agreeing  to  pay  part  of  the  consideration  to  the  intestate 
was  the  same,  in  legal  effect,  as  agreeing  to  pay  the  grantor.  The 
whole  upshot  of  the  matter  was  that  the  defendant  owed  Mead  for 
land  sold,  and  agreed  with  Mead  to  pay  off  the  purchase  money  to  his 
order,  instead  of  to  himself.  There  was  no  such  trust  as  required  to 
be  in  writing  by  the  statute  of  frauds.  I  see  no  reason  to  grant  a 
nonsuit  upon  any  of  the  grounds  urged  upon  the  circuit  court,  and 
think  that  the  court  should  be  advised  accordingly. 
Ogden  and  Van  Dyke,  Justices,  concurred. 


yi.  Actions  for  Fai.se  Representations  as  to  Credit  of 

Another 

UPTON  v.  VAIL. 

(Supreme  Court  of  New  York,  1810.    6  Johns.  181,  5  Am.  Dec.  210.) 

This  cause  came  before  the  court,  on  certiorari,  from  a  justice's 
court.  The  suit  below  was  a  special  action  on  the  case  against  Ugton, 
for  "falselx  and  deceitfully"  recommending  one  Daniel  Brown^  Jr., 
to^Vail,  as  a  man  of  property,  whereby  Vail  was  induced  to  give  credit 
to  Brown,  and,  afterwards,  lost  his  debt.  The  facts  as  they  appeared 
X  before  the  justice,  upon  the  trial,  were,  as  follows :  Upton  Md  a  judg- 
<^^  merit  bond  against  Brown,  bearing  diiie  the  Sth'of  March,  1808,  and 

conditioned  to  pay  $550.  On  the  10th  of  March,  1808,  he  went  with 
Brown  to  the  house  of  Vail,  where  Brown  applied  for  goods  upon 
credit,  and  Vail  asked  Upton  as  to  the  solvency  of  Brown ;  and  Upton 
said,  he  was  good,  and  as  good  as  any  man  in  the  county  for  that  sum. 
Vail,  accordingly,  trusted  him  with  goods,  to  the  amount  of  $10,  and 
took  his  note,  payable  the  1st  of  October  following.  On  the  25th  of 
March,  1808,  Upton,  caused  an  execution  to  be  issued  on  his  judgment, 
and  took  and  sold  all  the  property  of  Brown,  and  among  which  wa<> 
the  property  that  Brown  had  received  of  Vail,  upon  the  credit  above 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  189 

mentioned.  This  was  confessed  by  Upton,  who  said  that  Brown  had 
no  property,  and  was  worth  nothing,  and  that  he  had  taken  the  goods 
which  Brown  received  of  Vail,  and  had  a  right  so  to  do,  and  would 
do  so  again.  All  this  happened  before  Brown's  note  fell  due.  Upon 
these  facts,  the  justice  gave  judgment  against  Upton. 

'i'he  cause  was  submitted  to  the  court  without  argument.  y 

Kent,  C.  J.,  delivered  the  opinion  of  the  court.    Deceit,  in  the  rec-^p-^^T-o-^/f^^-f  ^■ 
ommendation  of  Brown,  was  the  gist  of  this  action ;    it  was  a  con-  '^WUr-t^ 
elusion  which  the  justice  was  to^SrawTrom  the  facts,  and  I  think  the 
facts  did  warrant  that  conclusion.    There  is  no  cause  to  disturb  the 
judgment  below,  on  the  ground  that  it  is  not  supported  by  proof.    The 
judgment  of  The' "justice"  was  here  a  substitute  for  the  verdict  of  a 
jury,  and  the  facts  would  well  have  justified  a  jury  to  have  drawn  w  if  ^y     j. 
the  inference  of  a -premeditated  fraud.     But  one  of  the  points  stated  -^         ^"rt ' 
on  the  part  of  the  plaintiff  is  that  this  action  will  not  lie  at  all,  with-    *  ^^  ^ 
out  the  showing  some  note,  or  memorandum  in  writing,  to  charge  the    '^'    '" 
party;   and  this  objection  was  made  at  the  trial  below. 

We  have  never  expressly  decided  in  this  court  that  the  action  would 
lie.  In  Ward  v.  Center,  3  Johns.  271,  the  question  was  incidentally 
raised,  but  no  opinion  expressed  by  the  court,  because  the  motion,  in 
that  case,  was  for  a  new  trial,  and  not  in  arrest  of  judgment.  The 
case  of  Paisley  v.  Freeman,  decided  in  the  King's  Bench  so  late  as  the 
year  1789  (3  Term  Rep.  51),  is  the  first  direct  authority,  in  the  Eng- 
lish courts,  in  support  of  the  action.  I  have  carefully  examined  the. 
reasoning  of  the  judges  in  that  case,  and  in  the  subsequent  cases,  which 
go  to  question,  or  support  the  soundness  of  that  decision ;  and  I  pro- 
fess my  approbation  of  the  doctrine  on  which  it  was  decided.  The 
case  went  not  upon  any  new  ground,  but  upon  the  application  of  a 
principle  of  natural  justice,  long  recognized  in  the  law,  that  fraud  or 
deceit  accompanied  with  damage  is  a  good  cause  of  action.  This  is 
as  just  and  permanent  a  principle  as  any  in  our  whole  jurisprudence. 
The. only  plausible  objection  to  it  is  that,  in  its  application  to  this  case, 
it  CQmje£_within  the  mischiefs  which  gave  rise  to  the  statute  of  frauds, 
and-lhal^-therefore,  the  representation  ought  to  be  in  writing.  But  this, 
I  apprehend,  is  an  objection  arising  from  policy  and  expediency;  for 
it^  certain  that  the  statute  of  frauds,  as  it  now  stands,  has  nothing  to 
do_  with  the  case.  The  case  of  Paisley  v.  Freeman  has  received  a  de-/i  ^^'  ■  ^f-  '^V,7^', 
cided  sanction,  by  a  succession  of  learned  judges,  in  the  several  courts  ^^'"'^  '^■/v^  ••/^ 
of  Westminster  Hall ;  and  I  observe  that  the  action  is  sustained  with-  '  - '  / 
out  contradiction  in  the  courts  in  Connecticut.  Eyre  v.  Dunsford, 
1  East,  318;  Haycraft  v.  Creasy,  2  East,  92;  Tapp  v.  Lee,  3  Bos. 
&  Pull.  367 ;  Harnar  v.  Alexander,  5  Bos.  &  Pull.  241 ;  1  Campbell's 
N.  P.  4,  277;  Wise  v.  Wilcox,  1  Day's  Cases  in  Error,  22. 

In  one  of  the  cases.  Sir  James  Mansfield  says:  "I  am  far  from 
wishing  to  sustain  an  action  simply  upon  misrepresentation ;  but  there 
never  was  a  time  in  the  English  law  where  an  action  might  not  have 
been  maintained  against  the  defendant  for  this  gross  fraud."     Lord 


190 


FORMATION. 


(Part  1 


Eldon  has,  indeed,  expressed  his  dissatisfaction  with  the  case  of  Pais- 
ley V.  Freeman ;  and  he  thought  that  the  statute  of  frauds  and  per- 
1  juries  ought  to  be  applied  to  the  case.  Evans  v.  Bicknell,  6  Ves.  Jr. 
186.  He  is,  undoubtedly,  a  very  respectable  authority;  but  as  far  as 
mere  authority  goes  the  preponderance  is  vastly  on  the  other  side. 
The  courts  of  law  have  been  uniformly  against  him;  and  even  his  suc- 
cessor, Lord  Erskine,  has  declared  himself,  in  the  strongest  terms,  in 
favor  of  the  suit.  "As  to  the  danger  from  a  single  witness,"  he  ob- 
serves, "is  not  one  sufficient  for  conviction  of  a  capital  crime?  That 
objection  goes  to  the  very  root  of  the  law,  which  is  uniform  in  prin- 
ciple and  practice,  with  the  single  exception  of  the  case  of  perjury, 
as  there  is  oath  against  oath.  The  case  of  Paisley  v.  Freeman,  there- 
fore, stands  upon  the  clearest  principles  of  jurisprudence,  and  has 
•no  connection  with  the  statute  of  frauds,  which  applies,  where  one  man 
undertakes  for  the  debt  of  another."  13  Ves.  133. 
X  But  independent  of  the  English  cases,  I  place  my  opinion  upon  the 
broa3"  doctrine  that  fraud  and  damage,  coupled  together,  will  ^sustain 
an  action.  This  is  a  principle  of  universal  law,  and  I  consider  it  as 
deserving  of  particular  notice,  and,  in  a  question  depending  upon  gen- 
eral principle,  as  adding  no  inconsiderable  weight  to  the  accumulation 
of  authority,  that  the  same  doctrine  is  laid  down  by  Pothier.  Traite 
du  Contrat  de  Mandat,  art.  21.  It  is  drawn  by  him  from  the  text  of 
the  civil  law,  where  it  is  supported  by  the  sanction  of  Ulpian.  Dig.  50, 
17,  47.  Consilii  non  fraudulenti  nulla  obligatio  est,  cseterum  si  dolus 
et  calliditas  intercessit,  de  dolo  actio  competit.  "If,"  says  Pothier,  "you 
had  only  recommended  Peter  to  his  creditor  as  honest,  and  able  to  pay, 
this  was  but  advice,  and  not  any  obligation ;  and  if  Peter  was,  at  the 
time,  insolvent,  you  are  not  bound  to  indemnify  the  creditor  for  the 
sum  which  he  loaned  to  Peter,  by  means  of  your  advice,  and  which 
he  has  lost.  Nemo  ex  consiHo  obligatur.  The  rule  is  the  same,  if  the 
advice  was  given  rashly  and  indiscreetly,  without  being  duly  informed 
of  the  circumstances  of  Peter,  provided  it  was  sincerely  giveri'!  Lib^ 
erum  est  cuique  apud  se  explorare  an  expediat  sibi  consilium.  But 
if  the  recommendation  was  made  in  bad  faith,  and  with  knowledge 
that  Peter  was  insolvent,  in  this  case  you  are  bound  to  indemnify 
the  creditor." 

The  court  are,  accordingly,  of  opinion,  that  the  judgment  below 
must  be  affirmed. 
.   Judgment  affirmed.** 

<*  The  leading  case  of  Paisley  v.  Freeman.  3  Term  Rep.  51  (17S9),  settled 
^the  law  in  favor  of  the  action  not  being  within  the  statute.    Tg^chauge  this 
riile  a  statute  was  require^.     The  statute  (9  Geo.  IV,  c.  14,  §  6,  commonly 
known  as  Lord  Tenterden's  Act)  provided  as  follows:    "That  no  action  shall 
be  brought  whereby  to  charge  any  person  upon  or  by  reason  of  any  represen- 
tation or  assurance  made  or  given  concerning  or  relating  to  the  character. 
[   conduct,  credit,  ability,  trade,  or  dealings  of  any  other  person,  to  the  intent  or 
'  jmrpose  that  such  other  person  may  obtain  credit,  money,  or  goods  upon,  un- 
>,  less  such  representation  or  assurance  be  made  in  writing,  signed  by  the  party 
xo  be  charged  therewith." 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM   OTHER  CONTRACTS.  191 

VII.  Special  Promise  to  Answer  for  the  Miscarriage  of 
Another  Person 

KIRKHAM  V.  MARTER. 
(Court  of  King's  Bench,  1S19.     2  Barn.  &  Aid.  613.) 

TTTP_f1f_r1a ration  fifafer]  that  one  T.  E.  Marter,  before  the  making  of 
thejiromise  of  defendant,  had,  without  the  leave  or  hcense  of  the  plain- 
tiff ,^,wrong-fully  ridden  a  horse  of  the  plaintiff's,  in  consequence  where- 
of the  horse  died;  that  the  plaintiff  had  threatened  to  commence  an  ac- 
tion against  the  said  T.  E.  M.  for  the  recovery  of  such  damages  as 
plainti1F~had  sustained  by  reason  of  the  premises;  and  thereupon,  in 
consideratidh  of  the  premises,  and  tha^the  plaintiff,  at  the  request  of 
defenuant,  would  not  bring  any  action  against  the  said  T.  KTM.  for  the 
cause^a foresaid,  and  that  plaintiff  would  be  content  to  take,  for  and 
on  account  of  the  said  horse,  what  should  be  agreed  upon  between 
the  defendant  and  one  A.  B.,  defendant  promised  to  pay  plaintiff  'what 
should  be  agreed  upon  between  defendant  and  said  A.  B.  for  and  on 
account  of  said  horse.  Averment,  that  plaintiff  had  brought  no  ac- 
tion for  the  cause  aforesaid,  and  that  he  was  willing  to  take,  for  and 
on  account  of  the  horse,  what  had  been  agreed  upon  between  the  de- 
fendant and  A.  B.,  and  that  defendant  and  A.  B.  did  agree  that  de- 
fendant should  pay  plaintiff'  50  guineas  for  the  said,  horse,  and  the  bill 
due  for  the  maintenance  and  keep  of  the  said  horse,  and  that  the  same 
should  be  paid  before  the  then  next  Epsom  races.  Declaration  then 
averred  that  that  bill  before  the  then  next  Epsom  races  was  ascer- 
tained to  amount  to  a  certain  sum  therein  mentioned.  Breach,  non- 
payment of  the  said  several  sums.     Plea,  general  issue. 

The  cause  was  tried  on  Thursday,  13th  May,  at  the  second  Middle- 
sex sittings  in  this  term,  before  Abbott,  C.  ].,  w4ien  the  plaintiff  proved 
a  verbal  contract  as  laid  in  the  declaration.    Abbott,  C.  J.,  thought  this  ^' 
an  undertaking  for  the^ddfanlt  or  -  miscarriage  oFanotliierr  wiitHin  the 
statufe'^ilirauds,-  and  consequently,  that  the  promise  ought  to  have  f  •^^''V 
been  in  writing,  and  the  plaintiff  was  nonsuited.     The  distringas  was  \ 
returnalSIe  on  Monday,  the  17th.     The  motion  for  a  new  trial  was 
made  on  the  21st;    and  although  more  than  four  days  had  elapsed 
since  the  trial,  the  court  agreed,  after  consulting  with  the  master,  that 
such  a  motion  might  be  made  at  any  time  within  four  days  after  the  re- 
turn of  the  distringas.*"  x_-p  r,  ^ 

Abbott,  C.  J.    This  case  is  clearly  within  the  mischief  intended  to  /..'^l^/^^^      i' 
be  remedied,  by  the  statute  o£-irauds,  that  mischief  being  the  fre- ^ 
quent    fraudulent   practices    which    were    too    commonly   endeavored 
to  be  upheld  by  perjury;   and  if  it  be  within  the  mischief,  1  think  the  A         *  «  ,4 
words  of  the  statute  are  sufficiently  large  to  comprehend  the  case.  '^"^    ' 

45  The  arguments  of  counsel  are  omitted. 


192  FORMATION.  (Part  1 

The  words  are  these:  "No  action  shall  be  brought  to  charge  a  de- 
fendant upon  any  special  promise  to  answer  for  the  debt,  default,  or 
miscarriage  of  another  person."  Now  the  word  "miscarriage"  has 
not  the  same  meaning  as  the  word  "debt",.0X-l'ileiault."  Il_seems  to 
me  to 'comprehend  that  species  of  wrongful  act,  for  the  consequences 
of  *  which  the  law  would  make  the  party  civilly  responsible.  The 
Wrongful  riding  the  horse  of  another,  without  his  leave  and  license, 
and  thereby  causing  its  death,  is  clearly  an  act  for  which  the  party  is 
responsible  in  damages,  and,  therefore,  in  my  judgment,  falls  within 
the  meaning  of  the  word  "miscarriage."  The  Case  of  Read  and  Nash 
is  very  distinguishable  from  this.  The  promise  there  was  to  -pay  a 
sum  of  money  as  an  inducement  to  withdraw  a  record  in  an  action-^f 
assault,  brought  against  a  third  person.  It  did  not  appear  that  the  de- 
fendant in  that  action  had  ever  committed  the  assault,  or  that  he  had 
ever  been  liable  in  damages ;  and  the  case  was  expressl}''  decIHed  on 
the  ground  that  it  was  an  original,  and  not  a  collateral,  promise.  Here 
the  son  had  rendered  himself  liable  by  his  wrongful  act,  and  the 
promise  was  expressly  made  in  consideration  of  the  plaintiff's  for- 
bearing  to  sue  the  son.    I  therefore  think  that  the  nonsuit  was  right.     X, 

HoLROYD.  T.  I  am  also  of  opinion  that  the  nonsuit  iu  this^ase_was 
right.  I  think  the  term  "miscarriage"  is  more  properly  applicable  to  a 
ground  of  action  founded  upon  a  tort  than  to  one  founded  upon  a  con- 
tract ;  for  in  the  latter  case  the  ground  of  action  is  that  the  party  has 
not  performed  what  he  agreed  to  perform,  not  that  he  has  misconduct- 
ed himself  in  some  matter  for  which  by  law  he  is  liable.  And  I  think 
that  both  the  words  "miscarriage"  and  "default"  apply  to  a  promise 
to  answer  for  another  with  respect  to  the  nonperformance  of  a  duty, 
though  not  founded  upon  a  contract.  This  case  is  certainly  within  the 
mischief  contemplated  by  the  Legislature,  and  it  appears  to  me  to  be 
within  the  plain,  intelligible  import  of  the  words  of  the  act  of  Par- 
liament. X 

Best,  J.  It  appears  to  me  that  this  case  is  within  the  spirit_and 
prmciple  as  well  as  the  words  of  the  act.  The  principle  of  the  act  is 
this :  That  where  a  man  undertakes  to  do  something  which  by  law  he 
is  not  bound  to  perform,  it  shall  be  reduced  to  writing.  Here  the  de- 
fendant does  undertake  to  do  something  that  by  law  he  is  not  bound 
to  do.  It  is  not  reduced  to  writing,  and,  therefore,  that  brings  it 
within  the  spirit  of  the  act.  The  question  is,  whether  the  words  of 
the  act  are  large  enough  to  embrace  this  case.  There  is  nothing  to 
restrain  these  words  "default"  or  "miscarriage" ;  and  it  appears  to  me 
that  each  of  them  is  large  enough  to  comprehend  this  case. 

Rule  refused. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  193 


SECTION  2.— DISTINCTION  BETWEEN  SURETYSHIP  AND 

GUARANTY 


KEARNES  V.  MONTGOMERY. 
(Court  of  Appeals  of  West  Virginia,  1870.    4  W.  Va.  29.) 

This  action  arose  in  Greenbrier  county,  in  February,  1867.  Kearnes 
was  the  plaintiff  below,  and  brought  the  case  here  on  a  writ  of  super- 
sedeas. All  the  facts  certified  in  the  bill  of  exceptions,  are  given  in 
the  opinion  of  Judge  Maxwell. 

Hon.  N.  Harrison,  judge  of  the  circuit  court  of  Greenbrier,  presid- 
ed on  the  trial  of  the  case.*®  . 

Maxwell,  J.  This  is  an_action  of  assumpsit,  to  recover  from  the  r-  " 
defendant  the  sum  of  $2,000,  wTthlnferestT  The  facts  certified  show 
that,  on  the  28th  day  of  January,  1860,  the  plaintiff  held  the  bond  of 
the  defendant  and  one  J.  N.  Montgomery,  for  $2,000;  that  the  de- 
fendant,  on  the  day  and  year  aforesaid,  proposed  to  exchange  with 
the  plaintiff,  for  the  said  bond,  a  bond  of  $2,000  executed  by  Thomas 
Creigh  and  L.  S.  Creigh  to  the  plaintiff ;  that  the  plaintiff  refused  to 
accept  the  said  last-mentioned  bond  unless  the  defendant  would  in- 
dorse the  same,  inasmuch  as  it  was  payable  to  the  plaintiff,  and  not  to 
the  defendant,  whereupon  the  said  defendant  wrote  his  name  upon  the 
back  of  the  said  bond,  which  was  then  accepted  by  the  plaintiff,  who 
iiinexchange  therefor  delivered  to  the  defendant  the  said  bond  of  the 
defendant  and  J.  N.  Montgomery;  that  afterwards,  and  after  the 
institution  of  the  suit,  but  before  the  trial,  the.  plaintiff  wrote  above  the 
blank  indorsement  of  the  defendant  a  promise  binding  the  defendant 
as~siirety  of  the  said  Thomas  Creigh  and  L.  S.  Creigh ;  that  the  bond, 
wifh  the  indorsement  thereon,  is  as  follows : 

"On  or  before  the  first  of  March,  1861,  with  interest  from  the 
first  of  March,  1860,  we  or  either  of  us  bind  ourselves,  our  heirs,  etc., 
to  pay  Alexander  Kearnes  the  just  and  full  sum  of  two  thousand 
dollars,  for  value  received.  Witness  our  hands  and  seals,  this  28th  day 
of  January,  1860.  Thomas  Creigh.     [Seal.] 

"Lewis  S.  Creigh.   [Seal.]" 

"For  value  received,  I  hereby  become  the  surety  of  Thomas  Creigh 
and  Lewis  S.  Creigh  as  obligors  in  the  within. bond. 

"Wm.  H.  Montgomery." 

That  the  debt  against  the  Creighs  could  have  been  made  by  suitin 
the  year  1861,  and  after  the  close  of  the  war  in  1865,  and  that  the  said 
Creighs  have  been  insolvent  since  1866,  and  that  since  that  time  the 
d"ebt  could  not  have  been  made  off  of  them  by  suit.    Upon  these  facts, 

46  The  arguments  of  counsel  are  omitted. 
Hen. Sue.— 13 


194  FORMATION.  (Part  1 

X  judgment  was  rendered  for  the  defendant.  The  plaintiff  in  error  in- 
sists that  the  judgment  is  erroneous,  because  upon  the  facfs  proved  the 
defendant  was  a  surety  or  maker  of  the  bond  in  question,  and  pri- 
marily liable  for  its  payment ;  while  it  is  insisted  for  the  defendant 
that  he  was  guarantor  merely,  and  only  liable  for  the  payment  of  the 
bond  in  case  the  money  could  not  be  made  off  of  the  makers  of  the 
paper  after  it  fell  due,  by  the  use  of  due  diligence,  which  he  insists  was 
not  used  before  the  makers  became  insolvent. 

Whether  the  defendant  is  guarantor  or  maker  depends  on  the  un- 
derstanding of  the  parties.  If  the  ^ayee  or  assignee  of  paper,  not 
negotiable,  indorse  his  name  in  blank  on  the  back  of  it,  he  is  prima 
facie  assignor;  but  if  a  stranger  indorse  his  name  in  blank  on  the 
back  of  paper,  not  negotiable,  he  is  prima  facie  guarantor,  but  this 
presumption  may  be  rebutted  by  showing  the  original  iinderstanding 
of  the  parties,  by  showing  an  express  agreement  otherwise,  or  by 
showing  circumstances  from  which  one  may  be  inferred. 
^  The  contract  of  a  guarantor  is  collateral  and  secondary.  It  differs 
in  that  respect  generally  from  the  contract  of  a  surety  which  is  direct ; 
and  in  general  the  guarantor  contracts  to  pay  if,  by  the  use  of  due 
diligence,  the  debt  cannot  be  made  out  of  the  principal  debtor,  while  the 
surety  undertakes  directly  for  the  payment,  and  so  is  responsible  at 
once  if  the  principal  debtor  makes  default.  As  the  proper  diligence 
/was  not  used  against  the  Creighs,  if  the  defendant  is  guarantor  merely, 
A    "  he  is  not  liable  for  the  payment  of  the  debt,  while,  if  he  is  to  be 

treated  as  surety,  he  is  liable.     It  becomes,  therefore,  necessary  to 
determine  whether  he  is  a  technical  guarantor  merely,  or  a  surety. 

If  the  paper  signed  by  the  Creighs  had  been  payable  to  the  de- 
fendant, then  the  defendant  would  have  been  the  assignor  thereof, 
with  the  rights  and  liabilities  of  an  assignor,  unless  some  special 
agreement  existed  to  create  a  different  relation ;  and  as  the  paper 
is  payable  to  the  plaintiff,  the  defendant  is  guarantor  thereof,  unless 
by  some  special  agreement  he  is  liable  as  maker  or  surety. 

y  The  plaintiff,  after  suit  brought,  wrote  over  the  name  of  the  de- 
J*«H^  f endant :  "For  value  received,  I  hereby  become  the  surety  of  Thomas 
Creigh  and  Lewis  S.  Creigh,  as  obligors  in  the  within  bond."  It  is 
upon  this  contract,  so  written  by  the  plaintiff,  that  he  claims  his  right 
to  recover  from  the  defendant.  The  plaintiff  might  write  anything 
over  the  name  of  the  defendant,  consistent  with  tRe  contract  of  the  de- 
fendant, so  as  to  carry  it  out.  He  could  not  write  the  words  which 
he  did  write,  unless  upon  special  contract  between  the  parties,  dis- 
closed by  the  evidence  and  surrounding  circumstances.  The  evidence, 
instead  of  sustaining  and  authorizing  this  special  contract  as  written 
by  the  plaintiff,  does  not  even  tend  to  show  any  such  understanding, 
but,  on  the  contrary,  shows,  so  far  as  can  be  inferred  from  it,  that  the 
defendant  was  to  assume  the  same  situation  as  to  liability  that  he 
would  have  occupied  if  the  paper  had  been  executed  to  him  as  payee 
uand  transferred  by  him  to  the  plaintiff.     As  the  facts  proved  wholly 


iV«y««-+^  *- 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  195 

fail  to  show  a  contract  on  the  part  of  the  defendant  to  be  liable  as 
maker  or  surety,  it  follows  that  he  is  liable  only  as  guarantor. 

The  facts  proved  show  affirmatively  that,  by  the  use  of  due  dili- 
gence against  the  Creighs,  the  plaintiff  might  have  made  the  money. 

The  judgnient  complained  of  will,  therefore,  have  to  be  affirmed, 
with  damages  and  costs. 
y  Brown,  President.  The  facts  of  this  case  show  that  it  was  the  in- CWv.vy^^^'Cvt, 
'  tention  of  the  parties  to  change  obligations,  and  that  the  liability  of 
the  defendant  was  thenceforth  to  be  collateral  only.  Without  at- 
tempting to  reconcile  or  distinguish  the  numerous  cases  decided  on  the 
subject,  the  conclusion  I  deduce  from  them,  as  applicable  to  this  case, 
is  that  the  indorsement  in  blank  of  the  single  bill  in  question,  by  the 
defendant,  made  him  collaterally  liable  as  an  assignor  would  have  been 
after  due  diligence,  and  not  primarily  liable  as  claimed  by  the  plaintiff. 

r  think,  therefore,  that  the  judgment  should  be  affirmed,  with  costs 
and  damages  to  the  appellee. 

BiRKSHiRE,  J.,  concurred  in  the  views  of  Maxwell,  J. 

Judgment  affirmed.*^ 

4  7 'Tnie  terms  'sureties'  and  'guarantors'  are  often  confounded,  from  the  ^  / 1  .'..t.  .^v,  t*^^ 
fact  that  a  guarantor  is,  in  common  acceptation,  a  surety  for  another.  The  .t^dj  ,]«,«* y 
rules,  however,  of  the  common  law  as  to  sureties  are  not  strictly  appliecTTo  "j '^' 

guaraTitors;^l5ut  rather  the  rules  of  the  law  merchant ;  and  the  true  distinc- 
tioTTseems  to  he  this;1]That  a  s.uzety  is  in  the  first  instance  answerable  for 
the'""3el:t  for  whicl;  he  bakes  himself  responsible,  and  his  contracts  are  often 
specialities ;  while  the  guarantor  isonly  liable  where  default  is  made  by  the 
party  whose  undertaking  is  guaranteed,  and  his  agreement  is  one  of  simple 
contract/ 2X  surety  is  not,  as  a  matter  of  course,  entitled  to  notice,  and  is 
not  dlschargen~t7y  the  insolvency  of  the  principal  debtor,  for  want  of  notice, 
although  the  principal  was  solvent  when  the  debt  became  due.  But  injregard 
to  a  guarantor,  if  the  debt  is  not  paid  at  maturity  by  the  principal,  who  is 
solveiat  at  the  time,  the  guarantor  will  be  discharged  if  he  has  not  received 
notice,  if  the  principal  shall  have  become  insolvent.  And  as  a  general  rule 
the  guarantor  is  entitled  to  notice  within  a  reasonable  time;  and  he  will 
also  be  discharged,  in  whole  or  in  part,  where  he  can  show  a  direct  injury 
resulting  from  want  of  notice."  Hubbard,  J.,  in  Courtis  v.  Dennis,  7  Mete. 
(Mass.)  510.  518.  519  (1S44). 

Though  American  courts  are  uniformly- eommitted  to  the  difference  in  prac- 
tical effect  bet^veen  a  suretyship  and  a  guaranty,  yet  there  is  no  satisfac- 
tofy~or  consistently  adopted  test  for  determining  in  all  cases  one  kind  of  con- 
trnTf  from  the  other.  "  "  X 

Tlie  jmere  use  of  the  word  "guaranty"  is  not  conclusive,  for  despite  this\i  r^ 
term  the  intention  may  exist  to  become  a  surety.     Mcintosh  Huntinston  Co.  '^''•^•^*"*^' 
V.  Reed  (C.  C.)  89  Fed.  464  (189S) ;    Saint  v.  Wheeler  &  Co.,  95  Ala.  362.  10    ^f^^^ 
South.  539,  36  Am.   St.   Rep.  210  (1891) ;    Riddle  v.  Thompson,  104  Pa.  330 
(1883). 

"The  distinction  between  the  two  classes  of  undertakings  is  often  shadowy, 
and  often  not  observed  by  .iudges  and  text-writers;  but  that  there  is  a  sub- 
stanti?e  distinction,  involving  not  infrequently  important  consequences,  is. 
of  course,  not  to  be  doubted.  It^seems^t^q  lie  in  thisi.  That  when  the  sponsors 
for  another  assume  a  primary  and  direct  liability,  whether  conditional  or 
not,  in  the  sense  of  being  immediate  or  postponed  till  some  subsequent  oc- 
currence, to  the  creditor,  they  are  sureties ;  but  when  this  responsibility  is 
secondary,  and  collateral  to  that  of  the  principal,  they  are  guarantors.  -_  Or, 
as  otherwise  stated,  if  they  undertake  to  pay  money,  or  do  any  other'act, 
in  jtlifi.. event  their  principal  fails  therein,  they  are  sureties;  but,  if  they  as- 
sume the  performance  o)4x  in  the  event  the  principal  is  unable  to  perform, 
th_ey  are  guarantors.     O^P^et  another  and  more  concise  statement,  a  surety 


"i^y^'^ 


196  FORMATION.  (Part  1 

HOFHEIMER  et  al.  v.  LOSEN. 

(Kansas  City  Court  of  Appeals,  Missouri,  1887.    24  Mo.  App.  652.) 

Appeal  from  Jackson  Circuit  Court;  Hon.  F.  M.  Black,  Judge. 
Affirmed.    The  case  is  stated  in  the  opinion. 

Ellison,  J.*^    This  was  a  suit  begun  before  a  justice  of  the  peace, 
for  a  balance  of  $200  and  interest,  upon  the  following  acceptance,  to 
wit : 
"$271.29.  Quincy,  Illinois,  April  4,  1883. 

"Four  months  after  date  pay  to  the  order  of  ourselves,  two  hundred 
seventy-one  ^Vioo  dollars,  value  received,  and  charge  same  to  ac- 
count of  H.  Hofheimer  &  Co. 

"To  John  Schnarr,  Security,  B.  Losen,  Quincy,  111." 

Is  one  who  undertalces  to  pay  if  the  debtor  do  not ;  a  guarantor,  if  the  debtor 
cannot.  The  first  is  sponsor,  absolutely  and  directly,  for  the  principal's  acts ; 
the  latter,  only  for  the  principal's  ability  to  do  the  act  'The  one  is  the 
insurer  of  the  debt ;  the  otlier,  an  insurer  of  the  solvency  of  the  debtor.' 
^  This  is  the  essential  distinction.  There  is  another  going  as  well  to  its 
A  form.  The  .contract  of  suretyship  is  the  joint  and  several  contract  of  the 
principal  and  surety.  'The.i?Qntract  of  the  guarantor  in  his  own  sepaflTle' un- 
dertaking, in  which  the  principal  does  not_join.'  Indeed,  it  has  been  liHld. 
permitting  all  other  considerations,  that  no  contract  joined  in  by  the  debtor 
and  another  can  be  one  of  guaranty  on  the  part  of  the  latter  (McMillan  v. 
Bull's  Head  Bank.  32  Ind.  11,  2  Am.  Rep.  323  [18G91.  s.  c.  10  Am.  Law  Reg. 
435,  and  notes),  though  we  apprehend  that  a  case  might  be  put  involving  only 
secondary  liability  on  the  sponsors,  though  the  undertaking  be  signed  also 
by  the  principal.  However  that  may  be,  it^  is  certain  that  in  most  cases  the 
joint  execution  of  a  contract  by  the  principal  and  another  operates  to  ex- 
clude the  idea  of  a  guaranty,  and  that  in  all  cases  such  fact  is  an  indfex 
pointing  to  suretyship."  McClellan,  J.,  in  Saint  v.  Wheeler  &  Wilson  Mfg. 
Co..  95  Ala.  3G2.  371,  10  South.  539.  36  Am.  St  Rep.  210  (1S91). 

The  same  test  is  recognized  in  Campbell  v.  Sherman,  151  Pa.  70,  25  Atl. 
35,  31  Am.  St.  Rep.  735  (1892).  Here  a  bond  signed  by  one  only,  binding  the 
obligor  that  a  certain  judgment  shall  be  paid  in  full  by  the  judgment  debtor, 
was  held  to  create  a  suretyship. 

An  unsatisfactory  test  has  been  advanced  by  making  the  determinant  the 
joint"  or  several  form  of  the  undertaking.  Joint  contracts  or  joint  anji  sev- 
eral contracts  at  common  law  were  contracts  of  suretyship  and  not  of  guar- 
anty (as  the  word  is  now  used  in  American  decisions) ;  but  all  several  con- 
tracts were  not  contracts  of  guaranty,  many  being  suretj'shipsV  e.  g.,  prom- 
ises of  payment  in  consideration  of  forbearance  towards  a  third  person,  who 
was  the  principal. 

And  see  Campbell  v.  Sherman,  151  Pa.  70.  25  Atl.  35.  31  Am.  St  Rep.  735 
(1892).  In  Allen  v.  Hubert  49  Pa.  259  (1805).  the  ^ords.  "I  hereby  agree  to 
become  security  for  the  performance  of  the  above  agreement" — i.  e.,  an  agree- 
ment to  pay  rent — were  held  to  be  a  direct  and  not  a  contingent  engagement 
and  hence  (sic)  a  suretyship. 

In  Zahm  v.  First  Nat  Bank  of  Lancaster,  103  Pa.  576  (1883),  will  be  found 
some  shadowy  distinctions  based  on  the  phraseology  of  guaranties  and  sure- 
tyships on  the  back  of  commercial  paper. 

In  some  states  by  statute  the  surety  cannot  be  sued  until  after  suit  against 
the  principal.     Boggs  v.  State.  4G  Tex.  10  (1876). 

*8  The  arguments  of  counsel  have  been  omitted,  and  only  that  part  of  the 
opinion  has  been  printed  which  deals  with  the  question  of  notice. 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  197 

Across  the_face  of  said  draft  was  writtenthe^follQ-wing : 
"Accepted  TApril  7th.  '  John  Schnarr. 

"B.   Losen,   Security." 
On  the  back  of  said  acceptance  is  an  indorsement  in  words  and 
figures  as  follows,  to  wit : 

"Amount   of  Acceptance $271.29 

"August  20,  1883.     By  cash 71.29 

"Balance $200.00" 

Defendant  did  not  file  any  answer  or  other  formal  pleading. 
There  was  a  judgment  for  defendant  in  the  justice's  court,  from 
which  an  appeal  was  taken  to  the  circuit  court  of  Jackson  county, 
Missouri.  In  said  circuit  court  the  case  was  tried  by  a  jury.  De- 
fendant filed  no  formal  or  special  pleadings  in  the  circuit  courtl  The 
pleadings  were  the  same  as  in  the  justice  court. 

Plaintiffs  obtained  judgment,  and  defendant  appeals.  *  *  * 
III.  As^  a  surety,  defendant  was  not  entitled  to  notice  of  nonpay- 
ment. I  know  of  no  reason  why  there  may  not  be  a  surety  for.  an 
acceptor.  The  undertaking  of  the  surety  here  was  joint  with  that  of 
the  acceptor.  He  is  an  original  promisor.  His  promise  is  not  collateral 
or  dependent  upon  a  distinct  consideration  from  that  of  the  acceptor. 
His  contract  is  not  that  of  a  guarantor.  But,  if  it  was,  it  is  not  such 
a  one  as  requires  notice.  As  before  stated,  it  is  an  absolute  promise 
to  pay  the  amount  stipulated,  and  the  creditor  is  not  bound  to  use 
diligence  or  give  notice  of  non-payment.  "But,  where  the  guaranty  is 
that"  the  creditor  himself  shall  be  able  to  collect  the  debt  of  some  third 
person,  then  it  is  incumbent  upon  the  creditor  to  use  diligence,  and  to 
give  reasonable  notice  of  non-payment.  This  is  in  accordance  with  the 
long-established  rule  of  the  common  law.  If  I  undertake  for  the  act 
of  some  third  person,  I  am  not  entitled  to  notice  of  his  default  before 
surt  brought ;  but  if  I  undertake  directly  your  act  or  success,  I  am 
entitled  to  notice  of  your  failure,  for  this  is  a  fact  peculiarly  within 
your  knowledge."  Train  v.  Jones,  11  Vt.  444 ;  Peck  v.  Barney,  13  Vt. 
93.  To  the  same  effect  are  the  cases  of  Davis  v.  Jones,  61  Mo.  409, 
and  Singer  Mfg.  Co.  v.  Hester,  71  Mo.  91. 

We  see  nothing  in  the  other  objections  presented  requiring  a  re- 
versal, and  affirm  the  judgment.    All  concur. 


X 


COLBY  v.  FARWELL. 
(Supreme  Court  of  New  Hampshire,  1901.    71  N.  H.  83,  51  Atl.  254.) 
Assumpsit,  to  recover  upon  a  contract  of  guaranty.    Trial  by  jury, 
and  verdict  for  the  plaintiff.    Transferred  from  the  May  term,  1901,  of 
the  superior  court  by  Peaslee,  J. 

The  plaintiff's  decedent  owned  a  promissory  note   secured   by   a 
second  mortgage  of  real  estate  in  Minnesota,  and  indorsed  as  follows : 


198  FORMATION.  (Part  1 

"In  consideration  of  one  per  cent,  per  annum,  I  hereby  guarantee 
the  final  collection  of  the  within  note  and  coupons  attached. 

"George  N.  Farwell." 
The  real  estate  was  found  by  the  jury  not  to  be  of  sufficient  value 
to  safTsTy  the  first  mortgage  claim,  and  it  was  admitted  that  nothing 
could  be  collected  from  the  maker  of  the  plaintiff's  note  since  its  matu- 
rity— about  two  years  before  this  suit  was  brought.  The  defendant 
demurred  to  the  declaration,  and  moved  for  a  nonsuit,  uporTtlTe^ground 
that  the  plaintiff  must  first  proceed  against  the  property  and  the  maker 
A^^  h  of  the  note.  The  demurrer  was  overruled  and  the  motion  denied,  sub- 
ject to  exception. 
^  '  Blodgett,  C.  J.  The  verdict  of  the  jury  closes  the  question  as  to 
the  availabihty  to  the  plaintiff  of  the  mortgage  security;  and  the  utter 
insolvency  of  the  maker  of  the  guaranteed  note  being  admitted,  the 
sole  question  raised  by  the  case  is  whether  the  plaintiff  was  bound  to 
first  proceed  against  the  maker  and  the  security  as  a  condition  prece- 
dent to  the  enforcement  of  the  guarantor's  liability.  We  are  of  opinion 
that  he  was  not. 

'^  The  guaranty  sought  to  be  enforced  was  one  of  collection,  and  as 
such  it  constituted  an  undertaking  on  the  part  of  the  guarantor  to  pay 
the  mortgage  debt,  if,  upon  maturity,  payment  could  not  by  reasonable 
diligence  be  obtained  from  the  debtor  or  from  the  mortgage.     So  far 

^^  the  authorities  are  uniform,  but  what  constitutes  reasonable  dilig&nce 
in  such  a  case  is  a  question  upon  w^hich  the  authorities  are  conflicting 
it  being  held  in  some  jurisdictions  that  such  diligence  requires  the 
prosecution  of  the  debtor  and  of  the  security  to  execution  and^return 
of  nulla  bona,  and  that  his  insolvency,  or  the  worthlessness  of  the 
security,  is  no  excuse  for  a  failure  to  prosecute  (Craig  v.  Parkis,  40 
N.  Y.  ISl,  100  Am.  Dec.  469 ;  Salt  Springs  Xat.  Bank  v.  Sloan,  135 
N.  Y.  371,  32  N.  E.  231 ;  Bosnian  v.  Akeley,  39  ^lich.  710,  33  Am. 
Rep.  447;  French  v.  Marsh,  29  Wis.  649;  IMcNall  v.  Burrow,  33 
Kan.  495,  496,  6  Pac.  897 ;  Roberts  v.  Laughlin,  4  N.  D.  167,  59  N.  W. 
967),  while  in  other  jurisdictions  it  is  held  that  if  the  debtor  be^so 
utterly  insolvent,  or  the  security  so  obviously  valueless,  that  aa ..action 
against  either  would  manifestly  be  fruitless,  the  holder  of  the  guaranty 
may  resort  to  a  suit  upon  it  without  first  instituting  proceedings  agamst 
the  one  or  the  other.  Camden  v.  Doremus,  3  How.  515,  533,  11  L. 
Ed.  705 ;  Gilhghan  v.  Boardman,  29  Ale.  79,  82 ;  Dana  v.  Conant,  30 
Vt.  246;  Sanford  v.  Allen,  I'Cush.  [Mass.]  ^^3 ;  Cady  v.  Sheldon, 
38  Barb.  [N.  Y.]  103,  111,  112;  McDoal  v.  Yeomans,  8  Watts  [Pa.] 
361 ;  McClurg  v.  Fryer,  15  Pa.  293 ;  Jones  v.  Ashford,  79  N.  C.  172. 
176;  Stone  v.  Rockefeller,  29  Ohio  St.  625;  Brackett  v.  Rich,  23 
Minn.  485,  23  Am.  Rep.  703;  Dewey  v.  Investment  Co.,  48  Minn. 
130,  134,  50  N.  W.  1032,  31  Am.  St.  Rep.  623;  Fall  v.  Youmans, 
67  Minn.  83,  69  N.  W.  697,  64  Am.  St.  Rep.  390. 

Tjie  latter  doctrine  we  take  to  be  the  true  one.    "The  law  requires  no 
man,  in  the  pursuit  of  his  rights,  to  do  a  vain  and  futile  thing,  useful 


Ch.  4)       SURETYSHIP  DISTINGUISHED  FROM  OTHER  CONTRACTS.  199 

to  nobody,  and  hurtful  to  himself  by  the  needless  expense  and  trouble 
it  would  impose."  McClurg  v.  Fryer,  supra ;  Haven  v.  Haven,  69  N. 
H.  204,  205,  39  Atl.  972 ;  Lyman  v.  Railroad,  66  N.  H.  200,  203,  20 
Atl.  976,  11  L.  R.  A.  364.  See,  also,  Beebe  v.  Dudley,  26  N.  H.  249, 
59  Am.  Dec.  341 ;  Dearborn  v.  Sawyer,  59  N.  H.  95,  97 ;  Howland  v. 
Currier,  69  N.  H.  202,  203,  44  Atl.  106. 

Exceptions  overruled. 

Wai^ker,  J.,  did  not  sit.    The  others  concurred.*' 

*9  Thejfluty  of  the  creditor  in  a  contract  of  guaranty  to  exiianst  his  rem- 
edy against  the  principal  before  suing  the  guarantor  seems  to  be  imported        ■^-'^  y (j'^'^ 
from  the  civil  law,   where  this  duty  (called  "excussion")  exists  in  favor  of 
both  sureties  and  guarantors  unless  the  contract  expressly  waives  beneficium 
excussionis. 

The  civil  law  cases,  showing  what  is  and  what  is  not  excussion,  are  per- 
haps useful  analogies. 

See  Meyer  v.  Coetzee,  4  South  African  Republic  Reports  (Transvaal)  252 
(1892) ;   Bethlehem  v.  Lietsman,  Cape  of  Good  Hope  Reports,  1908,  p.  367.       v  i^JLi^u^  LL^ 

The— expression  "guaranty  of  payment"  is  held  to  create  a  suretyship.  -.,^^yh  i  ^ 
"There  is  a  plain  distinction  between  a  guarantj'  of  payment  and  a  guaranty  """'■'  t'.-'--^ 
of  collection.  'The  former  is  an  absolute  promise  to  pay  the  debt  at  maturity. 
if  not  paid  by  the  principal  debtor,  and  the  guarantee  may  begin  an  action 
against  the  guarantor.  The  latter  is  a  promise  to  pay  the  debt  upon  the  con- 
dition that  the  guarantee  shall  diligently  prosecute  the  principal  debtor  with- 
out success.'  Jones  v.  Ashford.  79  N.  C.  173;  Baylie's  Sureties  and  Guar- 
antors, 113."  Jenkins  v.  WUkinsou,  107  N.  C.  709,  12  S.  E.  630,  22  Am.  St. 
Rep.  911  (ISaO).  A^U^.£(J'u^ 

4  "continuing  guaranty"  may  be  defined  as  a  promise  or  obligation  which    -  ^,  ^^  f-    ' 
covers  any  balance  (within  the  limit  specified)  that  may  arise  in  a  course  of     '"  ^'  ' 
trading  between  the  promisee  and  his  principal  debtor.     In  other  words,  the 
liability  of  the  guarantor  or  surety  is  not  terminated  by  the  first  credit  given 
to  the  specified  limit.    The  question  is  the  ascertainment  of  the  intent  of  the 
contracting  parties. 

"It  has  been  conceded  that  all  these  cases  must  be  decided,  each  on  its  own 
ground;  and.  therefore,  it  is  useless  to  refer  to  the  decisions,  except  for  any 
principle,  which  may  be  incidentally  laid  down  in  them."  Per  Park,  J.,  in 
Hargreave  v.  Smee,  6  Bing.,  at  page  249  (1829). 

"Bonds,  etc.,  are  entered  into  with  caution,  and  often  after  taking  legal  ad- 
vice ;  they  contain  the  entire  contract,  beyond  which  the  courts  rarely  look 
for  circumstances  to  aid  in  their  construction.  And  if  there  be  sureties  bound 
by  them,  and  the  meaning  is  doubtful,  the  construction  is  restricted,  and  made 
most  favorable  to  the  sureties.  *  *  *  On  the  other  hand,  letters  of  guar- 
antee are  (usually)  written  by  merchants,  rarely  with  caution  and  scarcely 
ever  with  precision ;  they  refer  in  most  cases,  as  in  the  present,  to  various 
circumstances,  and  extensive  commercial  dealings,  in  the  briefest  and  most 
casual  manner,  without  any  regard  to  form,  leaving  much  to  inference,  and 
their  meaning  open  to  ascertainment  from  extrinsic  circumstances  and  facrs 
accompanying  the  transaction,  without  referring  to  which  they  could  rarely 
be  properly  understood  by  merchants,  or  by  courts  of  justice."  Mr.  Justice 
Catron  in  Bell  et  al.  v.  Bruen,  1  How.,  at  page  186,  11  L.  Ed.  89  (1843). 

A  number  of  instances  of  contiuuing  guaranties  are  collected  in  4  L.  R.  A, 
343,  344. 


PART  II 

THE  EQUITABLE  AND  LEGAL  RIGHTS  OF  THE 

SURETY 


CHAPTER  I 
THE  SURETY'S  EQUITY  OF  EXONERATION 


SAUNDERS  V.  CHURCHILL  &  SMITH. 

(High  Court  of  Chancery,  1613.     Toth.  ISl.) 

Saunders  contra  Churchill  and  Smith,  10  &  11  Jac.  li.  A,  fo.  664  and 
728.  The  plaintiff  being  bound  with  the  said  Churchill's  father  for 
payment  of  money  at  a  day  which  the  plaintiff  supposed  the  mpney 
had  been  paid  accordingly,  the  money  was  not  paid,  the  said  Churchill 
the  father  dies  three  years  after,  upon  whose  death  the  obligee  puts 
the  bond  in  suit  against  the  plaintiff,  but  in  respect  the  bond  was  con- 
tinued without  the  plaintiff's  privity,  and  Churchill's  son  having  a  good 
estate  from  his  father,  was  ordered,  and  the  feoft'ees  to  whom  the 
son  had  conveyed  those  lands  in  trust,  was  ordered  to  sell  those 
lands  for  payment  of  the  said  Churchill's  debts.^ 


LEE  V.  ROOK. 

(High  Court  of  Chancery,  De  Term,  Pasch.,  1730.     Mos.  318.) 

Thedefendant,  whilst  he  was  under  age,  borrowed  several  sums  of 
money  of  Mr.  Lee,  and  ]\Ir.  Lee  and  his  wife  joined  in  a  fine,  and 
mortgage  of  their  estate  to  raise  the  money.  ^  The  defendant,  after  he 

1  The  earliest  example  of  the  equity  of  exoneration  which  has  been  noted 
is  Sebastian  Giglis  v.  Robert  Welby,  priest,  vol.  1,  Chancery  Calendar,  p. 
cxx,  s.  c.  Ames'  Cases  on  Suretyship,  p.  583.  The  case  is  in  the  reign  of 
Henry  VII. 

The  reason  for  the  equity  of  exoneration  Is  stated  by  Lord  Keeper  North 
in  Ranelaugh  v.  Hayes,  1  Vern.  190.  s.  c.  1  Eq.  Abr.  79  (1683):  "And  he  con- 
ceived it  reasonable  that  Sir  James  Hayes  should  be  decreed  to  clear  the 
Earl  of  Ranelaugh  from  all  tliese  suits  and  incumbrances  within  some  rea- 
sonable time.    And  he  compared  it  to  the  case  of  a  counter-bond,  where  al- 

(200) 


Ch.  1)  THE  surety's  equity  of  exoneration.  201 

came  of  age,  promised  to^pay  Mr.  Lee  what  money  he  had  received 
from  him.  Mr.  Lee  died,  and  the  plaintiff  his  wife,  as  his  executrix, 
brought  a  bill  against  the  defendant  Rook,  to  redeem  and  pay  off  the 
rnortgage  money.  And  at  the  hearing  of  this  cause,  two  questions 
were  jpade,  I  Whether  this  was  a  proper  bill? -'And  whether  the  de- 
fendant, siiice  the  statute  of  frauds  and  perjuries,  could  be  bound  by 
this  contract  concerning  lands,  which  was  never  put  into  writing? 

Master  o-p  the  Rolls.  The  defendant,  after  he  came  of  age,  having 
promised  to  pay  the  money,  this  is  to  be  considered  as  the  case  of  a 
person  of  full  age,  and  if  I  borrow  money  on  a  mortgage  of  my  estate 
for  another,  I  may  come  into  equity  (as  every  surety  may  against  his 
principal)  to  have  my  estate  disencumbered  by  him,  and  the  covenant 
in  the  mortgage  deed  to  pay  the  money,  will  bind  the  defendant,  for 
the  money  being  borrowed  for  him,  it  is  his  debt,  and  the  testator  of 
the  plaintiff  was  only  a  nominal  person,  but  since  it  does  not  appea'r /^ 
what  money  the  defendant  received,  the  plaintiff  by  consent  is  to  bring 
an  indebitatus  assumpsit,  and  the  defendant  is  not  to  take  advantage 
of  the  statute  of  limitations ;  and  is  to  pay  il20.  to  the  plaintiff,  ad- 
mitted by  his  answer  to  have  been  received,  and  the  bill  is  to  be  re- 
tained 'till  after  the  trial. 


BEARDMORE  v.  CRUTTENDEN. 

(In  Chancery,  before  Lord  Thurlow,  Hilary  Term,  1791.    Cooke,  Bankr.    Laws 

[8th  Ed.]  232.) 

Bill  b}^  surety  in  a  bond  against  the  obligee,  who  is  a  mere  trustee, 
and  his  cestui  que  trust,  to  compel  them  to  prove  under  the  commission 
agaijist^the  obligor.  Injunction  for  want  of  an  answer,  and  upon 
motion  to  dissolve  it  the  defendants  were  ordered  to  prove  upon  plain- 
tiff's bringing  money  into  court.'' 

though  the  surety  is  not  troubled  or  molested  for  the  debt,  yet  at  any  time 
after  the  money  becomes  payable  on  the  original  bond,  this  court  will  decree 
the  principal  to  discharge  the  debt,  it  being  unreasonable  that  a  man  should 
always  have  such  a  cloud  hang  over  him." 

2  "The_surety,  however,  has  another  right,  viz.,  that,  as  soon  as  his  obliga- 
tion_to  pay  is  become  absolute,  he  has  a  right  in  equity  to  be  exonerated  by 
his  principal."  Per  Willes,  J.,  in  Bechervaise  v.  Lewis,  L.  R.  7  C.  P.  377 
(T572). 

"But  in  late  cases,  provided  there  was  no  risk,  delay,  or  expense,  as  in  the 
case  put,  of  the  money  in  the  next  room,  indemnifying  against  the  conse- 
quences of  risk,  delay,  and  expense,  the  surety  has  a  right  to  call  upon  the 
creditor  to  do  the  most  he  can  for  his  benefit;  and  the  latter  cases  have 
gone  farther.  It  is  nowclear  that,  if  the  surety  deposits  the  money  and 
agrees  that  the  creditor  shall  he  at  no  expense,  he  may  compel  the  creditor  to 
pnn*e  under  a  commission  of  bankruptcy,  and  give  the  benefit  of  an  assign- 
ment in  that  way."    Lord  Eldon,  in  Wright  v.  Simpson,  6  Ves.  734  (1802). 


202  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part   3 

In  re  BABCOCK. 

(Circuit  Court  of  the  United  States,  PMrst  Circuit,  1844.    3  Story,  393,  Fed. 

Cas.  No.  GOG.) 

This  was  a  case  in  bankruptcy,  adjourned  into  the  Circuit  Court  from 
the  District  Court;  the  judge  of  the  District  Court  being  interested 
in  the  case.^     *     ♦     * 

Story,  Circuit  Justice.  The  circumstances  of  the  case,  shortly 
stated,  are  these:  Kendall  (the  creditor)  is  the  holder  of  a  bill  of  ex- 
change, drawn  by  one  Leonard,  agent  of  the  Dudley  Manufactur- 
ing Company,  payable  to  his  own  order,  upon  Babcock,  the  bankrupt, 
and  accepted  by  him,  and  indorsed  by  Leonard  to  Kendall.  It  is  ad- 
mitted that  Babcock  is  a  mere  accommodation  acceptor,  but  that  fact 
was  not  known  to  Kendall  at  the  time  of  his  taking  the  bill.  The  bill 
at  its  maturity  was  dishonored,  and  Kendall  has  proved  his  debt  in 
bankruptcy  against  the  estate  of  Babcock,  and  has  also  brought  a 
suit  against  the  Dudley  Manufacturing  Company  as  drawers,  and  at- 
tached property  of  the  company  in  that  suit.  The  assignee  of  Bab- 
Lj_)  ^    cock  by  his  petition  now  asks  the  court  to  order  Kendall  to  proceed  in 

"^  "  sard  suit,  and  to  levy  his  execution  upon  the  property  so  attached,  and 

to  apply  the  proceeds  in  satisfaction  of  the  bill  of  exchange,  and  that 
he"  may  not  be  allowed  any  dividend  on  the  estate  of  Babcock  untiT7he 
haTHrsTapplied  the  property  attached  in  extinguishment  and  satisfac- 
tion of  his  claim. 

The,  argument  in  support  of  the  prayer  of  petition  turns  upon  this: 
That  Babcock  is  but  a  surety  for  the  debt,  that  the  attachment  ts  a 
security  held  by  the  creditor  for  the  debt,  and  that,  in  equity,  the 
surety  has  a  right  to  require  that  the  security  shall  be  first  applied  in 
discharge  of  his  liability  pro  tanto,  before  he  is  called  upon  to  dis- 
charge his  secondary  obligation. 
/  There  is  no  doubt  that  a  surety  for  a  debt  may  in  many  cases 
-••nvJtn^^  be  entitled  to  relief  by  requiring  the  creditor  to  proceed  against  the 
principal.  But  this  is  ordinarily  limited  to  cases  where' his  character  as 
surety  stands  confessed  upon  the  face  of  the  instrument  itself,  and  also 
where  he  offers  to  indemnify  the  creditor  in  his  proceedings  against 
the  principal,  and  also  offers  to  pay  whatever  the  principal  may  fail 
to  pay  under  those  very  proceedings.  This-  is  the  common  course, 
where  the  surety  seeks,  by  a  bill  against  the  creditor  and  the  principal, 
to  compel  the  latter  to  exonerate  the  surety  from  losses  which  may 
otherwise  be  sustained  by  him  by  the  delays  and  forbearance  of  the 
creditor  in  enforcing  his  debt.  See  1  Story  on  Eq.  Jurisp.  §  327,  and 
cases  there  cited ;  2  Story  on  Eq.  Jurisp.  §  730,  §  849.  Upon  a  similar 
ground,  if  the  creditor  in  the  case  of  the  bankruptcy  of  the  principal 
has  not  proved  his  debt  against  him,  but  declines  to  do  so,  a  court  of 

3  The  arguments  of  counsel  are  omitted,  and  also  the  statement  of  facta ; 
the  latter  suthcieutly  appearing  in  the  opinion. 


Ch.  1)  THE  surety's  equity  of  exoneration.  203 

equity  will,  upon  a  bill  filed  by  the  surety,  compel  the  creditor  to 
prove  his  debt  in  bankruptcy,  and  give  the  surety  the  benefit  thereof; 
but  then,  in  such  a  case,  the  relief  is  granted  upon  the  terms  that  the 
surety  brings  the  amount  due  into  court.  Beardmore  v.  Cruttenden, 
1  Cooke,  Bank.  Law,  211;  1  Deacon,  Bank.  Laws  (Ed.  1827)  p.  291; 
Ex  parte  Rushforth,  10  Ves.  409,  414;  Wright  v.  Simpson,  4  Ves. 
734.  And  if  the  creditor  has  himself  already  proved  his  debt  in  bank- 
ruptcy, the  surety  will  have  a  right  upon  payment  of  the  debt  to  stand 
in  equity  as  substituted  to  the  rights  of  the  creditor,  and  will  be  entitled 
to  the  dividends.  _     _  ^Om-p/^  c^*'?,  " 

But  a  person  may  be  a  surety  so  far  as  regards  the  principal,  and  ^  ^    ^       ^\^ 
yet_  not  be  entitled  to  hold  that  character  in  respect  to  the  creditor.  ij^  ^j 

Thus,  for  exanTple,  in  the  case  of  a  bill  of  exchange,  an  accommodation 
acceptor  for  the  drawer  is  to  be  deemed  the  principal  and  primary 
debtor,  as  to  the  holder  of  the  bill,  and  it  will  make  no  difference 
generally,  in  cases  of  this  sort,  whether  he  is  known  to  be  an  accommo- 
dation acceptor  or  not ;  and  yet,  in  respect  to  the  drawer,  he  is  to  be 
treated  to  all  intents  and  purposes  as  a  mere  surety.  Ex  parte  Rays- 
wicke,  2  P.  Will.  89;  Ex  parte  Marshal,  1  Atk.  129;  Ex  parte 
Mathews,  6  Ves.  283  ;  Ex  parte  Atkinson,  1  Cooke,  Bank.  Laws,  p.  210 ; 
Deacon,  Bank.  Laws,  p.  253,  254;  Id.  (Ed.  1827)  291;  Ex  parte  Rush- 
forth,  10  Ves.  409,  414.  So  that_it_is_iiot  safe  in  all  cases  to 
reason_tha_t  a_person,.who  is  in  fact  a  surety  quoad  the  principal,  is  to  be 
treated  as  a  surety  throughout  in  regard  to  the  creditor.  That  may 
and  usually  does  turn  upon  very  different  considerations.  See  United 
States  V.  Cushman,  2  Sumn.  426,  436,  Fed.  Cas.  No.  14,908;  Berg 
v.  Radchffe,  6  Johns.  Ch.  (N.  Y.)  302;  HolHer  v.  Eyre,  9  Clarke  & 
Fin.  145.  ^ 

Now,   upon  the   known   principles   of   courts  of   equity,   acting  in      ^     /' 
bankruptcy,  the  holder  of  a  bill  of  exchange  is  entitled  to  prove  his      "?^fj/j  y, 'vr/-'^ 
debt_in  bankruptcy  against  the  drawer,  the  payee,  and  the  acceptor     '^  i^^rio 
respectively,  if  they  have  all  become  bankrupts,  and  to  take  a  dividend 
against  the  estates  of  each  until  he  has  been  paid  his  full  debt.     If 
one  of  the  parties  only  is  bankrupt,  the  creditor  is  still  entitled  to 
proceed  against  the  other  at  law,  until  he  has  obtained  satisfaction.    It 
makes  no  dift'erence  in  the  case  whether  the  bill  is  an  accommodation 
bill  or  not.     This  is  sufficiently  apparent  from  the  cases  of  English 
v.  Darley,  2  Bos.  &  Pull.  62;    Ex  parte  Bank  of  Scotland,  19  Ves. 
310;    Ex  parte  Rushforth,   10  Ves.  410;    Ex  parte  Reed,   3  Deac. 
&  Chit.  481 ;    and  others  cited  in  1  Deacon,  Bank.  Laws  (Ed.  1827) 
239,  255. 

In  relation  to  the  po-'nt  of  the  creditor's  having  collected  securities  in  .^^xm-*^-* 

his  hands  for  the  payment  of  the  debt,  it  is  doubtless  true  that  sureties  -•'  -^'  |, 

are  entitled  upon  the  discharge  or  payment  of  the  debt  by  themselves  to 
have  the  benefit  of  those  securities.  But  in  bankruptcy  a  distinction 
is  taken  betwee'n  the  case  of  a  security  given  to  a  creditor  by  the  bank- 
rupt himself  of  his  own  property,  and  the  case  of  a  security  of   a 


204  THE   EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2" 

third  person  transferred  to  the  creditor  by  the  bankrupt,  or  other- 
wise in  his  hands.  In  the  former  case  the  creditor  is  not  allowed  ta 
prove  his  debt  against  the  bankrupt,  unless  he  surrenders  up  the 
security,  or  it  is  sold  with  his  consent,  and  then  he  may  prove  for 
the  residue  of  his  debt  which  the  security  when  sold  does  not  dis- 
charge. In  the  latter  case  he  may  prove  his  debt  in  bankruptcy  without 
surrendering  the  security  of  the  third  person  which  he  holds,  and 
may,  notwithstanding  such  proof,  proceed  to  enforce  his  security 
against  such  third  person,  provided,  however,  he  does  not  take,  under 
the  bankruptcy  and  the  security,  more  than  the  full  amount  of  his  debt. 
This  distinction  was  maintained  in  Ex  parte  Bloxham,  6  Ves.  449^ 
Ex  parte  Crossley,  3  Bro.  Ch.  237,  and  Ex  parte  Parr,  18  Ves.  65. 
A  From  the  principles  which  have  been  stated,  admitting  the  attach- 
ment  to  be  a  security,  and  the  bankrupt  to  be  a  mere  accomirioda- 
'  tion  acceptor,  it  js^lear  AhatJJie  creditor  has  a  right  to  proceed  against 

the  bankrupt  for  his  debt  in  bankruptcy,  and  also  against  the  other 
parties  to  the  bill,  under  his  attachment,  until  he  has  recover'^d'  the 
full  amount  of  his  debt ;  for  it  is  not  a  security  given  by  the  bankrupt 
of  his  own  property,  but  is  a  security  attained  by  the  creditor  against 
other  parties  to  the  bill  by  a  proceeding  in  invitum.  I  give  no  opinion, 
what  is  the  light  in  which  this  attachment  is  to  be  viewed  in  respect  to 
the  present  parties — whether  as  a  security  or  as  a  mere  remedial  pro- 
cess to  enforce  payment  of  the  debt  against  the  drawers.  In  either 
view,  so  far  as  the  present  petition  is  concerned,  the  result  must  be 
J"*,VcviA.t4y  ^^^  same.  The  most  that  the  assignee  is  entitled  to  is  to  have  the 
■  aid  of  the  court  in  having  the  attachment  suit  carried  on  to  its  proper 
conclusion,  for  the  benefit  of  the  bankrupt's  estate  as  far  as  regards 
any  surplus  which  shall  remain  after  the  creditor  has  received  from 
the  dividends  in  bankruptcy  and  under  the  attachment  the  full  amOTmt 
of  his  debt.  The  creditor  is  not  bound  to  pursue  the  attaclimenf  "suit 
at  his  own  expense,  unless  he  chooses  so  to  do;  but  he  is  bound,  if 
he  does  not  choose  to  carry  it  on  upon  his  own  account,  to  allow  the 
assignee  to  carry  it  on  for  the  benefit  of  the  bankrupt's  estate  at  the 
expense  thereof.  If  the  attachment  suit  is  proceeded  in,  and  any 
money  is  received  under  it,  the  creditor  will  be  entitled  to  receive  so 
much  thereof  as,  with  the  dividends  received,  will  cover  the  full 
amount  of  his  debt  and  costs ;  the  surplus  will  belong  to  the  estate 
of  the  bankrupt.  If  the  creditor  declines  to  proceed  farther,  all  the 
future  costs  must  be  borne  by  the  assignee.  If  the  creditor  chooses 
to  proceed  in  the  suit,  the  future  costs  in  the  suit  must  be  borne  by 
the  creditor  and  the  assignee,  according  to  their  respective  interests 
in,  or  benefits  derived  from  the  suit. 
X  What  I  shall  order,  therefore,  upon  the  present  petition,  i^that 
the  creditor  shall  forthwith  make  his  election  whether  he  will  pro- 
ceed in  the  attachment  suit  upon  his  own  account  or  not  {^Ahsit  J_f  he 
elects  to  proceed  therein,  then  he  shall  be  required  to  proceed  therein 
under  the  order  and  discretion  of  the  court,  as  it  shall  award  from 


Ch.  1)  THE  surety's  equity  of  exoneration.  205 

time  to  time;  and/that,  if  he  shall  obtain  payment  therein,  and  levy 
upon  any  property,  he  shall  be  entitled  to  receive  from  the  proceeds, 
if  sufficient,  the  full  amount  of  his  debt  and  costs,  deducting  there- 
from the  dividends  received  from  the  bankrupt's  estate,  and  the  sur- 
plus to  be  paid  over  to  the  assignee,.  -^  If, .the  creditor  shall  decline  to 
proceed  in  the  said_juit^  then  he  shall  authorize  and  allow  the  same 
to  "be~canried  on  by  the  assignee  at  the  expense  and  for  the  benefit  of 
the  bankrupt's  estate ;  and  that  out  of  the  property  or  money  which 
shall  be  obtained  under  and  in  virtue  of  the  suit,  he  shall,  after  the 
expenses  thereof  are  deducted,  be  entitled  to  receive  the  full  amount 
of  his  debt,  beyond  the  dividends  received  by  him,  out  of  the  proceeds, 
if  sufficient,  and  the  surplus,  if  any,  shall  belong  to  the  assignee  for 
the  benefit  of  the  bankrupt's  estate.  And  either  party  shall  be  at  lib- 
erty to  apply  to  the  court  from  time  to  time  for  further  directions  in 
the  premises. 


ASCHERSON  v.  TREDEGAR  DRY  DOCK  &  WHARF  CO., 

Limited. 

(Court  of  Appeal,  [1909]  L.  R.  2  Ch.  401,  78  L.  J.  R.  Ch.  697.) 

Action.     By  an  agreement  under  hand,  dated  August  27,  1902,  Ed-  Fm^ 
ward  Ascherson  and  four  other  directors  of  the  defendant  company 
gave  the  London  City  &  Midland  Bank,  Limited,  a  joint  and  several 
guarantee  to  secure  the  overdraft  from  time  to  time  on  the  defend- 
ant company's  current  account. 
~  The  guarantors'  liability  was  limited  to  £20,000.  and  interest. 

It  was  provided  that  "this  guarantee  shall  be  a  continuing  guarantee 
and  in  full  force  until  three  calendar  months  after  each  of  us  shall 
have  given  or  sent^you  notice  in  writing  under  our  respective  hands 
of  our  intention  to  discontinue  and  determine  the  same." 

Edward  Ascherson  died  on  June  24,  1908,  having  appointed  the 
plaintiffs  his  executors.  The  bank  heard  of  his  death  on  June  30, 
l908,  and  at  once  closed  the  old  account  with  an  overdraft  of  £17,219. 
and  opened  a  new  account  for  the  defendant  company  under  the  con- 
tinuing guarantee.  The  bank  informed  the  defendant  company  of 
this  change  in  the  account,  and  obtained  the  names  of  the  executors, 
to  whom  they  gave  formal  notice  of  their  liability  under  the  guar- 
antee, but  they  did  not  demand  payment  of  the  overdraft  either  from 
the  defendant  company  or  the  guarantors.  After  certain  intermediate 
correspondence  between  the  various  parties,  the  plaintiffs  wrote  on 
December  3,  1908,  asking  the  bank  to  let  them  know  the  extent  of 
their  testator's  liability  at  his  death  and  how  far  it  had  been  reduced 
by  sums  subsequently  paid  by  the  defendant  company  into  the  account. 
On  December  5,  1908,  the  bank  replied  as  follows :  "The  balance  due 
to  the  bank  on  June  30  last,  the  date  on  which  we  received  notice  of 
the  death  of  Mr.  Edward  Ascherson,  was  £17,219.     On  that  day  the 


206  THE   EQUITABLE   AND   LEGAL   RIGHTS  OF  THE   SURETY.       (Part    3 

account  was  stopped,  and  all  transactions  have  gone  through  a  new 
/  account  since  that  date,  so  that  our  claim  against  the  estate  of  the 

late  IMr.  Edward  Ascherson  is  £17,219.  with  interest  thereon  from 
June  30  last." 
.  .  A     The  plaintiffs,  being  desirous  of  winding  up  their  testator's   es- 

'  '"'  tate,  requested  the  defendant  company  to  discharge  this  liability,  and 

on  their  refusal  brought  this  action  against  the  defendant  company  for 
a  declaration  that  the  plaintiffs  as  executors  of  Edward  Ascherson  and 
his  estate  were  entitled  to  be  discharged  and  exonerated  from  all  lia- 
bility under  the  guarantee  by  payment  by  the  defendant  companyT^o 
the  bank  of  the  said  sum  of  £17,219.  with  interest  from  June  30,  1908, 
or  so  much  thereof  as  was  now  owing  by  the  defendant  company  to 
the  bank,  and  for  an  order  for  payment  accordingly.* 
/  SwiNFEN  Eady,  J.  (after  stating  the  facts).  The  object  of  the 
present  action  is  to  compel  the  defendant  company,  the  principal  debt- 
ors, to  pay  off  the  amount  owing  by  them  to  the  bank  and  relieve  and 
release  the  executors  of  the  deceased. 

The  defendant  company  conceded  that  the  form  of  the  guarantee  in 
the  present  case  was  indistinguishable  from  that  in  Coulthart  v.  Clem- 
^'^'^viMA,  (^^-entson,  5  Q.  B.  D.  42,  where  it  was  held  that  a  guarantee  in  that  form 
''*  was  revoked  as  to  subsequent  advances  by  notice  of  the  guarantor's 

death ;  and  the  bank  have  acted  upon  that  footing.  They  have  drawn 
the  line  on  June  30,  1908,  when  they  received  notice  of  the  death ; 
they  then  closed  the  old  account  and  opened  a  fresh  account  wnth  the 
defendant  company  as  from  that  date. 

It  was  admitted  that  the  bank  were  entitled  to  do  that,  and  were 
I  ^  f^.^rf  ^  not  bound  to  credit  the  closed  account  with  the  subsequent  payments 
in  so  as,  by  the  application  of  the  rule  in  Clayton's  Case,  1  Mer.  572, 
to  relieve  the  deceased's  estate,  but  were  entitled  to  treat  the  £17,219. 
as  still  owing,  for  the  purpose  of  the  guarantee,  with  interest  from 
June  30,  1908,  in  accordance  with  In  re  Sherry,  25  Ch.  D.  G92. 

It  was  contended  that  until  the  guarantee  had  been  determined  and 
the  overdraft  called  in  no  right  of  action  accrued  to  the  bank  against 
the_sureties,  although,  if  the  present  accounts  continued  for  more  than 
six  years,  all  claim  against  the  deceased's'  estate  would  be  barred  by 
the  Statutes  of  Limitation  under  the  decision  in  Parr's  Banking  Co. 
v.  Yates  [1898]  2  Q.  B.  460. 

That  contention  is  not  well  founded.  Repayment  of  the  overdraft 
may  be  enforced  by  the  bank  at  any  time;  there  is  no  evidence  of 
any  contract  binding  the  bank  to  allow  an  overdraft,  for  any  definite 
time,  or  at  all.  In  my  opinion  the  true  position  is  this.  The  bank 
have  a  present  right  of  action  against  the  executors  of  Edward  Ascher- 
son for  the  £17.219.  owing  on  June  30,  1908,  with  subsequent  inter- 
est, and  have  claimed  that  amount  by  their  letter  of  December  5,  1908. 

It  has  been  the  law  of  the  Court  for  very  many  years  that  a  suret>' 

*  The  arguments  of  counsel  are  omitted. 


> 


Ch.  1)  THE  surety's  equity  of  exoneration.    .  207 

is  entitled  to  come  into  equity  to  compel  the  principal  debtor  to  pay 
what  is  due  from  him,  to  the  intent  that  the  surety  may  be  relieved. 

In  Ranelaug-h  v,  Hayes,  1  Vern.  189,  the  Lord  Keeper  "compared 
it  to  the  case  of  a  counter-bond,  where  although  the  surety  is  not 
troubled  or  molested  for  the  debt,  yet  at  any  time  after  the  money  be- 
comes payable  on  the  original  bond,  this  court  will  decree  the  prin- 
cipal"— that  is,  the  principal  debtor — "to  discharge  the  debt }  it  being 
unreasonable  that  a  man  should  always  have  such  a  cloud  hang  over 
him."  Then  in  Nisbet  v.  Smith,  2  Bro.  C.  C.  579,  582,  the  Lord  Chan- 
cellor says:  "It  is  clear  and  never  has  been  disputed  that  a  surety, 
generally  speaking,  may  come  into  this  court,  and  apply  for  the 
purpose  of  compelling  the  principal  debtor  for  whom  he  is  surety  to 
pay  in  the  money,  and  deliver  him  from  the  obligation." 

A  recent  instance  of  that  was  the  case  of  Wooldridge  v.  Norris,  L. 
R.  6  Eq.  410,  413.  In  that  case  Veal  the  younger  borrowed  iSO. 
from  the  trustees  of  a  charity,  the  plaintiff  and  Hopkins  entering  into 
bond  A  as  sureties  for  its  repayment.  Veal  the  elder  was  counter- 
surety  under  bond  B  providing  for  payment  to  the  plaintiff  and  Hop- 
kins of  "all  such  sum  and  sums  of  money,  costs,  damages,  and  ex- 
penses which  they  respectively  may  be  called  upon,  and  be  liable  and 
compelled  to  pay"  under  bond  A,  and  saving  them  harmless  and  keep- 
ing them  indemnified  from  all  actions,  suits,  or  other  proceedings  un- 
der bond  A.  The  principal  debtor  Veal  the  younger  not  having  paid 
the  £50.,  the  trustees  of  the  charity  applied  to  the  plaintiff,  one  of  the 
sureties  under  bond  A,  for  payment.  The  counter-surety  under  bond 
B  being  dead,  the  plaintiff  filed  a  bill  against  his  executors,  charging 
that  the  trustees  of  the  charity  had  recently  applied  to  the  plaintiff 
for  payment  of  the  i50.  secured  by  bond  A,  and  the  plaintiff  there- 
upon applied  to  the  defendants  to  pay  the  same,  but  they  alleged  they 
had  no  funds,  and -praying  for  administration,  and  for  an  order  that 
the  defendants  might  be  directed  to  pay  the  £50.  out  of  the  counter- 
surety's  estate  and  to  indemnify  the  plaintiff  against  all  claims  under 
bond  A.  To  this  bill  the  defendants  demurred  for  want  of  equity. 
They  contended  that  the  plaintiff,  though  called  upon  to  pay  the  £50. 
as  surety  under  bond  A,  had  not  in  fact  paid  anything  to  the  trustees 
of  the  charity,  and  that  until  he  had  done  so  he  had  no  right  of  ac- 
tion or  suit  against  the  counter-surety  or  his  executors  under  bond  B. 
Giffard,  V.  C,  said:  "In  this  case  the  bill,  which  is  in  the  nature  of 
a  bill  quia  timet,  is  one  of  a  kind  which  is  rather  unusual  in  modern 
times.  The  objections  which  were  taken  to  it  were,  first,  that  a  state 
of  circumstances  had  not  arisen  to  give  the  plaintiff"  the  right  which 
he  claims,  of  filing  the  bill;  and,  secondly,  that  it  was  not  a  bill  on 
behalf  of  the  plaintiff  and  all  other  creditors.  Now,  as  regards  the 
right  of  a  plaintiff  to  file  a  bill  quia  timet,  the  principle  is  clearly 
laid  down  by  Lord  Redesdale  in  these  terms  (Mitford  on  Pleading 
[5th  Ed.]  pp.  171,  172)  :  'A  court  of  equity  will  also  prevent  injury 
in  some  cases  by  interposing  before  any  actual  injury  has  been  suf- 


208  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

fered,  by  a  bill  which  has  been  sometimes  called  a  bill  quia  timet,  in 
analogy  to  proceedings  at  the  common  law,  where  in  some  cases  a  writ 
may  be  maintained  before  any  molestation,  distress,  or  impleading. 
Thus,  a  surety  may  file  a  bill  to  compel  the  debtor  on  a  bond  in  which 
he  has  joined  to  pay  the  debt  when  due,  whether  the  surety  has  been 
actually  sued  for  it  or  not;  and  upon  a  covenant  to  save  harmless  a 
bill  may  be  filed  to  relieve  the  covenantee  under  similar  circumstan- 
ces. 
wv't^o'^t  /  Then  it  was  argued,  although,  perhaps  I  may  say,  but  faintly,  that 
'  in  Padwick  v.  Stanley,  9  Hare,  627,  Turner,  V.  C,  limited  the  cases, 

in  which  the  court  of  equity  exercised  that  jurisdiction  to  "cases  w-here 
the  creditor  has  a  right  to  sue  the  debtor  and  refuses  to  exercise  that 
right." 

In  my  opinion  the  cases  in  which  equity  has  granted  relief  to  siire- 
ties  have  not  been  limlted'Tb~cases  where  the  creditor  has  refused  to 
sue.  In  Wooldridge  v.  Norris,  L.  R.  6  Eq.  410,  that  element  did  not 
exTst. 

In  Mathews  v.  Saurin,  31  L.  R.  Ir.  181,  it  was  determined  that 
"when  there  is  an  actual  accrued  debt,"  as  there  is  in  the  present  case, 
"and  the  surety  is  liable  and  admits  liability  for  the  amount  guar- 
anteed," w^hich,  again,  is  the  present  case,  "he  has  a  right  to  compel 
the  principal  debtor  to  relieve  him  from  his  liability  by  paying  off  the 
debt.  In  order  to  support  such  an  action  it  is  not  necessary  to  prove 
that  the  creditor  has  refused  to  exercise  his  right  to  sue  the  principal 
debtor." 

The  suggested  limitation  in  Padwick  v.  Stanley,  9  Hare,  627,  was 
disapproved.     It  is  true  that  the  disapproval  was  only  obiter,  because 
the  creditor  had,  in  fact,  brought  an  action  against  the  principal  debtor. 
/     The  present  action  is  not  like  Dale  &  Perry  v.  Lolley,  2  Bro.  C.  C. 
>^/^^  582,  note,  where  a  surety  brought  an  action  to  compel  the  debtor  to 

•^  pay  a  bill  not  due  for  twenty  months,  or  Hughes-Hallett  v.  Indian 

Mammoth  Gold  Mines  Co.,  22  Ch.  D.  561,  where  he  asked  for  in- 
demnity against  a  future  contingent  liability.  The  obligation  of  the 
executors  is  a  present  liability,  and  they  are  entitled  to  the  relief  they 
y  ask.  There  must  be  a  declaration  that  the  plaintiffs,  as  executors  of 
the  deceased,  are  entitled  to  be  discharged  and  exonerated  from  all 
liability  under  the  guarantee  by  payment  by  the  defendant  company 
to  the  bank  of  the  £17,219.  with  interest  from  June  30,  1908,  or  so 
much  thereof  as  is  now  owing  by  the  defendant  company  to  the  bank. 

There  must  be  an  order  for  the  defendant  company  to  pay  the  amount 
to  the  bank,  so  as  to  satisfy  the  plaintiffs'  liability,  with  liberty  to  ap- 
ply in  event  of  non-payment.     The  costs  will  follow  the  event.* 

»  Accord:  Wright  v.  Morley,  11  Yes.  Jr.  11  (180^. 


Ch.  1)  THE  surety's  equity  of  exoneration.  209 

TAYLOR  V.  HERIOT. 
(Court  of  Chancery  of  South  Carolina,  1812.    4  Desaus.  Ch.  227.) 

The  bill  was  filed  in  this  case  by  the  complainant,  who  had  become 
surety  for  the  late  Wm.  Heriot^_a  bond  executed  in  April,  1803,  and 
conditioned  to  pay  a  large  sum  of  money  to  Mr.  Withers,  the  guard- 
ian~oT~T\Tiss  Butler,  at  a  time  when  Wm.  Heriot  was  in  good  credit, 
and  apparently  in  affluent  circumstances.  Mr,  Heriot  on  24th  June, 
1807,  executed  a  mortgage  to  the  complainant  of  four  lots  of  land 
and  eight  negroes,  part  of  which  however  were  comprised  in  the  deeds 
hereinafter  mentioned,  or  were  subject  to  judgments.  Since  the  death 
of  Mr.  Heriot,  in  November,  1807,  it  appeared  that  his  afifairs  were 
embarrassed,  and  that  if  the  marriage  settlement  executed  by  him  pre- 
vious to  his  marriage  with^Miss  Thomas,  on  the  10th  May,  1792,  and 
certiin'other  subsequent  deeds,  were  supported,  his  estate  would  not 
be' adequate  to  the  payment  of  his  debts;  and  in  that  case  the  com- 
plainant would  be  obliged  to  pay  the  debt  of  Mr.  Heriot  to  Mr.  With- 
ers, for  which  he  was  surety. 

The  bill  sought  relief,  by  setting  aside  those  deeds,  and  subjecting 
the  property  to  the  debts  of  Mr.  HerioL  y 

'ArT  objection  was  made  at  the  hearing  that  the  complainant  came 
too  soon  for  relief,  as  he  had  not  yet  been  damaged,  not  having  been 
obliged  to  pay  the  security  debt.  But  the  judge  was  of  opinion  that 
a  surety  need  not  wait  until  he  had  paid  the  debt,  but  might  come  for 
relief  as  soon  as  he  was  endangered,  and  that  it  was  manifest  in  this 
case  that  he  was  endangered.  From  this  part  of  the  decree  there  was 
no  appeal.    *    *    * « 


SCANLAND  v.  SETTLE. 

(Supreme  Court  of  Tennessee,  1838.    Meigs,  169.) 

John^JBurris,  Jr.,  being  indebted  on  account  to  Settle,  Whitley  & 
Smith,  merchants  and  partners  in  trade,  in  the  sum  of  $205.37^,  to 
secure  the  payment  thereof  executed  three  several  promissory  notes 
with  the  complainant's  intestate,  William  Locke,  as  surety,  dated  De- 
cember '21,  1822,  payable  one  day  after  date.  Besides  those  notes  he 
owed  the  defendants  several  other  sums  of  money.  To  secure  the 
whole,  on  the  7th  of  April,  1827,  he  executed  a  deed,  conveying~ce'rtain 
reaTand'personal  property  to  a  trustee,  not  stipulating  for  any  delay. 

6  The  remainder  of  the  case  has  been  omitted. 

Accfi£d:  Obiter,  King  v.  Baldwin,  2  Johns.  Ch.  (N.  T.)  554  (1817).  Subse- 
quently this  decision  of  Chancellor  Kent's  was  reversed  on  other  grounds. 
See  17  Johns.  (N.  Y.)  384,  8  Am.  Dec.  415  (1819),  Obiter,  Gibbs  v.  Mennard, 
6  Paige  (N.  T.)  258  (1837). 

Hen.Sur.— 14 


210  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

But  the  trustee  never  acted.  The  property  remained  in  the  hands  of 
Burris,  and  he  disposed  of  some  portions  of  it.  Locke  died  in  1833, 
and  early  in  1834,  the  defendants  sued  the  complainant,  his  adminis- 
trator, in  Jackson  county  court,  and  at  August  session,  1834,  recov- 
ered judgment  for  $344.06  debt  and  damages,  besides  costs.  To  en- 
X  join  this  judgment,  the  complainant,  on  the  3d  of  November,  IS^, 
filed  his  bill  in  Jackson  circuit  court,  afterwards  transferred  to  the 
chancery  court  at  Livingston,  charging  that  the  property  mentioned 
in  the  deed  was  an  ample  indemnity  and  security  for  the  demand  of 
the  defendants  against  Burris;  that  the  deed  had  been  taken  to  in- 
demnify Locke,  and  discharge  him  from  liability,  and  that  such  was 
its  legal  effect ;  that  the  defendants  had  collusively  permitted  Burris 
to  dispose  of  and  enjoy  the  property  mentioned  in  the  deed,  but  that 
there  yet  remained  a  sufficient  amount  of  it  subject  to  the  control  of 
the  trustee  and  the  defendants  to  pay  and  discharge  the  judgment 
and  costs;  praying  for  a  perpetual  injunction  against  the  judgment, 
and,  in  case  that  should  be  refused,  that  the  court  would  cause  the 
trust  to  be  executed,  and  the  property  mentioned  in  the  deed,  or  such 
part  of  it  as  remained  undisposed  of,  and  subject  to  the  control  of 
the  defendar\fs,  to  be  sold,  and  the  proceeds  applied  to  the  discharge 
of  the  judgment,  and  for  general  relief. 

The  answer  of  Settle,  the  acting  partner  of  the  defendant's  firm,  ad- 
mitted that  the  trustee  had  not  acted ;  that  Burris  had  retained  the 
property,  and  had  disposed  of  some  part  of  it,  without  any  collusion  on 
the  part  of  defendants,  who  had  been  merely  passive.  The  other  an- 
swers were  to  the  same  purpose.  The  injunction  was  dissolved,  and 
the  money  collected  from  the  complainant. 

On  the  hearing,  on  the  otli  of  January,  1837,  before  Chancellor 
Williams,  he  ordered  the  injunction  to  be  made  perpetual ;  that  the  de- 
fendants should  repay  complainant  the  amount  collected  of  him,  and 
also  the  costs.  The  defendants  appealed  in  error.  The  cause  was 
heard  in  the  Supreme  Court  at  December  term,  1837,  when  the  court 
reversed  his  honor's  decree  so  far  as  it  released  Locke's  estate,  and 
pronounced  a  decree  that  complainant  should  be  substituted,  in  con- 
sideration of  the  money  paid  by  him  as  Locke's  representative,  to  the 
rights  of  Settle,  Whitley  &  Smith,  and  that  the  land  in  the  deed  of 
trust  mentioned  should  be  sold  to  satisfy  the  same.  The  land  was 
accordingly  sold,  and  the  commissioner's  report  was  read  and  con- 
firmed at  December  term,  1838. 

Green,  J.,  delivered  the  opinion  of  the  court. 

The  bill  in  this  case  alleges  that,  one  Burris  being  indebted  to  the 
defendants  in  the  sum  of  about  $208,  he  executed  to  them  his  bonds, 
with  Locke,  the  complainant's  intestate,  as  his  surety.  In  1827,  the 
defendants  took  a  deed  of  trust  from  Burris,  for  a  tract  of  land,  a 
negro,  and  all  his  personal  property,  to  secure  the  payment  of  certain 
debts  therein  specified  as  due  them,  including  the  debts  for  which 
Locke  was  surety.     Defendants  permitted  Burris  to  retain  possession 


Ch.  1)  THE  surety's  equity  of  exoneration.  211 

of,  use,  and  waste  the  personal  property  mentioned  in  the  deed  of 
trust;  and  in  1833  having  died  intestate,  suits  were  brought  against 
the  complainant,  his  administrator,  and  judgments  obtained.  The  bill 
charges  that  "there  is  sufficient  portion  of  the  property  named  in  said 
deed  of  trust,  now  in  the  county,  subject  to  the  control  of,  and  sale 
by,  the  said  Settle,  Whitley  &  Smith,  and  the  said  Thomas  Smith, 
trustee,  to  pay  and  satisfy  said  judgment  and  costs." 

The  complainant  prays  that  the  estate  of  Locke  be  released  from 
liability,  and  the  defendants  be  compelled  to  resort  to  their  deed  of 
trust  to  make  their  debt. 

The  Chancellor  decreed  in  favor  of  the  complainant,  and  enjoined 
the  judgment  against  him,  from  which'  the  defendants  prosecute  this 
appeal.  y 

We  are  unable  to  find  any  authority  upon  which  this  decree  can  be 
supported.  The  Chancellor  seems  to  have  placed  his  decree  upon  the 
ground  that  the.defendants.  by  taking  the  deed  of  trust,  inducting  all 
the  property  of  Burris,  placed  Locke,  the  surety,  in  a  worse  situation, 
than  he  would  have  been  in,  had  the  deed  not  been  made.  But  this, 
we_think,  is  a  mistaken  view  ofth^  subject. 

The  deed  does  not  stipulate  for  any  delay  to  sue  on  the  notes,  nor 
is  it  a  legal  consequence  that  there  should  be  any  delay.  So  that  the 
facts  do  not  justify  us  to  put  the  case  upon  the  ground  of  a  stipula- 
tion for  delay,  upon  a  good  consideration,  without  the  knowledge,  or 
assent  of  the  surety,  whereby  he  would  be  discharged.  Nor  can  the 
mere  fact  that  the  deed  was  taken  as  an  additional  security  for  the 
debt  dlscBarge  the  surety.  It  is  true  that  the  surety,  on  paying  the 
money,  would  be  entitled  to  be  substituted  to  the  rights  of  the  cred- 
itor, and  to  have  the  benefit  of  the  deed  of  trust.  1  Story's  Eq.  §  502. 
But  this  very  right  of  substitution  shows  that  the  surety  is  not  dis- 
charged ;  for,  if  discharged,  there  would  be  no  need  of  the  substi- 
tution. So  far  from  the  fact  of  a  creditor  taking  a  deed  of  trust,  or 
mortgage,  from  the  principal  debtor  as  an  additional  security,  being 
prejudicial  to  the  surety,  it  is  for  his  benefit — it  is  for  his  indemnity, 
as  though  he  had  taken  it  himself.  Having  paid  the  money,  he  can 
avail  himself  of  it,  as  though  it  had  been  executed  to  him,  as  an  indem- 
nity for  his  suretyship.  It  is  unreasonable,  therefore,  that  an  act,  no 
way  injurious,  but  highly  beneficial  to  the  surety,  should  operate  to 
release  him  from  his  liability  to  the  creditor.  ^ 

Butjt  is  said,  that  where  a  creditor  takes  collateral  security,  and  by 
anyact_of  his  own  puts  it  out  of  his  power  to  make  an  assignment  of. 
such  security  to  the  surety,  who  may  have  paid  the  debt,  such  surety 
would  be  discharged.  1  Story's  Eq.  §  502.  This  is  certainly  true, 
but  the  principle  does  not  apply  to  this  case.  It  is  true  that  pa'-t  of 
the  property  conveyed  in~tEie^deed  was  used  and  disposed  of  by  Bur- 
ris, and  if  the  whole  security  had  been  lost,  through  the  negligence 
and  misconduct  of  the  defendant,  it  would  have  formed  a  ground  of 
relief  under  this  head.     But  the  bill,  answers,  and  proof  all  concur  in 


212  THE   EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    3 

showing  that  the  land,  which  is  still  liable  to  this  debt,  is  sufficient  to 
satisfy  it.  Surely,  then,  if  there  remain  of  the  security  a  sufficiency 
ample  to  indemnify  the  surety,  he  has  no  right  to  complain  that  part 
of  it  has  been  wasted.  Indemnity  is  all  he  would  have  been  entitled 
to,  at  any  rate,  and  if  he  obtains  that,  as  he  alleges  in  his  bill  may  be 
done,  his  situation  is  as  good  as  though  none  of  it  had  been  wasted. 
There  is,  therefore,  no  equity  against  the  judgments  at  law  in  favor 
of  the  defendants,  and  the  decree  must  be  reversed. 

But  as  all  the  parties  are  before  the  court,  and  it  appearing  that  the 
amount  of  the  judgments  at  law,  against  the  complainant,  was  dis- 
charged, on  the  dissolution  of  the  injunction  in  this  cause,  we  are  of 
opinion  that  complainant  may  be  substituted  to  the  rights  of  the  de- 
fendants. Settle,  Whitley  &  Smith,  and  that  the  land  in  the  deed  of 
trust  mentioned  be  sold  to  satisfy  the  amount  paid  by  complainant  on 
account  of  Locke's  suretyship  and  the  costs  of  this  suit. 

Judgment  reversed.'' 


/ 


HOLCOMBE  v.  FETTER  et  al. 
^Court  of  Chancery  of  New  Jersey,  1905.    70  N.  J.  Eq.  300,  67  Ati.  1078.) 

On  demurrer  to  bill. 

Stevens,  V.  C.  This  is  a  suit  by  one  of  several  sureties  to  compel 
a  principal  debtor  to  pay  his  debt  to  his  creditor.  It  is  said  by'  Chan- 
cellor Green,  in  Irick  v.  Black,  that,  as  soon  as  the  debt  has  become 
payable,  a  surety  may  file  a  bill  to  compel  payment  by  the  principal,  in 
order  that  the  surety  may  be  relieved  from  responsibility.  That  this 
rule  is  well  settled  appears  from  the  following  citations:  Pom.  Eq. 
Jur.  §  1417;  Dering  v.  Winchelsea,  1  Lead.  Cas.  Eq.  (Am.  Note) 
*100;  Irick  v.  Black,  17  N.  J.  Eq.  189;  Delaware,  Lackawanna  & 
Western  Railroad  Co.  v.  Oxford  Iron  Co.,  38  N.  J.  Eq.  153 ;  Phila- 
delphia &  Reading  Railroad  Co.  v.  Little,  41  N.  J.  Eq.  519,  529,  7  Atl. 
356 ;  Herron  v.  Mullen,  56  N.  J.  Eq.  839,  42  Atl.  1016.  It  is  argued 
that  the  rule  is  not  applicable  to  the  case  at  bar  because  it  doe.s  npt 
appear  that  the  principal  debtor  is  insolvent  or  in  danger  of  becorning 
so;  but  the  jurisdiction  does  not  rest  upon  this  distinction. 

It  is  further  argued  that  if  the  defendant  Labaw  sleep  upon  his 
rights  as  creditor,  and  by  reason  of  his  laches  fail  to  recOTer^From 
the  principal  debtor,  such  laches  will  be  a  defense  to  an  aclioiLjor 
contribution.  But  what  delay  amounts  to  laches  is  often  a  matter  of 
doubt.  The  original  creditor  is  not  barred  by  laches  alone.  Pintard 
v.  Davis,  21  N.  J.  Law,  632,  47  Am.  Dec.  172 ;  Newark  v.  Stout,  52 
N.  J.  Law,  47,  18  Atl.  943.  Whether  a  co-surety  who  has  paid  the 
entire  debt,  and  thus,  at  least  to  some  extent,  succeeded  to  the  cred- 
itor's rights,  stands  as  to  laches  in  a  less  favorable  position  than  the 
original  creditor,  need  not  be  considered,  for  the  jurisdiction  in  this 

7  Accord:  Gilliam  v.  Esselman,  5  Sneed  (Tenn.)  86  (1857). 


Ch.  1)  THE  surety's  equity  op  exoneration.  213 

class  of  cases  rests  upon  the  fact  that  there  is  a  debt  due  which  it  is 
the  duty  of  the  principal  debtor,  in  exoneration  of  his  sureties,  to  pay 
forthwith.  Thphill  k  nnp  gui^  timet.  So  far  as  the  complainant  is 
concerned,  his  liability,  and  therefore  his  right  to  exoneration,  is  the 
same  as  it  ever  was.* 


STEPHENSON  v.  TAVERNERS. 

(Court  of  Appeals  of  Virginia,  1852.    9  Grat.  398.) 

MoNCURE,  J.,  delivered  the  opinion  of  the  court.^  *  *  * 
In  regard  to  the  remaining  claim,  to  wit,  the  claim  of  the  appellant 
to  have  the  debt  to  Holliday,  for  which  he  is  bound  as  surety,  paid 
out^Qhe  estate  of  Baldwin,  the  principal  debtor :  when  the  suit  was 
brought,  the  appellant  had  not  paid  the  debt,  and  probably  has  not 
yet  paid  it.  But  he  is  entitled  nevertheless,  the  debt  being  due,  to  come 
into  equity  by  a  bill  quia  timet,  against  the  creditor  and  the  debtor, 
and  compel  the  latter  to  make  payment  of  the  debt  so  as  to  exonerate 
himself  for  his  responsibility.  Story's  Eq.  Jur.  §§  327,  639,  849.  He 
may  enforce,  for  his  exoneration,  any  liens  of  the  creditor  on  the  es- 
tate of  the  principal,  and,  if  the  latter  be  dead,  may  bring  any  suit  in 
equity  which  the  creditor  could  bring  for  a  settlement  of  the  admin- 
istration account  of  the  estate  of  the  decedent,  and  for  the  administra-  ^  ^  _ 
tion  of  the  assets,  whether  legal  or  equitable.  The  only  difference  is-^  '  ' 
that^he  must  bring  the  creditor  into  court  along  with  him,  in  order 
that  he  may  receive  the  money  when  it  is  recovered. 

The  appellee,  therefore,  had  a  right  to  bring  this  suit  for  the  re- 
covery of  this  claim,  ^  He  ought  to  have  brought  it,  not  only  for  him- 
self, but  for  all  other  creditors  of  Baldwin,  who  might  elect  to  become 
parties,  and  contribute  to  the  costs  of  the  suit.  His  object  was  not 
only  to  have  an  account  and  payment  in  a  course  of  administration, 
but  to  have  the  assets  marshaled  if  necessary,  and  the  equitable  assets, 
if  any,  apportioned  pari  passu  among  all  the  creditors;    and  all  the 

8  Accord:  Graham  v.  Thoruton  (Miss.)  9  South.  292  (1891). 

Numerous  English  and  American  cases  are  in  accord  with  the  principal 
case,  among  others  the  following:  Stump  v.  Rogers  et  al..  1  Ohio.  538  (182-4)"; 
Washington  v.  Tait,  3  Humph.  (Tenn.)  543  (1842) ;  Howell  v.  Cobb,  2  Coldw. 
(Tenn.)  104,  88  Am.  Dec.  591  (18G5) ;  Bishop  v.  Day,  13  Vt.  81,  37  Am.  Dec. 
582  (1841) ;  Trick  v.  Black  et  al..  17  N.  J.  Eq.  189  (1864) ;  McConnell  v.  Scott, 
15  Ohio,  401,  45  Am.  Dec.  583  (1846),  wfeere  the  principal  was  insolvent,  and 
the  debts  due  from  certain  defendants  were  decreed  to  be  paid  in  esonera- 
tinn  of  conTplainant ;  Barbour  v.  Nat  Ex.  Bank,  45  Ohio  St.  133  (1887)  hold- 
ing section  5845  Rev.  St.  Ohio  1880,  to  be  merely  declarators'  of  the  equitable 
right;  Dobie  v.  Fidelity  &  Casualty  Co.,  95  Wis.  540,  70  N.  W.  482,  60  Am. 
SfTiep.  135  (1897) ;  West  v.  Chasten,  12  Fla.  315  (1868)  ;  Norton  v.  Reid  et 
al.,  11  S.  C.  .593  (1867) ;  obiter,  Croone  v.  Bivens  et  al.,  2  Head  (Tenn.)  339' 
(1859)  ;  obiter,  Antrobus  v.  Davidson,  3  Mer.  579  (1817) ;  obiter.  Whitridge  v. 
Durkee,  2  Md.  Ch.  442  (1850) ;  obiter,  Gilliam  v.  Esselman,  5  Sneed  (Tenn.> 
86  (1857). 

8  The  statement  of  facts  and  a  portion  of  the  opinion  are  omitted. 


214  THE  EQUITABLE  AND   LEGAL   RIGHTS  OP  THE  SURETY.       (Part    2 

creditors  were  necessary  parties,  at  least  in  that  general  way.  1  Story's 
Eq.  PI.  §  99.  The  creditor  who  was  entitled  to  receive  the  debt,  for 
which  the  appellant  was  bound  as  surety,  should  also  have  been  a 
party;  and  so  should  the  heirs  or  devisees  of  Baldwin,  who  were  in- 
terested in  the  real  estate  sought  to  be  marshaled  and  applied  as  eq- 
uitable assets.  The  suit  was  therefore  defective  for  want  of  par- 
ties ;   but  it  ought  not  on  that  ground  to  have  been  dismissed. 

The  appellant  should  have  been  permitted  to  amend  his  bill  and 
make  the  necessary  parties,  unless  a  decree  for  an  account  had  been 
made  in  some  other  creditor's  suit,  having  in  view  the  same  objects ; 
in  which  case  it  would  have  been  proper  to  have  stayed  or  dismissed 
the  appellant's  suit,  and  required  him  to  become  a  party  to  the  other 
suit  by  petition  or  motion,  or  proving  his  claim  before  a  commission- 
er. "If  several  suits  are  depending  in  favor  of  different  creditors, 
the  court  will  order  the  proceedings  in  all  the  suits  but  one  to  be  stayed, 
and  will  require  the  several  parties  to  come  in  under  the  decree  in  such 
suit,  so  that  only  one  account  of  the  estate  may  be  necessary."  Story's 
Eq.  PI.  100,  note  2;  Hallett  v.  Hallett,  2  Paige  (N.  Y.)  15;  Ross 
v.  Crary,  1  Paige  (N.  Y.)  416,  note  a.    *    *    * 

The  decree  was  [in  part]   as  follows: 

"The  court  is  of  opinion  *  *  *  that  instead  of  dismissing  the  bill 
in  other  respects,  the  circuit  court  should  have  permitted  the  appellant 
to  amend  it,  and  make  all  other  creditors  of  Charles  R.  Baldwin,  who 
might  elect  to  become  parties  and  contribute  to  the  costs  of  the  suit, 
plaintiffs  with  himself,  and  make  the  creditor  entitled  to  receTve"tlie 
debt  to  Holliday  in  the  bill  mentioned,  for  which  the  appellant  is  bound 
as  surety,  and  the  heirs  or  devisees  of  said  Baldwin,  defendants. 
*     *     * »» 


HUGHES-HALLETT  v.  INDIAN  MAMMOTH  GOLD  MINES 

CO. 

(Supreme  Court  of  Judicature,  Chancery  Division.     1882.     L.  R.  22  Ch.  Div. 

561.) 

This  action  was  brought  to  rescind  a  contract  by  the  plaintiff  to  take 
shares  in  the  Indian  Mammoth  Gold  Mines  Company,  and  to  obtain 
from  the  other  defendants  an  indemnity  against  hability  on  the  shares. 

The  company  was  formed  by  registration  under  the  CompanieiTActST 
1862  and  1867,  on  the  13th  of  August,  1880,  for  the  purpose  of  work- 
ing some  gold  mines  in  India.  The  liability  of  the  shareholders  was 
limited,  the  nominal  amount  of  each  share  being-  £1.  On  the  14th  of 
August,  1880,  a  prospectus  of  the  company  was  issued  by  the  directors. 
For  the  purposes  of  the  present  report  it  is  unnecessary  to  refer  to 
the  statements  contained  in  .the  prospectus.  Shortly  after  it  had  been 
issued  it  was  seen  by  the  plaintiff.  One  E.  M.  Cookesley  had  an  in- 
terest in  the  mine,  which  the  company  had  agreed  to  purchase,  and  at 


Ch.  1)  THE  surety's  equity  of  exoneration.  215 

his  request  the  plaintiff  appHed  for  and  obtained  an  allotment  of  4,000 
shares  in  the  company,  and  paid  2s.  6d.  per  share  on  application,  and 
a  further  sum  of  2s.  6d.  per  share  on  allotment,  making  il,000.  alto- 
gether. The  plaintiff  was  to  hold  the  shares  as  a  trustee  for  Cookes- 
ley,  and  Cookesley  furnished  him  with  the  £1,000.  which  he  paid  for 
the  shares. 

The  allotment  to  the  plaintiff  was  made,  so  far  as  appeared,  by  the 
secretary  of  the  company  without  any  authority  from  the  directors. 
When  Cookesley  asked  the  plaintiff  to  apply  for  the  shares,  he  said 
that  he  would  get  the  plaintiff  to  execute  a  transfer  of  the  shares  to 
him  (Cookesley),  and  that  he  (Cookesley)  would  send  it  in  to  the  com- 
pany for  registration  within  a  fortnight  or  three  weeks.  The  plain- 
tiff executed  a  transfer  accordingly,  and  Cookesley  afterwards  sent 
it  to  the  company  for  registration ;  but  the  directors,  under  a  power 
contained  in  the  articles  of  association,  refused  to  register  it,  and 
consequently  the  plaintiff's  name  remained  on  the  company's  register 
as  the  holder  of  the  shares. 

The  plaintiff,  on  the  13th  of  April,  1881,  issued  the  writ  in  this  ac- 
tion against  the  company,  the  directors,  and  Cookesley.  He  alleged 
by  his  statement  of  claim  that  he  applied  for  the  shares  on  the  faith 
of  the  prospectus,  from  which  he  believed  that  the  property  of  the 
company  was  valuable,  and  that  he  was  incurring  no  risk  in  making 
the  application ;  and  he  alleged  that  the  prospectus  contained  material 
misrepresentations  and  omitted  to  disclose  material  facts.  The  plain- 
tiff claimed  to  have  the  allotment  of  shares  to  him  canceled,  the  con- 
tract to  take  the  shares  rescinded,  and  the  register  of  the  company 
rectified  accordingly.  He  also  claimed  an  indemnity  by  the  directors 
and  by  Cookesley  from  any  liability  in  respect  of  the  shares. 

By  their  statements  of  defense  the  directors  denied  that  the  plain- 
tiff applied  for  shares  on  the  faith  of  the  prospectus,  and  alleged  that 
he  did  so  in  pursuance  of  an  agreement  between  himself  and  Cookes- 
ley. They  also  denied  that  the  prospectus  contained  any  misrepre- 
sentations or  omitted  to  disclose  any  material  facts. 

Cookesley,  by  his  statement  of  defense,  did  not  deny  that  the  plain- 
tiff applied  for  the  shares  at  his  request. 

On  the  29th  of  June,  1881,  an  order  was  made  to  wind  up  the  com- 
pany. The  plaintiff  afterwards  applied  to  Mr.  Justice  Chitty,  to  whose 
court  the  winding-up  was  attached,  for  leave  to  continue  the  proceed- 
ings in  the  action  against  the  company,  but  this  application  was  re- 
fused. Consequently  the  action  proceeded  only  against  the  directors 
and  Cookesley. 

Cookesley  did  not  appear  at  the  trial. 

For  the  purposes  of  this  report  it  is  unnecessary  to  refer  to  the  evi- 
dence as  to  the  alleged  misrepresentations  in  the  prospectus. 

When  the  action  came  on  for  trial,  15s.  per  share  remained  un- 
called, and  there  was  no  evidence  to  show  whether  any  further  call  was 
likely  to  be  made  in  the  winding-up. 


216  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.       (Part    2 

[Fry,  J,  As  against  Cookesley  it  is  a  mere  quia  timet  action. 
Can  you  maintain  an  action  to  enforce  an  indemnity  against  a  liability, 
which  may  never  exist?  Lord  Ranelaugh  v.  Hayes,  1  Vern.  189,  is, 
so  far  as  I  know,  the  only  case  in  your  favor,  but  it  has  been  disap- 
proved.    (\^ide  Lloyd  v.  Dimmack,  7  Ch.  D.  398.)]     *     *     *  ^o 

Fry,  J.,  after  stating  the  facts,  continued: 

The  plaintiff's  case  against  Cookesley  is  this:  That  he  is  liable  to 
indemnify  him  in  respect  of  the  15s.  still  payable  on  the  shares,  and 
upon  the  evidence  before  me  I  am  certainly  of  opinion  that  the  plain- 
tiff" is  entitled  to  an  indemnity  from  Cookesley  in  respect  of  that  15s. 
y  But  then  arises  this  fact  for  consideration,,  namely,  that  no  part  of 
the  15s.  has  been  called  for,  and,  for  anything  that  appears  wr;eyT- 
dence  before  me,  no  part  ever  will  be  called  for.  Whether  it  will  in 
fact,  of  course,  I  cannot  tell.  It  appears  to  me,  therefore,  that  this 
is_the  jimple  case  of  a  person  who  has  taken  property  in  his  own 
name  on  behalf  of  another,  and  who  is  entitled  to  an  indemnity  from 
that  other  person  against  liability  in  respect  of  that  property,  siimg 
for  an  indemnity  before  the  contingency  which  creates  the  damage 
has  arisen.  It  is,  in  my  judgment,  a  mere  action  quia  timet,  and  it  is 
a  very  important  inquiry  whether  such  an  action  can  be  maintained. 
If  it  can,  it  is  obvious  that  every  person  who  has  undertaken  a  posi- 
tion of  responsibility  for  another  which  entitles  him  to  an  indemnity 
may  sue  before  the  right  to  indemnity  accrues — before  the  damage 
has  accrued  which  gives  rise  to  the  right  to  indemnity.  It  appears  to 
me  that  there  is  no  authority  for  such  an  action.  The  case~5f~Lx)rd 
Ranelaugh  v.  Hayes,  1  Vern.  189,  is,  so  far  as  I  am  aware,  the  only 
authority  which  countenances  such  a  view,  and,  as  I  observed  on  a 
previous  occasion,  that  case  has  never,  so  far  as  I  am  aware,  been 
followed.  I  can  see,  therefore,  no  authority  binding  me  to  pronounce 
such  a  judgment,  and  I  must  decline  so  to  enlarge  the  jurisdiction  of 
the  court.  It  appears  to  me  that  it  would  lead  to  most  injurious  con- 
sequences if  I  were  to  allow  a  person  in  the  position  of  the  plaintiff 
to  seek  for  an  indemnity  before  he  is  injured.  There  have  been,  un- 
doubtedly, cases  in  which,  where  a  contract  for  indemmty^exisfedv  and 
a  right  to  sue  upon  that  contract  had  arisen,  the  court  has  declared 
the  right  to  indemnity  generally,  and  has  put  matters  in  such  a  train 
that,  when  the  subsequent  right  to  indemnity  should  arise,  the  indem- 
nity might  be  worked  out.  Some  forms  of  judgments  in  that  class 
of  cases  are  to  be  found  in  the  last  edition  of  Seton  on  Decrees,  and 
they  show  that  where  a  person  has  taken  shares  for  another,  and  a 
call  has  been  made  which  has  not  been  met  hv  the  person  liable  to  pay 
it,  the  trustee  who  is  entitled  to  an  indemnity  may  obtain  a  declaration 
of  his  title  generally,  and  may  possibly  obtain  liberty  to  apply  from 
time  to  time  to  work  it  out. 

10  The  arguments  of  counsel  are  omitted. 


Ch.  1)  THE  surety's  equity  of  exoneration.  21T 

It  has  been  contended  that  the  plaintiff  is  entitled  to  some  better 
contract  of  indemnity  than  that  which  has  been  entered  into  by  Cookes- 
ley,  but,  in  my  judgment,  that  is  not  the  law  of  the  court.  If  the 
plaintiff  was  minded  to  accept  the  personal  contract  of  Cookesley  for 
indemnity,  he  must  be  content  with  that,  and  I  cannot  possibly  give 
him  any  better  indemnity.  If  authority  were  necessary  for  that  prop- 
osition, it  appears  to  me  that  it  is  supplied  by  the  case  of  Brough  v. 
Oddy,  1  Russ.  &  My.  55.  )C 

Then  it  is  said  that  this  is  not  a  mere  action  quia  timet,  because  there 
has  been  a  breach  of  Cookesley's  contract  to  obtain  a  transfer  of  the 
shares.  It  appears  to  me  that  the  real  contract  between  the  plaintiff 
and  Cookesley  was  only  that  Cookesley  should  send  in  the  transfer 
for  registration,  and  that  contract  he  has  performed.  But,  even  if 
the  contract  were  to  obtain  the  registration  of  the  transfer,  that  is  not 
a  contract  which  this  court  would  specifically  perform,  because  it  is  ad- 
mitted that  the  reason  why  the  transfer  has  not  been  registered  is  the 
refusal  of  the  directors  to  register  it,  a  refusal  with  which  I  have  no 
power  of  dealing  in  an  action  between  the  plaintiff  and  Cookesley. 
It  appears  to  me,  therefore,  that,  so  far  as  this  is  an  action  against 
Cookesley  for  specific  performance,  it  is  misconceived,  because  there 
is  the  right  in  a  third  person  to  prevent  the  specific  performance.  So 
far  as  it  is  an  action  for  indemnity,  it  is  also  misconceived,  because  no 
liabiTTEy  has  yet  arisen  which  can  give  rise  to  an  action,  I  am  t4iere^ 
for^,  though  somewhat  unwillingly,  compelled  to  refuse  the  plaintiff 
any  relief  as  against  Cookesley.  in^ 

His^tordship  then  considered  the  case  made  by  the  plaintiff  against 
the  defendant  directors,  and  held  that  that  case  also  failed.  And  his 
Lordship  dismissed  the  action  with  costs,  except  as  against  the  com- 
pany,^^ 

11  The  surety  himself  is  not  liable  until  the  default  of  the  principal,  and 
the  creditor  cannot  anticipate  such  default,  and  have  money  set  aside  In  the 
surety's  estate  to  be  due  on  the  happening  of  such  contingency.  Antrobus  v. 
Davidson,  3  Mer.  569  (1817). 

Unless  by  special  statutory  provision. 


218  THE   EgUITADLE  AND   LEGAL   RIGHTS  OF  THE   SURETY.       (Part    3 

CHAPTER  II 
THE  SURETY'S  EQUITY  OF  REIMBURSEMENT 


DE  LECTON  v.  DE  SUTTONA. 

(Michaelmas  Term,  1223,  7  &  8  Hen.  III.     Bracton's  Note  Book,  Case  No. 

1,641.) 

Hugo  De  Lecton^ues  against  Robert  de  Suttona  that  he  return  to 
him  seven  pounds,  fourteen  shilHngs,  eight  pence,  which  he  owes  to  him 
and  unjustly  detains  from  him,  for_that  Randolph  Bacon  loaned  that 
money  to  the  said  Robert  upon  the  security  of  him,  the  said  Hugo.  So 
that  the  said  Hugo  at  his  distress  paid  it  to  the  same  Randolph  for 
the  same  Robert,  and  this  he  offers  to  prove,  etc.,  wherefore  he  has 
been  damaged,  etc.  And  Robert  comes  and  defends  against  him,  etc., 
that  he  never  became  security  for  him  nor  does  he  owe  him  anything 
nor  has  this  same  Hugo  paid  money  for  him,  and  he  offers  to  defend 
this,  etc.  And_therelore,  it  is  adjudged  that  he  defend  himself  be- 
fore 12  hands  (men) — i.  e.,  a  jury — and  that  he  come  such  a  day  with 
his  law. 


SIR  DANIEL  O'CARROLL'S  CASE. 

(High  Court  of  Chancerj-,  1745.     1  Amb.  61.) 

On  appeal  from  decree  made  by  the  blaster  of  the  Rolls,  the  case 
was : 

Bill  was  brought  by  plaintiff  as  creditor  of   Sir  Daniel  O'Carroll 

against  Sir  Daniel  and  ,  administratrix  of  her  husband,  who 

was  surety  for  Sir  Daniel,  for  payment  of  a  sum  of  money  upon  a 
note  of  hand,  payable  by  installments.  It  appeared  that  Sir  Daniel 
had  been  discharged  by  the  insolvent  debtors  act,  and  that,  previous 
to  the  time  of  his  discharge,  one  of  the  times  of  payment  became^iue, 
and  the  rest  have  since.  His  honor  made  the  common  decree  for  pay- 
ment by  the  surety,  and  she  to  have  remedy  over  against  Sir  Daniel, 
the  principal.  V  From  this__decree  there  was  an  appeal;    and  it  was 

/  said  the  surety  cannot  have  a  decree  against  the  principal,  because~this 
court  has  only  jurisdiction  in  personam,  and  not  in  rem,  except  in  case 
of  specific  performance  of  articles,  etc.,  and  the  person  of  Sir  Daniel 

y  is  discharged  by  the  statute;  but  Lord  H.ardwicke,  C,  cleared  him- 
self of  that  difficulty,  and  said  he  could  make  a  decree,  the  same  as 
a  judgment  would  be  at  law,  and  likened  the  case  to  that  of  a  priv- 
ileged person,  who  is  decreed  to  satisfy,  etc.,  and  on  refusal,  instead 


Ch.  2)  THE  surety's  equity  of  reimbursement.  219 

of  an  attachment,  a  sequestration  issues  immediately  after  the  writ 
of  execution,  and  the  estate  and  effects  are  detained  in  the  hands  of 
the  officer,  till  the  party  has  complied  with  the  decree. 

Decree :  Defendant  the  administratrix  shall  have  remedy  against 
Sir  Daniel's  estate  and  effects,  except  his  wearing  apparel,  for  the 
money  due  on  the  first  installment,  and  the  common  decree  for  the 
rest.  ™™ 


GLOSSUP  V.  HARRISON. 
(In  Chancery,  1814.     3  V.  &  B.  134,  Coop.  t.  Eld.  61.) 

A  motion  was  made  by  the  surety  of  a  receiver,  who  had  been  dis- 
charged by  order,  to  restrain  him  from  taking  out  of  court  the  balance 
d^e  to  him  without  discharging  what  the  surety  had  paid  on  his  ac- 
count. 

The  Lord  Chancellor.  Where  the  surety  for  a  receiver  in  this 
court  is  called  upon  to  pay,  as  the  receiver  is  an  officer  of  the  court, 
and  the  surety  is  so  in  a  sense,  if  there  is  anything  due  in  account 
between  them,  justice  requires  that  upon  the  application  of  the  surety 
he  shall  be  indemnified  for  what  he  has  paid  for  the  receiver  out  of 
the  balance  due  to  him.  If  that  has  not  been  decided,  as  I  think  it 
lias,  it  must  be  decided  upon  principle,  as  it  is  clearly  capable  of  being- 
maintained  upon  equitable  grounds.  The  court  therefore  cannot  part 
with  the  fund  until  an  opportunity  is  given  of  determiiiThg"lTfe~claim 
cii^tbe  surety,  the  amount  of  which,  when  ascertained,  must  be  paid 
to  him,  and  the  residue  only  must  be  paid  to  the  receiver. 


TINSLEY  V.  OLIVER'S  ADIM'R  et  al. 

(Supreme  Court  of  Appeals  of  Virginia,  1817.    5  Munf.  419.) 

Upon  appeals  from  decrees  of  the  Superior  Court  of  Chancery  for 
the  Richmond  District,  dismissing,  with  costs,  two  bills  exhibited  by 
the  appellant,  the  object  of  which  was  to  obtain  retribution  for  the 
amount  of  several  judgments,  on  bonds,  obtained  against  him,  and  paid 
by  him,  as  security  for  the  intestate,  John  Oliveir;  the  prayer  of  the 
bills  belng^iithat  the  administrator  should  render  an  account  of  the 
personal  assets,  and  satisfy  the  claims  of  the  plaintiff^  as_sta.ildiiLg^Jn 
equity,  in  the  shoes  of  the  judgment  creditors /^jthat  the  other  de- 
fendants should  render  an  account  of  the  real  estate,  and  in  case  of 
a  deficiency  of  the  personal  estate,  which  was  suggested  as  probable, 
that  his  said  claims  might  be  charged  upon  the  real  estate,  either  by 
marshaling  assets,  or  putting  him  upon  the  footing  of  a  bond  creditor. 
In  one  of  the  cases,  the  plaintiff  appeared._to  have  obtained  a..iu.dg- 
ment  at   law  .against   the   administrator,   but   without   receiving   sat- 


220  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

isfactipnj  in  the  otlieJVjQfi_motion  had  been  made,  or  suit_MJaw  in- 
stituted, to  recover  the  money  paid.  No  objection  to  thejiirisdiction 
of  the  court  of  equity  was  taken  by  the  defendaiifs.  Xhancellor  Tay- 
lorHTsmlssed  the  bill<,  on  the  ground  that,  in  his  opinion7~the-plaintifif 
haTl  complete  remedy  at  law,  but  without  prejudice  to  any  suit  he  might 
be  advised  to  bring  at  law. 

Judge  Roane  pronounced  the  court's  opinion  as  follows : 
The_court  is  of  opinion  that  the  decrees  in  these  cases,  dismissing 
the  bills  of  the  appellant,  are  erroneoySi  the  appellant  being  -f>Foperly 
in  a  court  of  equity('-as  well  for  the  purpose  of  establishing  his  demand 
against  the  estate  of  the  appellee's  inte^t^fte,  in  the  second  suit, 'as  of 
having  an  account  of  his  personal  estat^.'and  being  permitted  to  stand 
in  the  place  of  the  obligees  in  the  bonds,  in  the  bills  mentioned,  so  as 
to  be  paid  out  of  the  real  assets  in  default  of  the  personal. 

The  decrees  are  therefore  reversed,  with  co?'=;.  and  the  causes  are 
remanded,  to  be  proceeded  in,  pursuant  to  the  principles  of  this  decree. 


DECKER  V.  POPE. 

(London  Sittings,  1757.    1  Selw.  N.  P.  [13th  Ed.]  91.) 

This  was  an  action  brought  by  an  administrator  de  bonis  non  of.  a 
suretyT wTfb,  at  defendant's  request,  had  joined  with  another  friend  of 
defendant's  in  giving  a  bond  for  the  payment  of  the  price  of  some 
goods  that  were  sold  to  defendant ;  and  the  surety  having  been  obliged 
to  pay  the  money,  the  administrator  declared  against  the -d^endaftt-f or 
solnuch  money  paid  to  his  use. 

Lord  Mansfield  directed  the  jury  to  find  for  the  plaintiflf;  ob- 
serving  that,  where  a  debtor  desires  another  person  to  "Be  bound  with 
him  or  for  him,  and  the  surety  is  afterwards  obliged  to  pay  the  debt, 
this  is  a  sufficient  consideration  to  raise  a  promise  in  law,  and  to  charge 
the  principal  in  an  action  for  money  paid  to  his  use.  He  added  that 
he  had  conferred  with  most  of  the  judges  upon  it,  and  they  agreed  in 
that  opinion.^ 

1  "  'The  absence  of  any  remedy  at  law  was  conceded  in  1662.  It  was  said  by 
Buller,'jf.,  in  Toussaiut  v.  Martinnant  [2  Term  R.  100,  105],  that  the  first  case 
in  which  a  surety  who  had  paid  the  creditor  succeeded  in  an  action  at  law 
against  the  principal  for  indemnity  was  before  Gould,  J.,  at  Dorchester,  which 
was  decided  on  equitable  grounds.'  The  innovation  seems  to  be  due,  however, 
to  Lord  Mansfield,  who  ruled  in  favoTTrnrsTrretr  In  DecTcer  v.  Pope  [1  Selw. 
Nl  P.  (13th  Ed.)  91]  In  1757,  'observing  that  when  a  debtor  desires  another 
person  to  be  bound  with  hira  or  for  him.  and  the  surety  is  afterwards  obliged 
to  pay  tiie  debt,  this  is  a  sufficient  consideration  to  raise  a  promise  in  law.' " 
Ames'  Essay  on  Assumpsit,  2  Harvard  Law  Review,  p.  59. 

The  practice  existed  of  protecting  the  surety  by  making  him  the  obligee  in 
a  counter-bond  for  his  indemnity.  3  Reeves'  History  of  the  Common  Law,  p. 
3S4,  citing  Y.  B.  16  Edw.  IV.  9. 


Ch.  2)  THE  surety's  equity  of  reimbursement.  221 

INGALLS  V.  DENNETT. 

(Supreme  Judicial  Court  of  Maine,  1829.     6  Me.  79.) 

This  was  a  scire  facias  against  the  defendant,  as  trustee  of  the 
goods  of  one  Richardson.  If  appeared  from  his  examination  that. he 
had"  property  of  Richardson's  in  his  hands,  to  the  value  of  about  $28, 
butjthat  he  was  surety  for  Richardson  in  a  note  03;.exdxi£~-to  a- third 
person  for  more  than  $100,  for  which  he  was  suedTatter  the  service 
of^the  trustee  process  in  this  case,  and  which,  to  reheve  his  property, 
from  attachment,  he  had  since  paid,  without  indemnity  from  the  debtor, 
except  the  above  balance  of  $28,  which,  by  agreement  with  Richard- 
SQii,  he  had  indorsed  on  the  note  he  had  taken  up.^ 

MeIvLEn,  C.  J.,  delivered  the  opinion  of  the  court  in  the  ensuing 
June  term  in  Lincoln,  observing  that  the  question  must  be  decided 
on  the  facts  as  they  existed  at  the  time  the  process  was  served,  and 
at  that  time  Dennett  had  no  right  of  action  against  Richardson  ;_f or 
he  had  not  then  either  paid  the  note  for  which  he  was  surety,  nor 
absolutely  assumed  the  debt  himself,  by  giving  a  new  security,  and  dis- 
cliarging  Richardson  from  his  liability.  Neither  of  these  things  hav- 
ing been  done,  the  court  must,  according  to  settled  principles,  con- 
sider him  as  trustee,  though  the  case  seems  to  be  a  hard  one  for  the 
■defendant. 

Trustee  charged.* 


CORNWALL  V.  GOULD. 

(Supreme  Judicial  Court  of  Massachusetts,  1827.     4  Pick.  444.) 

Assumpsit  for  money  had  and  received;  lent  and  accommodated; 
and  paid,  laid  out  and  expended.  Ta[CL-Sp.eciaI_counts  were  filed  at  the 
term  of  the  trial. 

The  ground  of  the  action  was  that  in  April,  1822,  in  Georgia,  a 
promissory  note  was  made  at  the  request  of  the  defendant,  for  the 
sum  of  $1,700,  by  J.  Denniston,  payable  to  the  plaintiff,  and  by  him 

2  The  argument  of  counsel  is  omitted. 

3  Powell  V.  Smith,  8  Johns.  (N.  Y.)  249  (1811),  accord,  unless  varied  by  code 
provisions,  as  in  Hannay  v.  Pell,  3  B.  D.  Smith  (N.  Y.)  432  (1854). 

Payment  made  by  the  surety  before  maturity  entitles  him  to  reimburse- 
ment  as  of  maturity.  Armstrong  v.  Gilchrist,  2  Johns.  Cas.  424  (1800) ;  Craig 
y.  Craig,  5  Rawle  (Pa.)  91  (1835). 

Though  no  action  lies  until  payment  by  the  surety,  there  are  some  cases 
whi<:;Il  permit  collateral  (notes,  etc.)  to  be  realized  upon,  though  notes  are 
matR"T5y~prtncipal  to  the  snroty  directly. 

See  jrerchants'.  etc..  Bank  y.  Cumlngs,  149  N.  Y.  360,  44  N.  E.  173  (1896), 
an"3r  cases  therein  cited. 

Where,  in  addition  to  the  legal  duty  of  reimbursement,  an  express  agree- 
ment Js  nTadelTc^twe^n  prtncipar  and  surety  that  the  former  will  pay  the  debt 
when  due.  the  surety's  right  of  action  arising  out  of  the  agreement  exists 
before  his  payment.     Locke  v.  Homer,  131  Mass.  93,  41  Am.  Rep.  199  (18S1). 


222  THE  EQUITABLE  AND   LEGAL  RIGHTS  OP  THE  SURETY.      (Part    2 

indorsed  for  the  purpose  of  being  discounted  for  the  use  and  benefit 
of  the  defendant  at  a  bank  in  Georgia;  that  the  note  was  discounted 
at  the  bank  and  the  money  received  by  the  defendant,  who  had  under- 
taken to  indemnify  the  plaintiff,  and  for  that  purpose  had  assigned 
to  him  conditionally  a  patent  right ;  that,  after  one  or  two  renewals 
of  the  note  at  the  bank,  it  was  paid  by  the  plaintiff  out  6T  his  own 
funds,  by  giving  a  new  note,  signed  by  himself  and  indorsed  by  one 
ClafHin;  and  that  he  had  received  nothing  therefor  from  the  i1l'i\  ndant. 

'The  jury  were  instructed  by  the  Chief  Justice,  that  if  they  were  sat- 
isfied that  the  note  was  made  at  the  request  of  the  defendant  and  for 
his  use  and  benefit,  and  that  the  plaintiff  was  the  party  to  the  note 
on  whom  the  bank  relied,  and  that  the  debt  was  paid  to  the  bank  by 
the  plaintiff,  this  would  constitute  a  good  ground  of  action  for  money 
lent  and  accommodated.  Also,  that  the  giving  a  new  note  to  the  bank 
by  the  plaintiff,  with  another  indorser,  in  lieu  of  this  note,  after  it 
had  been  several  times  renewed,  the  first  being  given  up  as  paid,  was, 
without  evidence  of  payment  of  the  new  note,  a  payment  in  law  of  the 
first  note,  so  as  to  entitle  the  plaintiff  to  recover  upon  the  money 
counts. 

The  defendant  objected  to  the  filing  of  the  two  special  counts,  as 
being  for  a  different  cause  of  action,  which  objection  was  overruled. 

A  ,general_vgrdict  was  found  for  the  plaintiff,  and  the  defendant 
moved  for  a  new  trial.* 

Wilde,  ].,  delivered  the  opinion  of  the  court.    This  is  an  action  of 

'^'^''^i^        .     assumpsit.    The  declaration  contains  the  usual  money  counts,  and  two 

^t^y^       ''    special  counts,  all,  however,  founded  on  the  same  cause  of  action.    At 

V'l'Tv*^*  the  trial  a  general  verdict  was  returned  for  the  plaintiff,  and  the  de- 

^   ^         fendant  now  objects  to  one  of  the  special  counts  as  insufficient jtQ~waF- 

rant   a   judgment   on    the   verdict.      But   this    objection    cannot    pre- 

vail.     The  rule  is  that  when  there  are  several  counts  for  the  same 

cause  of  action,  and  a  general  verdict  is  returned,  it  may  be  altered 

so  as  to  apply  to  any  one  count,  because  such  alteration  cannot  preju- 

fdice  the  defendant  on  the  question  of  damages.  Xllg.  general  ques- 
tiqn  therefore  is  whether  there  is  any  one  count  supported  by  the 
evidence.  ' 

'jo^«j.,"v- <^.;.,^  First,  it  is  objected  to  the  count  for  money  paid  that  no  money  has 
in  fact  been  paid,  and  that  the  giving  a  negotiable  note  of  hand  for  a 
prior  debt  is  not  equivalent  to  payment,  so  as  to  warrant  a  recovery  in 
this  form  of  action.  This  objection  is  applicable  also  to  the  other 
counts.  But  if  the  law  was  correctly  laid  down  in  the  case  of  Bar- 
clay et  al.  V.  Gooch,  2  Esp.  571,  this  objection  cannot  prevail.  It  is 
said  that  this  case  has  been  overruled ;  and  it  certainly  has  been 
doubted.  It  was  also  a  case  at  nisi  prius;  but  it  was  afterwards  sanc- 
tioned bv  the  opinion  of  the  other  judges.  It  is  also  confirmed  by  a 
similar  decision  in  New  York  in  the  case  of  Witherby  v.  Mann,  11 

4  The  arguments  of  counsel  have  been  omitted. 


(, 


Ch.  2)  THE  surety's  equity  of  reimbursement.  223 

Johns.  518,  and  has  been  mentioned  with  approbation  by  this  court. 
Douglas  V.  Moody  et  al.,  9  Mass,  553.  The  cases,  in  which  a  different 
doctrine  seems  to  be  maintained,  are  all  distinguished  from  the  case  of 
Barclay  et  al.  v.  Gooch,  and  cannot  therefore  be  considered  as  over- 
ruling it. 

In  these  later  cases  it  has  been  held  that  a  bond  given  for  a  prior 
debt,  due  on  simple  contract  not  under  seal,  was  not  such  a  payment  ^ 
as  would  support  an  action  for  money  paid ;  yet  the  prior  debt  was 
certainly  extinguished  by  the  bond.  The  distinction,  however,  is  that 
bonds  can  in  no  sense  be  considered  as  money;  whereas  negotiable 
bills  and  notes  are  frequently  so  considered,  and  are  so  treated  in  the 
ordinary  transactions  of  business.  It  may  be  said  that  this  is  a  tech- 
nical distinction,  and  it  is  so;  but  to  a  technical  objection  a  technical 
answer  is  sufficient.  /C  ^  ^!' 

Another  objection  to  the  plaintiff's  recovery  is  that  the  debt  paid  was  .  .  f.^^-Sv^/  (X* 
uQLthe  debt  of  the  defendant,  but  of  one  Denniston.  It  appears  by  the 
report  of  the  case  that  Denniston  gave  his  note  at  the  request  of  the 
defendant,  who  received  the  money  after  the  note  had  been  dis- 
counted at  the  bank.  It  was  indorsed  by  the  plaintiff  for  the  use 
of  the  defendant,  who  promised  to  indemnify  him ;  so  that  it  is  clear 
that  the  plaintiff  had  no  claim  on  Denniston.  If  he  had  paid  the  note, 
the  defendant  would  have  been  liable  to  him;  and  from  this  liability 
the  defendant  has  been  discharged  by  the  plaintiff.  So  far  as  the 
plaintiff's  rights  are  concerned,  the  debt  was  the  defendant's,  and  not 
DenniLston's.  /'         Mt4\ 

It  is  also  objected  that  the  payment  by  the  plaintiff  was  voluntary  ^  ^-r. 

and  not  in  consequence  of  any  legal  liability,  there  being  no  proof  that 
hejiad  been  duly  notified  by  the  bank  so  as  to  charge  him  as  indorser. 
It  is_a  sufficient  answer  to  this  objection  that  notice  may  be  pre- 
sumed, and  that  it  is  now  too  late  to  make  the  objection,  as  it  was  not 
made  at  the  trial.  If  the  cashier  of  the  bank,  whose  deposition  was 
taken  and  used  at  the  trial,  had  been  interrogated,  the  fact  might 
have  been  ascertained.  )(f,^i^>^^'^ 

Another  objection  is  that  the  plaintiff  took  security  from  the  de-  v,^^^.^)-  U^.^  ' 
fejidant  fox -his  indemnity,  and  cannot,  therefore,  resort  to  an  implied  h^^^r\^, 
promise.  This  would  be  true,  if  it  had  been  agreed,  or  understood,  that 
the  plaintilt  should  look  only  to  his  security  for  his  indemnity;  but 
this  does  not  appear,  and  the  taking  collateral  security  for  the  fulfil- 
ment of  a  promise  to  indemnify,  whether  express  or  implied,  does  not 
discharge  the  promisor  from  his  obligation.  /\ ,       ^      '^ ' 

The  last  objectigii.  isutliat  the  defendant  would  be  liable  to  Clafflin, 
should  he  be  compelled  to  pay  the  outstanding  note.  But^his  objection 
also  failsTIgr  on  the  facts  proved  the  plaintiff  alone  is  liable  to  Clafflin. 
To  make  the  defendant  liable  it  must  appear,  either  that  Clafflin  signed 
the  note  at  his  request,  or  that  he  agreed  to  indemnify  him.  There  is 
no  evidence  of  either  fact,  nor  any  circumstance  proved  from  which 
the  defendant's  liability  to  Clafflin  can  be  presumed. 


224  THE   EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    3 

Upon  the  whole,  we  think  the  plaintiff  is  entitled  to  recover  on.tl-ie 
count  for  money  paid,  and  that  the  verdict  may  be  altered,  and  judg- 
ment rendered  on  that  count.^ 


POWNAL  V.  FERRAND. 

(Ck)urt  of  Common  Pleas,  Easter  Term,  1S27.    6  Barn.  &  C.  439,  13  B.  0. 

L.  203.) 

Assiini£sit^or  money  paid,  laid  out,  and  expended  to  the  use  of  the 
defendant.  Plea,  gsneral-issue.  At  the  trial  before  Lord  Tenterden, 
C.  J.,  at  the  Middlesex  sittings  after  the  last  term,  the  following  ap- 
peared to  be  the  facts  of  the  case: 

The  plaintiff"  was  the  indorser  of  a  bill  of  exchange  for  £350.,  pay- 
able three  months  after  date,  drawn  on  the  11th  March,  1825,  by  one 
Ford,  upon  and  accepted  by  Ferrand,  the  defendant.    The  bill  was  in- 
dorsed by  Ford  to  the  plaintiff',  and  by  him  to  one  Hayes,  and  again 
by  him  to  one  Field.    The  bill  not  having  been  paid  when  due,  Field, 
the  holder,  brought  actions  against  the  several  parties  to  the  bill,  and 
recovered  judgment,  and  Pownal,  the  present  plaintiff,  on  the  24th 
December,  1825,  in  consequence  of  such  recovery  against  him,  paid 
Field  £40.  on  account  of  the  bill.     The  defendant,  Ferrand,  having 
refused  to  pay  the  costs  of  the  action  against  the  other  parties.  Field 
recovered  against  him  as  acceptor  £350.  and  £30.  costs,  and  levied 
upon  his  goods  £340.,  giving  credit  for  the  £40.  paid  him  by  Pownal. 
This  action  was  brought  to  recover  the  £40.  which  Pownal,  the  plaintiff, 
\ha3'been  compelled  to  pay  to  Field  on  account  of  the  bill.    Itwas  ob- 
Ijected  that  this  money  could  not  be  recovered  in  this  form  of  action, 
"^because  there  was  no  privity  between  the  plaintiff  and  defendant ;  that 
;the_^Q.-\vas  not  paid  in  exoneration  of  the  defendant,  but  of  the  plain- 
,  tiff,  who  was  a  party  to  and  liable  on  the  bill;    and  it  was  said  that 
lit  would  be  a  great  hardship  on  the  acceptor  of  a  bill  if  several  in- 
dorsers  could,  by  partial  payments,  acquire  a  right  of  action.     The 
Lord  Chief  Justice  was  of  opinion  that  as  the  defendant  was  liable 
by  law  to  the  amount  of  the  bill,  and  as  he  had  been  exonerated  from 
the  payment  of  £40.  by  the  plaintiff's  payment  of  that  sum,  it  must  be 
considered  as  so  much  money  paid  to  his  use.    A_yerdict  having  been 
found  for  the  plaintiff,  Starkie  now  moved  for  a  new  trial.* 

^Lord  Tenterden,  C.  J.  The  facts  of  this  case  are  so  very  peculiar 
that  it  appears  to  me  that  a  decision  in  favor  of  the  plaintiff  will  not 
tend  to  any  mischievous  consequences.  The  acceptor  w^as  primarily 
liable  upon  the  bill  to  the  plaintiff'.  Field  sued  the  plaintiff  on  the  bill, 
and  obtained  a  verdict  against  him,  and  after  that  verdict  the  plain- 
tiff paid  Field  £40.  on  account  of  the  bill.    Field  also  brought  an  ac- 

5  Accord  on  point  that  payment  by  note  of  surety  Is  pasonent :   Witherby  v. 
Mann.  11  Johns.  (N.  Y.)  .518  (1S14). 
«  The  argvnnent  of  counsel  is  omitted. 


Ch.  2)  THE  surety's  equity  of  reimbursement.  225 

tion  against  the  defendant  as  acceptor  of  the  bill,  and  obtained  a  ver- 
dict against  him  for  £350.;  and  judgment  was  signed  for  that  sum 
and  £30.  costs,  and  an  execution  issued  against  the  defendant,  under 
which  £340.  was  levied.  This  action  is  brought  to  recover  from  the 
defendant  the  sum  of  £40.,  which  the  plaintiff  was  compelled  to  pay  as  ^^/o^  >=j J,> 
indorser  of  the  bill.     This  case  differs  from  Cowley  v.  Dunlop,  7  T.  ^      ' 

R.  565,  and  Houle  v.  Baxter,  3  East,  177 ;  for  in  those  cases  the  ac- 
ceptors had  become  bankrupts,  and  obtained  their  certificates  before  the 
indorsers  made  any  payment  on  account  of  the  bills.  At  the  time  of 
making  such  payments,  therefore,  the  acceptors  had  ceased  to  be  Hable 
on  the  bills.  Here  the  money  paid  by  Pownal  is  money  which  the  de- 
fendant, Ferrand,  was  liable  to  pay,  and  justice  requires  that  Pownal 
should  be  allowed  to  recover  it  back.  y(P^*^M''iw<M^ 

Itjs^id  that  Pownal  ought  to  have  sued  on  the  bill;  but^the  bill  '^^  ' 
was  not  ffi  his  possession,  and,  even  if  it  "was,  there  might  be  great 
difficulty  in  suing  upon  it,  for  the  present  defendant  might  have  plead- 
edja.iormer  recovery  of  the  whole  amount  of  the  bill.  The  plaintiff,  by 
bringing  this  action  for  money  paid  to  the  use  of  the  defendant,  avoids 
this  difficulty.  I  am  of  opinion  that  he  is  entitled  to  recover  upon  the 
general  principle  that  one  man,  who  is  compelled  to  pay  money  which 
another  is  bound  by  law  to  pay,  is  entitled  to  be  reimbursed  by  the 
latter ;  and  I  think  that  money  paid  under  such  circumstances  may  be 
considered  as  money  paid  to  the  use  of  the  person  who  is  so  bound  to 

A  BaylEY.  T-  It  is  the  duty  of  the  acceptor  of  a  bill  to  pay  it  when  f' C-/|.-a  Kt«-wv^ 
djje.  If  any  injury  result  to  him  by  reason  of  his  non-payment  of  the '"'^^'^ ?  ^"^  t 
bilLJie^ has  no  ground  of  complaint,  for  it  arises  from  his  own  breach  ^wi-^-**^^ 
of  duly.  If  he  pays  the  bill  when  it  becomes  due,  no  party  can  call 
upon  him.  The  holder  of  a  bill,  however,  has  a  right  to  claim  payment 
from  all  the  parties  to  it ;  but  the  acceptor  is  the  only  person  who 
ought  to  expect  to  be  called  upon  to  pay  it.  Each  party  may  pay 
something,  and  in  that  case  the  acceptor  will  be  responsible  to  the 
several  parties  to  the  extent  of  the  sums  which  they  have  paid.  Here 
the  holder  called  upon  the  plaintiff,  one  of  the  indorsers,  to  pay  the  bill. 
If  the  defendant  had  done  his  duty  as  acceptor,  the  plaintiff  would 
not  have  been  so  called  upon.  The  plaintiff  did  pay  £40.  to  the  holder 
on  account  of  the  bill ;  and  the  question  is  whether  he  is  to  lose  that 
sum,  or  has  any  remedy  against  the  defendant,  in  consequence  of 
whose  default  he  was  compelled  to  pay  it.  The  law  is  that  a  party 
by  voluntarily  paying  the  debt  of  another,  does  not  acquire  any  right 
of  action  against  that  other;  but  i^f  I  .pay  your  debt  because  I  ^m 
forced J:o  do  so,  then  I  may  recover  the  same,  for  the  law  raises,  a 
promise  on  the  part  of  the  person  whose  debt  I  pay  to  reimburse  me. 
That  principle  was  fully  established  in  the  case  of  Exall  v.  Partridge, 
8  T.  R.  308.  There  the  goods  of  a  stranger,  which  were  on  the  prem- 
ises of  another,  were  distrained  by  the  landlord  for  rent;  and  the 
Hen. Sub. — 15 


226  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

Stranger,  in  order  to  redeem  them,  was  forced  to  pay  the  rent,  and  he 
brought  an  action  to  recover  the  same  from  the  three  joint  lessees, 
from  whom  the  rent  was  due  to  the  landlord ;  and  it  was  held  that 
as  the  money  was  paid  by  compulsion,  in  satisfaction  of  a  demand 
upon  the  three,  the  action  was  maintainable.    So  in  this  case  the  plain- 

■t^^-dt^'r(^<  *'^  paid,  by  compulsion,  part  of  the  debt  due  from  the  acceptor.  -It 

k^'  is  said  that  the  plaintiff  has  no  remedy,  because  he  has  not  paid  the 

whole  amount  of  the  bill;    but  I  think  he  is  entitledLto_££CQYer~The 

part  wTiTch  "he  has  paid,  for  to  that  extent  the  defendant  has  been 

.  _     o  benefited.    The  cases  of  Cowley  v.  Dunlop,  7  T.  R.  565,  and  Houle  v. 

"  '^  -'■'^  r  Baxter,  3  East,  177,  are  distinguishable  from  the  present,  because  in 
those  cases  the  acceptors  had  become  bankrupts  and  obtained  their 
certificates,  which  operated  as  statutable  releases  of  their  debts  be- 
fore  the  money  was  paid. 

^  ^'  JHoLROYD,  jWl  an]i_of  opinion  that  this  action  for  money  paid  to 

the  defendanTs  use  is  maintainable.  The  defendant,  as  acceptor  of 
the  bill,  was  liable  in  the  first  instance  to  pay  it.  If  he  had  performed 
his  duty,  the  plaintiff  would  not  have  been  called  upon  by  the  holder ; 
but,  as  indorser,  he  was  liable  to  be  called  upon  either  to  pay  the  whole 
or  part.  He  was  called  upon,  and  was  actually  compelled  to  pay  part. 
There  was  no  breach  of  duty  on  his  part,  and  I  think  that,  he  having 
been  compelled  by  law  to  pay  money  which  the  defendant  was  liable  to 
pay,  the  law  will  imply  a  promise  on  the  part  of  the  latter  to  repay 
the  money ;  for  it  is  a  general  principle  that  a  man  who  pays  the  debt 
of  another  by  compulsion  may  recover  from  him  the  amount  of  the  debt 

^(tX^iif^    U^'^  paid.     It  is  said  that  the  plaintiff  by  making  this  payment  was  only 

Ctr  W/3^  remitted  to  his  remedy  upon  the  bill ;  but  I  am'  of  opinion~tHat  the 
plaintiff  is  entitled  to  recover  in  this  action  upon  the  same  principle 
upon  which  a  surety  is  entitled  to  recover  money  from  his  principal. 
I  think  that  a  party  is  not  bound  to  resort  to  the  original  engagement 
.unless  it  be  by  deed,  but  that  he  may  at  his  election  found  his  action 
upon  the  original  engagement,  or  bring  indebitatus  assumpsIF  for 
money  paid. 

v.tc^-^««^  y^  ^--1  '  LiTTLEDALEj  J.  j  The  authorities  cited  induced  me  for  some  time 
to  entertain  considerable  doubt  whether  the  plaintiff  as  indorser  could 
recover  in  this  form ;  but,  upon  further  consideration,  I_am  of_opinion 
that  although  the  plaintiff  by  making  the  payment  may  be  remitted  to 
his  original  right  upon  the  bill,  yet  he  may  also  maintain  an  action  for 
money  paid  to  his  use.  It  is  a  general  rule  that  a  man  who  is  compelled 
by  process  of  law  to  pay  money  which  another  is  liable  to  pay  may  in 
an  action  of  indebitatus  assumpsit  for  money  paid  to  the  use  of  that 
other,  recover  the  same.  This  case  in  principle  resembles  Exall  v. 
Partridge,  8  T.  R.  308.  There  the  lessees  were  liable  by  law  to  pay 
the  rent.  Here  the  acceptor  was  liable  by  law  to  pay  the  amount 
specified  in  the  bill,  and  the  indorser  was  liable  only  in  default  of  pay- 
nient  by  the  acceptor.  So.  in  Exall  v.  Partridge,  the  stranger,  having 
his  goods  upon  the  premises  in  respect  of  which  the  rent  was  due,  be- 


i 


Ch.  2)  THE  surety's  equity  of  reimbursement,  227 

came,  by  reason  of  the  default  of  the  lessees,  liable  to  satisfy  the  rent 
out  of  his  goods.    It  was  held  in  that  case  that  the  law  would  imply  a 
promise  on  the  part  of  the  lessees  to  repay  the  stranger  the  rent  which       ,-^f  asr^f> 
he  had  been  compelled  to  pay.    It  is  true  that  in  this  case  the  acceptor  %.j^  ,^,~j  (i 
will  become  liable  to  several  actions;    but  he  has  brought  that  upon 
himself  by  not  paying  the  bill  when  it  became  due,  as  he  ought  to 
have  done.     The  same  inconvenience  might  happen  in  the  case  of  a 
distress  for  rent ;   for  if  the  goods  of  different  persons  were  distrained 
upon,  and  they  severally  contributed  sums  towards  payment  of  the 
rent,  the  lessees  would  be  liable  to  several  actions. 
Rule  refused.' 


CRAIGHEAD  V.  SWARTZ  et  al. 
(Supreme  Court  of  Pennsylvania,  1907.    219  Pa.  149.  67  Atl.  1003.) 

Appeal  from  Court  of  Common  Pleas,  Cumberland  County. 

Action  by  Charles  C.  Craighead,  surviving  partner  of  R.  R.  Craig- 
head &  Bro.,  for  the  use  of  John  A.  Craighead,  by  W.  P.  Stuart,  com- 
mittee, for  the  use  of  Margaret  E.  Craighead,  executrixy-against  G.  W. 
Swartz  and  another.  From_a.4jLKigm€ftt-foF  defendantsjjnotwithstand- 
ing  the  verdi£t,-plaintifip  pppp^lg-     Affirmed. 

Argued  before  jMitchell,  C.  J.,  and  Fell,  Brown,  Potter,  and 
Elkin,  JJ.  _  ^     ^ 

Brown,  J.  The  facts  in  this  case  are  not  in  dispute.  They  appear  f^^ 
in  the  special  verdict  returned  by  agreement  of  the  parties.  John 
W,  Craighead,  appellees'  decedent,  made  and  delivered  three  promis- 
sory notes  to  R.  R.  Craighead  &  Bro.  The  first,  dated  April  18,  1892, 
was  for  $1,445.96,  payable  one  year  after  date;  the  second,  dated 
April  15,  1897,  was  for  $1,217.07,  payable  one  day  after  date;  the 
third,  dated  July  1,  1902,  was  for  $1,018.51  payable  one  day  after 
date.  Each  of  these  notes  was  under  seal.  On  February  5,  1904,  R.  R. 
Craighead  &  Bro.  transferred  these  notes  to  John  _A.  Craighead  as 
collalerar security  for  the  payment  of  two  judgment  notes  held  by  him 
against  them  "amounting  to  $5,009.38.  At_the  time  R.  R.  Craighead 
STBro.  transferred  the  notes  of  J.  W.  Craighead  to  John  A.  Craighead 
tliey.  were  insolvent,  and  were  so  at  the  time  of  the  trial  below.  _Be- 
fore_ they  transferred  the  notes,  John  W.  Craighead  had  indorsed  two 
of_their  notes  in  the  Farmers'  Trust  Company  of  Carlisle;  one  for 
$5,000,  dated  February  2,  1903,  payable  90  days  after  date,  and  the 
other,  for  $2,500,  dated  April  20,  1903,  payable  90  days  after  date. 
These  two  notes  were  protested  for  non-payment;    the  first  on  May 

7  Accord:  Kimmel  v.  Lowe.  2S  Minn.  2G4,  9  N.  W.  764  (1881) :  Bullock  v. 
Campbeir9  Gill  (Md.)  182  (18.u0) ;  Poe  v.  Dixon.  GO  Ohio  St.  124,  54  N.  E. 
86.  71  Am.  St.  Rep.  713  (1889).  There  being  no  written  promise  of  the  prin- 
cipal to  the  surety,  the  latter "s  action  was  barred  by  the  statute  relating  to 
implied  contracts. 


U^o«^«- 


228  THE  EQUITABLE   AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

4,  1903,  and  the  second  on  July  20,  19t>3.  On  March  23,  1905,  the 
Farmers'  Trust  Company  brought  suit  against  the  estate  of  John  W. 
Craighead  on  the  notes  indorsed  by  him,  and  judgment  was  recovered 
in  September,  1906.  In  April,  1"005,  suit  was  brought  by  the  com- 
mittee  of  John  A.  Craighead  against  the  estate  of  John  W.  Craig- 
head on  the  three  notes  he  had  given  to  R.  R.  Craighead  &  Bro.,  and 
wTiich  they  had  transferred  to  John  A.  Craighead.  The  estate  of  JoBn 
X  W.  Craighead  is  not  sufficient  to  pay  in  full  all  the  claims  against  it. 

VV^^  Trie  verdict  of  the  jury,  by  consent  of  the  defendants, _was_f^r 

,  $6,025.31,  subject  to  reserved  questions;  the  secooxi  being  whether  the 
(liability  incurred  by  John  \V.  Craighead  to  the  Farmers'  Trust  Cqm- 
/pany  for  the  firm  of  R.  R.  Craighead  &  Bro.  could  be  set  off  againstlhe 
/notes  given  by  him  to  R.  R.  Craighead  &  Bro.,  and  assigned  by  tliem 
to  John  A.  Craighead.    The  agreement  upon  which  the  special  verdict 
was  rendered  and  the  legal  questions  reserved  was  signed  not  only 
by  the  plaintiff  and  defendants,  but  by  the  Farmers'  Trust  Company. 
Whether  that  company  is  to  be  regarded  as  having  been  permitted  by 
the  agreement  to  intervene  in  the  suit  for  the  purpose  of  defend- 
ing is  immaterial.     The  one  question,  the  right  of  the  administrators 
of  John  W.  Craighead,  deceased,  to  make  the  defense  that  his  liability 
as  indorser  for  R.  R.  Craighead  &  Bro.  must  prevail  against  the  claim 
of  John  A.  Craighead's  estate,  is  to  be  determined  as  if  the  Farmers' 
Trust  Company  was  not  a  party  to  the  stipulation  for  the  special 
verdict  and  the  reservation  of  the  legal  questions.    Under  a  fair  con- 
struction of  this  stipulation,  the  court  below  very  properly  considered 
the  right  of  the  defendants  to  a  set-off  as  against  the  legal  plaintiff 
through  whom  the  use  plaintiff  claimed,  without  regard  to  any  inter- 
r  vention  by  the  Farmers'  Trust  Company.    Judgment  was  _entexed  for 
^^Y  J  the  defendants  on  the  reserved  question,  and  from  it  we  have_this 
I  aj^eal. 
I  ,j-  .^^     If  R.  R.  Craighead  &  Bro.  on  February  o,  1905,  being  at  that  time 
^  t^        r  ,    insolvent,  had  brought  suit  against  John  W.  Craighead  on  his  three 
'^  I  h^tr^'^  notes  held  by  them,  he  could  have  interposed  as  a  defense  his  liability 
'!'     /  as  indorser  on  their  protested  paper  held  by  the  Farmers'  Trust  Com- 

pany. When  a  principal  has  become  insolvent,  the  surety  may  retain 
the  moneys"of  the  principal  or  the  amount  of  his  indebtedness  to  the 
principal  as  a  fund  for  his  indemnity,  27  Am.  &  Eng.  Enc.  of  Law 
(2d  Ed.)  478.  "A  principal  who  is  insolvent  cannot  collect  a  debt 
which  the  surety  owes  him  without  his  indemnifying  the  surety."  1 
Brandt  on  Suretyship  and  Guaranty  (2d  Ed.)  §  227.  See,  also.  Abbey 
V.  Van  Campen,  Freem.  Ch.  (Miss.)  273;  Mattingly  v.  Sutton,  19 
W.  Va.  19 ;  Walker  v.  Dicks,  80  N.  C.  263 ;  Merwin  v.  Austin,  58 
Conn.  22,  18  Atl.  1029,  7  L.  R.  A.  84.  "The  surety  of  an  insolvent 
debtor  cannot  be  compelled  to  pay  a  debt  he  owes  his  principal  until 
he  is  released  of  his'  responsibility  of  suretyship,  and  may  retain 
what  he  owes  as  a  counter-claim  against  such  surety."  Scott  v.  Tim- 
berlake.  83  N.  C.  382. 


Ch.  2)  THE  surety's  equity  of  reimbursement.  229 

In  oui  own  state,  in  Ross  v.  McKinny,  2  Rawle,  227,  it  was  held 
that,  in  an  action  to  recover  a  legacy,  the  executor  might  demand  a 
conditional  verdict  that  would  permit  him  to  retain  the  legacy  until 
he  had  been  indemnified  against  a  demand  for  which  the  testator  was 
surety  for  the  legatee.  In  Beaver  v.  Beaver,  23  Pa.  167,  in  an  action  by 
an  administrator  of  an  insolvent  estate,  it  was  held  that  the  defendant 
was  entitled  to  set  ofif  the  amount  paid  on  a  note  by  decedent  on 
which  he  was  surety,  although  the  payment  was  not  made  until  after 
suit  brought,  on  the  ground  that  the  equity  of  set-off  originated 
wdien  the  obligation  to  pay  became  absolute.  It  was  there  said :  "As 
between  principal  and  surety,  courts  of  equity  always  lend  their  aid  for 
the  protection  of  the  latter.  As  soon  as  the  surety's  obligation  to  pay 
becomes  absolute,  he  is  entitled  in  equity  to  require  the  principal  debtor 
to  exonerate  him,  and  he  may  file  a  bill  to  compel  an  exoneration, 
although  the  creditor  has  not  demanded  payment  from  him.  Theo- 
bald's Principal  &  Surety,  226;  Nisbet  v.  Smith,  2  Bro.  C.  C.  579; 
Lee  V.  Rook,  Alosely,  318 ;  Story's  Equity,  §  327."  This  was  followed 
by  Thompson  v.  McClelland,  29  Pa.  475.  The  defendant  there,  as 
surety  of  the  legal  plaintiff,  who  was  insolvent,  was  allowed  to  set 
off  the  amount  paid  on  a  judgment  recovered  against  him  as  surety, 
although  such  payment  was  made  after  suit  had  been  brought  against 
him.  In  Miller  &  Reist  v.  Kreiter,  to  the  use  of  Bomberger,  76  Pa.  78. 
Reist,  the  defendant  below,  indorsed  a  note  made  by  Kreiter.  Before 
his  indorsement  of  this  note  he  had  given  Kreiter  a  non-negotiable 
note.  This  note  Kreiter  assigned  to  Bomberger,  who  brought  suit  upon 
it  on  January  25,  1872.  On  April  6,  1872,  judgment  was  recovered 
against  Reist  as  indorser  of  Kreiter,  and  it  was  held  that  on  August  30, 
1873,  on  the  trial  of  the  suit  brought  by  Bomberger,  Reist  could  set  off 
the  amount  of  the  judgment  recovered  against  him  as  Kreiter's  in- 
dorser. This  court  said:  "As  soon  as  the  note  was  protested,  June 
10,  1871,  and  Reist's  liability  as  indorser  became  fixed  and  absolute, 
he  was  entitled  to  call  upon  the  maker  to  exonerate  him  from  such 
liability,  and  that  even  before  demand  was  made  upon  him  for  pay- 
ment. Beaver  v.  Beaver,  23  Pa.  167.  His  right  of  set-off,  as  against 
any  claim  Kreiter  had  against  him,  may  be  said  to  have  originated 
from  this  period."  _  /<%L^'-ff 

Tlie_setd3ff  allowed  by  the  court  in  this  case  was  an  equitable  one,  ■^^.  ,„^i/ 
and  even  if  it  may  not  have  been  technically  within  our  defalcation  f/ '  y^fffP 
act,  it  was  a  good  defense  in  our  courts,  administering  equity  under     '  ^ 

common-law  proceedings.  As  to  this  it  is  said  in  Hibert  v.  Lang,  165 
Pa.  439,  30  Atl.  1004 :  "In  general,  in  order  to  support  a  set-off  there 
must  be  cross-demands  between  the  same  parties  and  in  the  same  rights 
such  as  would  sustain  mutual  actions  against  each  other;  yet  wherev- 
er there  is  the  practicability  of  avoiding  circuity  of  action  and  need- 
less costs,  with  safety  and  convenience  to  all  parties  (Gibson,  C.  J.,  in 
Tustin  V.  Cameron,  5  Whart.  [Pa.]  379),  or  where  there  is  a  special 
equity  to  be  subserved,  and  no  equity  of  third  parties  to  be  injured,  a 


230  THE  EQUITABLE  AND   LEGAL   RIGHTS  OP  THE  SURETY.      (Part    2 

set-off  will  be  allowed  upon  equitable  principles,  though  the  case  does 
not  come  within  the  language  of  the  statute." 

^  \Vhat  John  W.  Craighead  or  his  personal  representatives  could  luve 
set  up  as  a  defense  if  the  suit  on  the  notes  had  been  brought  by  R.  R. 
Craighead  &  Bro.  clearly  could  be  set  up  in  a  suit  by  the  assignee  of 
these  notes,  for  they  were  taken  by  John  A.  Craighead  subject  to"  any 
defense  the  maker  might  have  had  against  the  original  holders  at  the 
time  they  were  assigned.     They  were  all  under  seal  and__over_dye. 

n  The  stipulation  of  the  parties,  as  properly  construed  by  the  court, 
having  been  that  the  question  of  the  liability  of  John  W.  Craighead's 
estate  to  the  plaintiff,  in  view  of  his  liability  to  the  Farmers'  Trust 
Company  as  indorser  on  the  notes  of  R.  R.  Craighead  &  Bro.,  should 
be  raised  and  passed  upon,  without  regard  to  the  pleadings,  the  only 
po^ible  conclusion,  in  the  light  of  all  the  authorities,  was  reached  by 
the  learned  trial  judge.  ' 

The   assignments   of   error   are   overruled,   and   the   judgment   is 
affirmed. 


BROWN  v.  KIDD. 
(High  Court  of  Errors  and  Appeals  of  Mississippi.  1S57.    34  Miss.  291.) 

In  error  from  the  Circuit  Court  of  Jasper  County;  Hon.  John 
Watts,  judge. 

Handy,  J.,  delivered  the  opinion  of  the  court. 

The  plaintiff  in  error  brought  this  action  to  recover^a  sum  of  rnoney 
paid  by  him  as  a  surety  for  the  defendant. 

It  appears  by  the  record  that  judgment  had  been  rendered,  in  the 
state  of  Alabama,  against  the  defendant,  as  principal,  and  the  plain- 
tiff and  another  person,  his  sureties,  in  November,  1S46,  on  which  an 
execution  was  issued  in  January,  1847,  which  was  returned  indorsed 
"Non-paid."  A  subsequent  execution  was  issued  on  the  21st  April, 
18-47,  on  which  the  sheriff  returned  that  he  had  "levied  on  male  slave 
Randall,  as  the  property  of  Leroy  A.  Kidd,  April  26,  1847" ;  and  on 
the  2d  Alay,  1848,  a  writ  of  venditioni  exponas  was  issued,  whicH  was 
not  returned.  On  the  28th  April,  1849,  a  writ  of  fieri  facias  issued, 
which  was  not  returned;  and  on  the  14th  August,  1851,  another 
writ  of  fieri  facias  was  issued,  which  was  not  on  file,  but  appears  by  the 
execution  docket  to  have  been  returned  by  the  sheriff  as  follows :  "Re- 
ceived 14th  September,  1^51.  Superseded  by  writ  of  error  November 
3,  1851."  And  nothing  further  appears  to  have  been  done  on  the 
judgment. 

It  was_shown,  in  behalf  of  the jilaintiff,  that  on  the  27th  May,  1853, 
the  plaintiff  and  the  other  surety  eacbLpalito  tbe  propef  offTcer  _gf_the 
bank,  the  plaintiff  in  the  judgment,  one-half  of  the  principal  and  in- 
terest due  the^reon ;   and  the  witness,  who  was  the  officer  of  the  baiak, 


Ch.  2)  THE  surety's  equity  of  reimbursement.  231 

testified  that,  so  far  as  he  knew,  the  money  was  not  made  upon  the 
executions  issued! 

It  was  proved,  in  behalf  of  the  defendant,  that  at  the  date  of  the 
levy  in  April,  18i7,  a  likely  negro  boy  was  worth  $800  or  $900,  which 
was  more  than  the  amount  of  the  judgmenj:. 

The  case  turned,  in  the  court  below,  upon  the  question  whether  the 
judgment  was  to  be_considered  in  law  as  having  been  paid,  by  reason 
oT.tlie  levy  of  the  execution  upon  the  slave  of  the  defendant,  before 
the  payment  by  the  plaintiff  in  this  case  to  the  bank;  and  upon  that 
point  the  court  instructed  the  jury,  in  effect,  that  if  the  jury  believe, 
from  the  evidence,  that  there  was  a  levy  upon  the  property  of  Kidd, 
that  "was  prima  facie  a  satisfaction  of  the  judgment,  and,  if  the  plajn-  y'i^a'K^ 
tiff  paid  the  judgment  after  it  was  so  satisfied,  he  paid  it  in  his  own 
wrong,  and  they  should  find  for  the  defendant. 

~Tlie_verdict  and  judgment  being   for  the   defendant,   the  plaintiff 
sued  out  this  writ  of  error. 

It  is  insisted  that  the  court  erred  in  giving  the  instruction  above 
stated  ;  and  this  is  the  only  question  for  consideration.,  X. 

The  rule  is  too  well  settled  that  a  levy  upon  personal  property  is   A'^-|4'>p'>^ 
prima  facie  a  satisfaction  of  the  execution  levied  to  admit  of  contro-'' '^"'"'^r^'^''*'^ 
versy.    And  the  reason  of  the  rule  is  that  by  the  levy  the  defendant 
is  in  law  deprived  of  his  property,  which,  until  the  contrary  is  made 
to  appear,  is  presumed  to  have  been  disposed  of  by  the  sheriff;    and 
whether  it  is  applied  by  the  sheriff  to  the  payment  of  the  execution  or  , 

not,  it  operates  as  a  satisfaction  in  law.  This  rule  applies  as  w_ell  to 
parties  collaterally  interested  in  the  satisfaction  of  the  execution,^  as 
the^plaintiff  in  this  case,  as  to  the  plaintiff'  in  the  execution  levied,  and 
it  operates  as  a  discharge  of  the  defendant  from  the  judgment,  unless 
the  presumption  of  satisfaction  be  destroyed  by  sufficient  proof.  >^  ,-•,      _,     u 

It  is  said  that  an  amotion  of  the  levy  is  shown  in  this  case,  by  the  1  jj '  'j/fe 
fact  that  an  execution  was  issued  in  August,  1851,  which  was  returned 
"superseded  by  writ  of  error."  But  it  will  be  observed  that  the  levy 
insisted  upon  was  made  in  April,  1847,  under  writ  of  fieri  facias,  and 
that  the  writ  of  venditioni  exponas,  issued  for  the  purpose  of  sell- 
ing the  slave  levied  on,  was  never  returned.  No  disposition  is,  there- 
fore, shown  of  that  boy.  It  is  true  that  a  subsequent  writ  of  fieri 
facias  was  issued  in  1851.  But  it  does  not  appear  upon  what  ground 
that  writ  was  issued ;  and  if  it  could  be  presumed  that  it  was  is- 
sued upon  proper  showing  that  the  judgment  had  not  been  satisfied 
by  the  previous  levy,  yet  that  writ  appears  to  have  been  superseded, 
and  a  writ  of  error  prosecuted  to  it,  which  is  not  shown  to  have  been 
disposed  of.  So  that  the  presumption  that  the  judgment  had  not  been 
satisfied,  arising  from  the  fact  of  the  issuing  of  the  last  execution, 
is  destroyed  by  the  fact  that  execution  was  matter  of  contest,  and  its 
regularity  does  not  appear  to  have  been  determined. 

Under  the  circumstances  shown  by  the  record,  we  think  that  the 
judgment  is  correct,  and  it  must  be  affirmed. 


232  tHE  EQUITABLE  AND  LEGAL  lUGHTS  OF  THE  SURETY.      (Part    2 

ANGROVE  V.  TIPPETT. 

(Court  of  Queen's  Bench,  18G5.    11  L.  T.  [N.  S.]  708.) 

This  was  a_case  stated  upon  a  plaint  in  the  County  Court  of 
Cornwall. 

The  particulars  stated  the  plaint  to  be  as  follows:  "To  amount  of 
your  acceptance  of  my  draft  for  £40.,  dated  28th  Oct.,  1856,  pay- 
able three  months  after  date,  for  your  accommodation,  together  with 
interest  and  expenses  thereon,  paid  by  me  to  the  holder  thereof." 

The  defendant  had  pleaded  the  statute  of  limitations. 

It  appeared  that  in  October,  1856,  the  plaintiff  accepted  the  bill  of 
exchange  above  mentioned  for  the  accommodation  of  the  defendant, 
and  that  the  bill  in  due  course  got  into  the  hands  of  one  Keavan,  who, 
sued  the  acceptor  (the  present  plaintiff)  for  the  amount,  judgunent 
being  signed  in  July  1858,  Tippett  being  not  aware  of  the  proceedings. 
The  amount  was  paid  by  the  present  plaintiff  within  six  years  of  the 
time  of  the  entering  the  plaint  in  the  present  action.     The  County 

! Court  judge  gave  judgment  for  the  plaintiff,  " — 

H.  T.  Cole  appeared  for  the  defendant  (the  appellant),  and  con- 
tended  that  the  statute  of  limitations  commenced  running  against  the 
pfaintiff  from  the  time  when  the  bill  became  due,  which  was  more  .than 
six  years  before  the  entering  of  the  plaint  in  the  County  Court. 
[Crompton,  J.  Surely  the  time  runs  from  the  date  of  payment.  How 
is  he  injured  until  he  is  called  upon  to  pay?]  He  could  have  taken  up 
the  bill  for  honor  at  the  time  it  became  due.  [Blackburx,  J.  But  he 
did  not  do  so  and  he  had  no  claim  against  the  defendant  until  he 
actually  paid  the  amount.]  But  it  is  a  plaint  upon  the  bill,  which  ap- 
pears to  be  over  six  years  due.  ,  [Blackburn,  J.  The  plaint  shows 
it  is  for  money  paid.]    Webster  v.  Kirk,  17  Q.  B.  944,  is  in  point. 

Cromptox,  J.    This  is  a  well-known  cause  of  action,  and  it  is  well 
settled  that  the  action  cannot  be  brought  until  the  party  has  paid  the 
money.    There  is,  in  fact,  no  cause  of  action  until  he  has  done  so,"~and 
therefore  the  statute  of  limitations  does  not  apply  in  this  case. 
Judgment  for  the  plaintiff,  with  costs.® 

8  Accord:  Thayer  v.  Daniels,  110  Mass.  345  (1872) ;  Collingre  v.  Hevwood. 
9  A.  "SrETeSS  (1839) ;  Bullock,  v.  Campbell.  9  Gill  (:Md.)  182  (1850) ;  Barnsback 
v.  Reiner,  S  Minn.  59  (1863) ;  Bucks  v.  Taylor,  49  Miss.  552  (1873) ;  Walkei 
V.  Lathrop,  6  Iowa,  516  (1858) ;   Godfrey  v.  Rice,  59  Me.  308  (1871). 

It  would  seem  that  the  statute  had  run  in  favor  of  the  principal  against 
the  creditor  in  Huntley  v.  Sanderson,  1  C.  »&  M.  467  (1833),  and  also  in  Rey- 
nolds v.  Doyle,  1  M.  &  G.  753  (1840). 


Ch.  2)  THE  surety's  equity  of  reimbursement,  233 

APGAR'S  ADM'RS  v.  HILER. 
(Court  of  Errors  and  Appeals  of  New  Jersey,  1854.    24  N.  J.  Law,  812.) 

This  was  a  writ  of  error  to  the  Supreme  Court  to  remove  the  judg- 
ment obtained  in  that  court  by  the  defendant  in  error  against  the 
plaintiffs.  The  suit  below  was  an  action  of  assumpsit,  upon  trial 
before  Justice  Potts,  in  the  Hunterdon  circuit  in  December,  1852.  The 
plaintiff  below  proved  that  he,  with  Jacob  Apgar,  the  intestate  oftlie 
defendants  below,  and  one  Peter  R.  Fisher,  signed  a  note  to  Tunis 
Melick,  or  order,  for  $700.  Fisher  signed  the  note  first,  and  Apgar 
and  Hiler  after  him,  and  opposite  their  names  the  word  "Securities" 
was  written  by  Apgar.  It  was  proven  by  Henry  Johnson  that  Apgar 
solicited  and  procured  Hiler  to  sign  the  note  as  surety,  and  that  in  such 
solicitation  he  said,  "If  you  will  sign  it,  it  will  be  a  great  accommoda- 
tion to  us,  and  you  shall  never  pay  one  red  cent."  Apgar  and  Fisher 
were  partners  in  business.  A  suit  was  brought,  and  a  judgment  ob- 
tained~upon  the  note,  against  all  these  promissors,  and  the  debt  and 
costs  made  out  of  Hiler,  the  plaintiff  below. 

The_court,  among  other  things,  charged  th.e_ jury.  aa.fQllaw:£u:  (2  -tt>y  Ht4>^-^^ 

"Two  things  appear  to  be  certain — first,  that  Apgar  prevailed  on 
Hiler  to  sign  the  note  as  security;  and,  second,  that  he  promised,  if 
he  would  do  so,  he  should  be  saved  harmless ;  that  is,  should  not  have 
to  pay  one  red  cent.  If  you  believe  that  this  assurance  was  the  con- 
sideration of  the  execution  of  the  note  by  Hiler,  it  is  equivalent-to  a 
promise_that  he  would  stand  between  him  and  loss,  and  binds __Apgar 
f or_any-money  Hiler  had  to  pay  on  it ;  for  if  Apgar,  by  his  sole 
agency  and  solicitation,  and  as  a  matter  of  favor  to  himself,  and  with 
an  assurance  that  no  loss  shall  be  sustained,  procured  Hiler  to  become 
additional  security  with  himself,  he  puts  himself,  as  to  Hiler,  in  the 
situation  of  a  principal ;  that  is,  the  second  security  stands  in  relation  to 
the  first  security  on  the  same  footing  as  a  second  indorser,  who,  if  he 
has  to  pay  the  money,  may  collect  it  of  the  first  indorser.  It  there- 
fore follows  that,  if  you  believe  Johnson's  testimony,  Apgar's  estate 
is  bound  to  pay  the  whole  of  this  claim." 

To  this  charge  of  the  court  the  defendants  excepted,  and  praygd  ^  )/yy^ 
a  bilTof  exceptions. 

The  verdict  was  for  the  plaintiff  below,  for  the  whole  amount  of 
debt  and  costs  paid  by  him,  with  the  interest. 

The  opinion  of  the  court  was  delivered  by  y  ___ 

Ths  Chief  Justice.     Jacob  Apgar,   in  his  lifetime,  and  Philip     t'f'^'' 
Hiler,  the  defendant  in  error,  on  the  fourth  of  September,  1844.  be- 
came parties  to  a  promissory  note  in  the  following  form :  -' 

"One  year  after  date,  with  interest,  we,  or  either  of  us,  promise  to 


234  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

pay  Tunis  ]\Ielick,  or  order,  the  sum  of  seven  hundred  dollars,  value 
received,  without  defalcation  or  discount. 

"[Signed]  Peter  R.  Fisher. 

"Jacob  Apgar,|  , 

"PhiHp  Hiler,/^""^^^'^'- 

In  August  term,  1846,  Melick,  the  payee,  recovered  judgment  in  the 
Hunterdon  circuit,  against  Fisher,  Apgar  and  Hiler,  the  three  makers 
of  the  note,  for  the  amount  due  thereon,  with  costs.  Part  of  the  debt 
was  paid  by  Fisher.  The  balance  (amounting,  with  costs,  to  $549.88) 
was  paid  by  Hiler.  To  recover  the  amount  thus  paid,  action  was 
brought. 

Upon  the  trial  of  the  cause  it  became  a  material  inquiry  in  what 
character,  and  for  what  purpose,  Hiler  became  a  party  to  the  note; 
whether  Fisher  and  Apgar  were  the  principal  debtors  and  Hiler  se- 
curity— or  whether  Fisher  was  the  principal  debtor  and  Apgar  and 
Hiler  joint  securities — or  for  whom,  and  in  what  precise  character, 
Hiler  became  security. 

Upon  the  face  of  the  note,  Apgar  and  Hiler  appear  as  securities, 
J.        and  Fisher  as  the  principal.     In  jjie_abs.eiice   of   all  extrinsic   evi- 
^  V  dence,  Apgar  and  Hiler  would  be  regarded  as  co-securities,  andj^if  the 

deBt  were  paid  by  either,  he  would  be  entitled  as  agaio&t  his  co-se- 
curity to  contribution. 

But  it  was  clearly  competent  for  the  plaintiff  to  show  in  what  re- 
lation the  several  signers  of  the  note  stood  to  each  other — ^as  to~lhe 
payee  they  were  all  principals,  and  all  bound  jointly  and  severally  to 
pay  the  debt.  But  their  relation  to  each  other  depended,  not  upon 
the  form  of  the  note,  nor  whether  their  names  were  signed  first  or 
la^t  to  the  note,  but  upon  the  character  in  which  they  became"  parties 
to  the  note,  and  the  agreement  or  contract  made  among  themselves  at 
the  time  of  signing.  This  was  matter  in  pais,  proper  to  be  proved  by 
parol.  And  though  the  memorandum  imports  prima  facie  that  Apgar 
and  Hiler  were  joint  securities,  it  was  competent  for  the  plaintiff  to 
show  whether  they  were  securities  for  Fisher  alone,  or  for  each  other 
also.  Kean  v.  Davis,  21  N.  J.  Law,  683,  47  Am.  Dec.  182 ;  Robison 
V.  Lyle,  10  Barb.  (N.  Y.)  512. 

This  the  plaintiff  on  the  trial  attempted  to  do.  He  called  a  witness, 
who  testified  that  Hiler  signed  the  note  at  Apgar's  request,  that  it 
was  Apgar  and  Fisher's  note,  that  Apgar  said  it  would  be  a  great 
accommodation  to  them,  and  that  Hiler  should  never  pay  one  cent. 
The  credibility  of  the  witness  was  properly  submitted  to  the  jury.  If 
the  evidence  was  believed,  it  showed  either  that  Fisher  and  Apgar  were 
the  principal  debtors,  and  Hiler  alone  the  security ;  or,  if  Apgar  was 
security  for  Fisher,  still  that  Hiler  signed,  not  as  joint  security  with 
Apgar,  and  liable  with  him  to  contribution,  but  as  security  for  Apgar 
also.    He  stands  to  Hiler  in  the  relation  of  principal  to  a  surety.    It 


Ch.  2)  THE  surety's  equity  of  reimbursement.  235 

is  clear  from  the  evidence  that  in  any  event  Apgar  v^as  to  stand  be- 

tween  Hiler  and  loss.  v     -h      -/  f 

I.  If  the  jury  believed  that  the  note  was  the  debt  of  Fisher  .and  '^■^'■"^^  ,-^  -' 
Apgar,  and  that  Hiler  alone  was  security,  he  is  entitled  to  recover    rr^'S^^^^ 
from  his  principals  the  amount  paid  for  their  benefit.     The  action  is 

properly  brought  against  the  administrators  of  Apgar.  Whetjier  the 
original  note  be  joint  or  several,  the  liability  of  the  principals  to  the 
surety  is  several.    Each  is  liable  for  the  whole  amount. 

If  the  surety  is  bound  for  several  principals,  he  is  entitled  to  pro- 
ceed against  each  of  them  for  the  recovery  of  the  whole  of  what  he  has 
paid.  Each  of  the  principals  is  debtor  of  the  whole  of  the  debt  in  favor 
of  the  creditor;  and  the  person  being  surety  for  each  of  them  has, 
by  paying  the  debt,  liberated  each  of  them  from  the  whole,  and  con- 
sequently has  a  right  to  conclude  in  solido  against  each  of  them  for  the 
reimbursement  of  the  whole  of  what  he  has  paid,  with  interest,  from 
the  day  of  his  demand.  The  rule  prevails  both  in  the  civil  and  common 
law.  Burge  on  Suretyship,  364;  Duncan  v.  Keiffer,  3  Bin.  (Pa.)  126; 
2  Greenleaf's  Ev.  §  115,  note  7.  )<  fr^.  <.J  P/k 

II.  If,  on  the  other  hand,  the  jury  believed  that  Fisher  alone  was     yr  ^  tt-  l,^f„ 
the  original  debtor,  and  Apgar  his  security,  but  that  Hiler  became  se- 

cuHty  ~at  Apgar's  request,  and  upon  his  promise  of  indemnity,  still 
the~plaintilt  was  entitled  to  recover  in  this  action.  X  '^j  £  v^.'-i  m 

"The  evidence  was  not  offered  to  show  an  independent  contract  of         .     ' 
guaranty  against  loss,  but  simply  the  character  in  which  Hiler  became 
a  "party  to  the  note.     This,  as  has  been  shown,  may  be  proved  by 
parol. 

Nor  was  the  evidence  offered  to  prove  a  promise  by  Apgar  to  pay  the 
debt  of  a  third  person,  and  which  must  therefore  be  in  writing.  It 
was  designed  to  show  an  original,  equitable  obligation  on  the  part  of 
Apgar  to  refund  the  money,  growing  out  of  the  circumstances  under 
which  Hiler  became  a  party  to  the  instrument,  and  consequently 
liable  to  pay  the  debt.  y<^.^t-t-**^' 

In  either  aspect  of  the  case  the  charge  of  the  court  was  right,  and  if 
the  jury  believed  the  witness,  the  yerdict,  so  far  as  this  question  is 
concerned,  is  clearly  in  accordance  with  law  and  equity.  Whether 
the  claim  had  been  satisfied  by  Fisher,  the  principal  debtor,  or  by 
Apgar  in  his  lifetime,  and  what  balance,  if  any,  remained  due,  were 
questions  peculiarly  within  the  province  of  the  jury,  and  are  in  no  wise 
involved  within  the  bills  of  exceptions.  The  whole  charge  of  the 
judge  is  not  before  us,  and  this  court  cannot  assume  that  he  de- 
signed, by  any  casual  remark  upon  this  part  of  the  case,  to  withdraw 
from  the  jury  the  control  of  questions  of  fact  clearly  within  their 
province.  The  charge,  properly  considered,  admits  of  no  such  inter- 
pretation.®    *     *     * 

9  A  portion  of  the  case  relating  to  the  amount  recoverable  has  been  omitted. 


236  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

There  is  no  error  in  the  record,  and  the  judgment  should  be 
affirmed. 

Judgment  accordingly. 

For  affirmance — The  Chancellor,  the  Chief  Justice,  and  Judges 
Arrowsmith,  Elmer,  Haines,  Ogden,  Valentine,  Wills,  Corneli- 
soN,  Huyler,  and  Risley — 11. 

For  reversal — None.^° 


RIDDLE  V.  BOWMAN. 

(Superior  Court  of  Judicature  of  New  Hampstiire,  1853.     27  N.  H.  236.) 

Assumpsit  for  money  had  and  received,  and  money  paid.  In  the 
specification  filed  the  plaintiflf  claimed  $4,122.90,  for  money  by  him 
paid  in  discharge  of  a  note  for  $3,800,  dated  September  12.  1844,. 
signed  by  the  plaintiff  and  defendant,  and  James  McQuesten  and  G. 
W.  Morrison,  and  also  in  payment  of  $7  for  a  bill  of  costs  in  an  ac- 
tion upon  said  note.  Said  note  was  payable  to  the  Derry  Barjk  in  one 
year,  v^^ith  interest. 

Xhe^iiefendant  pleaded  the  general  issue,  .accompanied  with  a  brief 
statement.  It_app£ared  that  prior  to  September  3,  1842jjthe_perry 
Bank  held  an  execution  -against. one  Ephraim  Stevens,  Jr.,  aiid._the_de- 
fendant,  and  two  other  persons.  A. note  was  made,  dated  September 
3,  1842,  for  $3,800,  payable  to  said  bank  in  two  years,  with  interest 
after,  signed  by  the  said  Bowman,  Ephraim  Stevens,  Jr.,  James  Mc- 
Questen, Geo.  W.  Morrison,  and  the  defendant,  in  the  order  in  which 
the  names  stand  here,  and  the  amount  of  said  note,  deducting  the  in- 
terest for  two  years,  went  to  the  benefit  of  said  Bowman,  the  defend- 
ant, and  said  Stevens.  The  discount  and  paid  note  was  witlTthe  view 
and  purpose  of  getting  means  to  discharge  said  execution,  and  the 
same  was  discharged. 

On  September  12,  1844,  a  note  of  that  date  was  signed  by  John  P. 
Riddle,  the  plaintiff,  and  the  defendant,  and  G.  W.  Morrison,  and 
James  McQuesten,  in  that  order,  and  payable  to  the  Derry  Jiank  in 
onFyear,  with  interest,  and  said  note  was  paid  to  and  received  by^aid 
bank,  in  discharge  of  said  note  of  September  3,  1842.  The  defendant 
paid  the  interest  on  the  note  of  September  12,  1844,  to  September  12, 
1845. 

On  the  7th  day  of  April,  1846,  the  plaintiflf  paid  upon  said  note  the 
sum  of  $1,100,  and  on  the  30th  day  of  December,  1846,  he  paid  the 
further  sum  of  $650,  and  on  the  21st  day  of  April,  1847,  he  paid  the 
sum  of  $2,372.90  for  the  balance  thereof. 

It  appeared  that  on  the  17th  day  of  September,  1842,  Ephraim 
Stevens,  Jr.,  executed  to  the  plaintiff  a  mortgage  deed  of  three'Teveral 
tracts  of  land,  therein  described,  a  copy  of  which  deed  made~a~part 

lOAccord:  Qay  v.  Severance,  55  Vt  300  (18S3). 


Ch.  2)  THE  surety's  equity  of  reimbursement.  237 

of  this  case;  the  object  of  said  deed  being  to  secure  said  Riddle  from 
loss  in  consequence  of  signing  said  note  of  September  3,  1842,  as  by 
reference~tRereto  more  particularly  appears. 

At_the_date_of_said  deed  of  mortgage,  Frederick  G.  Stark  held  a 
mojtgage  deed  executed  to  him  by  said  Stevens,  covering  a  part  of 
theJands  embraced  in  the  mortgage  deed  of  Stevens  to  the  plaintiff. 
On^ihe  18th  day  of  September,  1814,  the  plaintiff  paid  to  said  Stark 
the  sum  of  $703.31,  the  amount  due  on  said  mortgage,  and  took  an 
assignment  thereof,  having  before  that  time,  and  before  the  time  of 
foreclosure,  tendered  to  said  Stark  the  amount  due  on  said  mortgage. 

It  appejredjhat.saidEphraim  Stevens,  Jr.,  died  in  1819,  and  left  a 
widow,  and  that  she  was  entitled  to  dower  in  the  lot  of  land  embraced 
in  the  mortgage  deed  of  the  said  Stevens  to  the  plaintiff,  and  known 
as  the  Red  House  lot ;  and  the  plaintiff  paid  her  for  her  right  in  said 
lot  the  sum  of  $275,  in  March,  1850. 

It  was  admitted  that  the^two  lots  or  portions  of  land  contained  in 
said  deed  of  mortgage  of  Stevens,  Jr.,  to  the  plaintiff,  known  as  the 
Bald  Hill  and  Pond  lots,  were  sold  at  auction  by  the  plaintiff  for  the 
sum  of  $1,725.73,  on  the  2d  day  of  January,  1816,  and  that  sum  was 
realized  therefor. 

On  the  20th  day  of  November,  1811,  the  plaintiff  executed  to  one 
William  Hall  a  deed  of  a  portion  of  the  land  described  in  said  mort- 
gage deed  of  Stevens,  Jr.,  to  the  plaintiff,  for  the  consideration  named 
therein.  The  sum  realized  from  the  sale  to  Hall  of  the  Red  House 
lot  was  $1,500.  And  no  evidence  was  offered  of  any  facts  showing  a 
foreelosvire  of  either  of  said  mortgages  by  the  plaintiff,  further"  than 
results  from  the  foregoing  statement  of  facts. 

"The  execution  of  the  deed  of  mortgage  of  Ephraim  Stevens,  Jr., 
to  F.  G.  Stark,  and  also  of  said  Stevens  to  the  plaintiff,  and  also  the 
deed  of  the  plaintiff' to  Wm.  Hall  of  a  part  of  the  land  mortgaged  to 
him  by  Stevens,  offered  in  evidence  by  the  defendant,  was  admitted 
for  the  purposes  of  the  trial. 

The  plaintiff  paid  interest  upon  the  note  of  September  12,  1811,  cast 
upon  banking  principles.  One  question  made  at  the  trial  was  as  to 
the  interest  which  the  plaintiff  is  entitled  to  recover  upon  the  sums 
paid  by  him  upon  said  note, 

/A,  verdict  was  taken,  by  consent,  for  the  plaintiff,  for  a  sum  as-^  -. 
sented  to  by  the  parties,  upon  whjch judgment  was  to  be  rendered,  gr^ 
the  same  to  be  amended,  and  judgment  to  be  rendered  thereon^/ ^r  the  \ 
same  to  be  set  aside,  and  judgment  entered  for  the  defendant.  Bow-  ^ 
man,lLCCording  to  the  opinion  of  this  court  upon  the  foregoing  case.^^  y 

Woods,  J.    Tliis  action  was  commenced  to  recover  the  amount  of  aA  ff^eM 
note  for  $3,S00,  signed  by  the  plaintiff,  as  surety  for  the  original  de- 
fendant. Bowman,  and  one  Stevens,  to  the  Derry  Bank. 

11  The  arguments  of  counsel  have  been  omitted. 


rf>Vw    y  -.z  '■ 


238  THE   EQUITABLE  AND   LEGAL   RIGHTS   OP  THE   SURETY.       (Part    2 

The  plaintiff  paid  the  amount  to  the  bank,  excepting  a  part  of  the 
interest,  in  the  several  instalments.  The  plaintiff,  then,  is  entitled  to 
recover  of  the  defendant,  Stevens  being  dead,  the  amount  paid  in  dis- 
charge of  the  note,  unless  he  had  received  moneys  for  which  he  is 
obliged  to  account.  Stevens  conveyed  to  the  plaintiff,  in  mortgage,  sev- 
eral tracts  of  land,  to  indemnify  him  generally  for  signing  the  note. 
A  portion  of  the  land  thus  mortgaged  was  incumbered  by  a  mortgage 
to  F.  G.  Stark,  and  upon  the  death  of  Stevens,  the  mortgagor,  his 
widow  claimed  dower  in  another  portion.  Two  of  the  lots  of  land 
embraced  in  the  mortgage  were  sold  by  the  plaintiff  for  $1,725.73, 
and  another  lot  for  $1,500.  If  no  other  facts  appeared  in  the  case, 
^  then  the  plaintiff,  we  think,  would  be  legally  bound  to  account  for 
those  two  sums,  amounting  in  the  aggregate  to  $3,225.73,  upon  the 
sum  paid  by  him  to  the  bank. 

But  he  paid  to  Stark  the  amount  of  the  mortgage  to  him,  being 
$703.31.  And  he  also  paid  to  Mrs.  Stevens,  for  her  right  of  dower  in 
the  land,  $275.  And  there  is  no  suggestion  that  that  sum  was  not  its 
fair  value.  The  plaintiff,  then,  is  entitled  to  have  those  two  sums, 
amounting  to  $978.31,  deducted  from  the  sums  realized  by  him  upon 
the  sale  of  the  lands  in  question,  leaving  a  balance  of  $2,217.42,  for 
which  the  plaintiff  is  to  account.  Interest  should  be  added  to  the  re- 
ceipts and  payments.  Simple  interest  is  to  be  cast  upon  the  several 
payments  made  by  the  plaintiff,  from  the  date  of  each  payment  re- 
spectively. And  simple  interest  is  also  to  be  allowed  upon  the  several 
sums  received  by  him,  from  their  respective  dates. 
7  The  fact  that  the  plaintiff,  upon  the  payment  of  the  Starkjnortgage, 
took  an  assignment  of  it,  cannot  relieve  him  from  his  accountability 
for  the  residue  of  the  money  realized  by  him  for  the  land  sold,  over 
the  amount  of  that  mortgage.  The  same  remark  is  applicable  to  the 
payment  made  for  the  dower,  and  the  conveyance  taken  of  it.  The  ti- 
tle to  the  residue  of  the  estate,  beyond  the  value  of  the  mortgage  and 
dower,  was  holden  as  collateral  security,  and  must  be  accounted  for 
y  accordingly.  Moreover,  he  is  not  relieved  from  hjs  accountability  for 
what  he  realized  from  the  sale  by  the  fact  that  it  does  not  appear  that 
the  Stevens  mortgages  had  been,  at  the  time  of  the  sale,  foreclosed. 
By  the  mortgage,  the  plaintiff,  or  his  grantee,  can  hold  the  possesston 
of  the  land,  free  from  all  right  to  redeem  by  any  one,  and  all  risk  of 
ejectment,  until  the  entire  bank  debt  shall  be  paid,  or  at  any  rate  until 
he  is  fully  indemnified  for  having  signed  the  note  in  question.  And 
having  given  his  deed  of  warranty  to  his  grantee,  he  is  thereby  only 
liable  for  what  he  received  of  him,  and  interest  thereon,  in  any  event. 
But  before  he  is  obliged  to  surrender  his  title  and  possession,  he  will 
receive  such  sum  as  will  at  least  indemnify  him  against  his  liability  by 
reason  of  his  covenants  of  warranty.  There  is  no  equitable  ground, 
therefore,  as  we  conceive,  upon  which  he  can  be  holden  not  liable  to- 
account  for  the  money  realized  upon  the  sales  made. 


Ch.  2)  THE  surety's  equity  of  reimbursement.  239* 

The  plaintiff  is  entitled  t^  judgment,  therefore,   for   the  balance 
which  shall  be  fotmd  due  him,  upon  the  principles  before  stated. 
Judgment  for  the  plaintiff.^^ 


BUCKNER  V.  MORRIS. 

(Court  of  Appeals  of  Kentucky,  1829.    2  J.  J.  Marsh.  121.) 

Robertson,  J.    This  was  a  suit  by  Morris  against  Buckner,  as  ad- 
ministrator,  and  his  securities,  for  a  devastavit. 
Two  questions  are  presented  by  the  record. 

(1)  A^Vheiher  Buckner  had  a  right  ot  retamer,  for  a  debt  due  to  him- 
seTTTfor  $1,296.53  ? 

(2)  Whether  Buckner  should  be  charged  with  a  debt  to  Brownson 
&  Co.,  with  which  he  had  been  credited  in  his  settlement  with  the  coun- 
ty court? 

Buckner  had  sued  the  heirs  of  his  intestate,  in  chancery,  and  obtained 
a  decree  for  $1,296.53,  in  1824,  with  which  he  charged  the  assets  in 
his  hands.    This,  together  with  the  debt  to  Brownson  &  Co.,  which  he 
claimed  to  have  paid,  and  for  which  the  county  court  gave  him  credit,    vx 
made  the  administrator  a  creditor  by  exhausting  the  assets.  /\ 

Morris  hayings  satisfied  a  judgment  obtained  against  him,  as  security, 
iiL-a_iiQte  for  the  intestate,  recovered  a  judgment  for  the  amount  against 
Buckner,  as  the  administrator,  in  1826,  and  issued  a  fieri  facias,  which 
was  returned  "Nulla  bona."  He  insists  that  his  debt  was  of  dignity  su- 
perior to  that  of  the  administrator.  We  think  differently.  /  Btickner's 
was  only  a  simple  contract  debt.  The  decree  which  he  obtained  against 
the  heirs  ascertained  the  amount  due  him,  and  is  evidence  of  the  debt 
against  the  heirs,  who  were  parties,  one  of  whom  Morris  is.  But,  as 
against  the  assets,  the  dignity  of  the  debt  was  not  enhanced  by  the 
decree.  In  this  respect,  the  only  effect  of  the  decree  was  to  prove  the 
debt.  Buckner  had  a  right  to  retain  the  amount,  as  soon  as  it  was  as- 
certained"^y  the  decree,  unless  debts  of  higher  grade  than  this  could 
be  shown.  X  Morris'  debt  was  not  superior  to  Buckner's.  Each  was  a 
simple  contracT^ebt.  When  Morris  discharged  the  bond  in  which  he 
was  security,  the  law  implied  an  assumpsit  by  the  administrator,  to  pay 
him  the  amount.  Five  years  would  bar  an  action  for  it.  A  bill  in 
equity,  or  motion,  or  an  action  of  assumpsit,  were  the  only  remedies 
for  recovering  it.  It  could  derive  no  advantage  from  the  dignity  of 
the  debt,  from  the  payment  of  which  it  resulted.  The  specialty  had 
been  canceled.  It  no  longer  possessed  any  obligation.  It  was  "functus 
oificio."  It  transferred  none  of  its  dignity  to  Morris.  His  claim  for 
indemnity  is  of  no  higher  grade  than  it  would  have  been  if  he  had  paid 
only  a  simple  contract  debt.    This  is  expressly  decided  in  the  case  of 

12  Accord:    Whipple  v.  Briggs,  30  Vt.  Ill  (1858). 


2-40  THE   EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    3 

Justices  of  Mason  County  v.  Lee,  1  T.  B.  Mon.  249.    Many  other  au- 
thorities might  be  cited,  but  the  proposition  is  so  nearly  self-evident  as 
w  to  render  an  array  of  cases  unnecessary. 
NT'<-r'^iy  )\     As  to  the  second  point,  we  have  as  little  difficulty.    It  is  alleged  that 
k»^.  Lrrtvlj?y   the  debt,  for  paying  which  Buckner  had  been  credited  in  his  settle- 
GrJ    .t/,.t,.ll     ment,  had  been  paid  by  the  intestate,  and  that  the  administrator  held 
the  receipt  which  would  show  it.     He  was  notified  at  the  bar.  during 
the  trial,  to  produce  the'  receipt.     He  lived  not  more  than  fifty  yards 
from  the  court-house,  but  objected  to  the  notice  for  want  of  time.    He 
insisted  on  being  indulged  until  the  next  day.    The  court,  considering 
this  unreasonable,  proceeded  with  the  trial,  and  permitted  parol  evi- 
dence to  be  given  of  the  contents  of  the  receipt.    There  can  be  no  valid 
or  reasonable  objection  to  the  course  adopted  by  the  court.     The  in- 
dulgence demanded  by  Buckner  was  unreasonable. 
^      |jk  Y     In  this  the  court  was  right.     But  in  deciding  that  Buckner  had  no 

'  right  to  retain  for  his  own  debt,  because  ]\Iorris'  was  of  superior  dig- 
nity,  the  court  erred.  Whether  the  jury  would  have  found  a  verdict  as 
it  did  for  Morris,  if  the  court  had  sustained  Buckner's  right  of  re- 
tainer, this  court  cannot  know ;  and  therefore,  for  this  error  of  the  cir- 
cuit court,  the  verdict  ought  to  have  been  set  aside,  and  a  new  trial 
awarded. 

The  jury  also  erred  in  not  finding  the  amount  of  assets. 
If,  therefore,  there  had  been  any  judgment  on  the  verdict,  it  would 
be  reversed.    But  there  is  no  judgment  in  the  record. 
Wherefore  the  appeals  mustlDe  ^ismlssed^.^"^ 


GIESEKE  v.  JOHNSON. 

(Supreme  Court  of  Indiana,  1888.     115  Ind.  308,  17  N.  E.  573.) 

From  the  Knox  Circuit  Court. 

ZoLLARS,  J.  J.  H.  Gieseke  and  appellee  executed  a  promissoixi}ote 
to  the  First  National  Bank  of  Vincennes  in  which  was  a  stipulation 
for  the  payment  of  attorney's  fees  for  its  collection. 

Although  not  shown  upon  the  face  of  the  note,  appellee-JiKas.,surety 
for  Gieseke.  Before  the  maturity  of  the  note  Gieseke  died,  and  ap- 
pellant was  appointed  administrator  of  his  estate.  After  the  maturity 
of  the  note  appellee  paid  it,  but  paid  no  attorney's  fees.  Suh5£quently 
he^  filed  his  claim  against  the  estate  of  Gieseke7"stating  thereia  -the 
amount  thus  paid,  setting  out  a  copy  of  the  note,  and  claiming  attor-_ 
ney's  fees  for  its  collection.  The  court  below  allowed  the  clainij  and 
included  in  its  judgment  $15  as  such  attorney's  fees. 

13  The  surety  on  a  note  is  entitled  after  payment  to  reimbursement  .from 
the  purchaser  of  the  property  for  which  the  principal  gave  the  note  in  syit; 
the  defendant  purchaser  having  agreed  with  the  vendor  to  discharge  the  nOte. 
Rodenbarger  v.  Bramblett,  78  Ind.  213  (1881). 


Ch.  2)  THE  surety's  equity  op  reimbursement.  244 

Is  appellee  entitled jQ_rer.nve-r  sncb  attorney's  fees?    That  is  the  only^^ 
question  for  decision  here.  ^  /P-d  L^im' 

We  are  satisfiedjhat  he  is  not.  One  sufficient  reason  why  he  is  not  />*p^^  r^ 
is  that  he  is  entitled  to  recover  the  amount  paid  to  the  bank,  with  in-'^^^*^^^ 
terest,  and  no  more.  His  right  of  action  is  for  indemnity  only,  and 
rests  upon  an  implied  promise  on  the  part  of  the  principal.  Hence  it 
is  that  a  surety  cannot  maintain  an  action  against  his  principal  until  he 
has  paid  something,  and  then  only  for  the  amount  paid,  with  interest. 
In  this  state  the  rate  of  such  interest  is  regulated  by  statute.  Rev.  St. 
1881,  §  1219;  Brandt,  Suretyship  and  Guaranty,  §§  176,  178;  Bon- 
ney  v.  Seely,  2  Wend.  (N.  Y.)  481;  Eaton  v.  Lambert,  1  Neb.  339; 
Blake  v.  Downey,  51  Mo.  437;  Succession  of  Dinkgrave,  31  La.  Ann. 
703;  Kendrick  v.  Forney,  22  Grat.  (Va.)  748;  1  White  &  Tudor, 
Leading  Cases  in  Eq.  (4th  Am.  Ed.)  225,  and  cases  there  cited;  Id. 
156,  and  cases  there  cited.  X/J,,^.^«J^  ^' 

To  say  that,  upon  and  by  reason  of  the  payment  of  the  note  by  the  fyy^jd-Mf-^^" 
surety,  equity  subrogated  him  to  the  rights  of  the  creditor,  and  to  go  <^{f^-> 
further  and  say  that  by  reason  of  such  subrogation  he  might  maintam 
an  action  upon  the  note  against  the  principal,  would  not  aid  the  appel- 
lee in  this  case;  for  the  action  would  still  be  for  indemnity,  and  the 
amount  of  his  recovery  the  amount  which  he  paid  to  the  bank,  with 
interest.    Sheldon,  Subrogation,  §  105,  and  cases  there  cited. 

It  is  there  said:  "The  subrogation  of  a  surety  will  not  be  carried 
further  than  is  necessary  for  his  indemnity.  If  he  buys  up  the  security 
at  a  discount,  or  makes  his  payment  in  a  depreciated  currency,  he  can 
enforce  it  only  for  what  it  cost  him."  In  the  case  of  Kendrick  v.  For- 
ney, supra,  in  speaking  of  the  rights  of  a  surety  to  be  subrogated  to 
the  rights  and  securities  of  the  creditor,  it  was  said :  "He  has  no  equity 
to  be  subrogated  to  the  rights  and  securities  of  the  creditor  against  the 
debtor  for  what  he  has  not  paid  for  him,  but  only  for  what  he  has  paid 
for  him.  So  that,  upon  the  principle  of  subrogation,  as  upon  the  im,- 
plied  contract  of  indemnity,  the  surety  is  not  entitled  to  recover  from 
the  principal  a  greater  amount  than  he  has  paid  for  him.  He  has  an 
equity  to  be  subrogated  only  for  his  indemnity  in  cases  where  the  doc- 
trine of  subrogation  will  apply."  y 

There  was  no  subrogation  or  equitable  assignment  in  the  case_be-  l^c^syf^'JifA 
fore  us  for  the  one  sufficient  reason,  without  attempting  to  givp  nth^ 
ers,  that  there  is  no  equity  requiring  either,  as  the  bank  held  no  securi- 
ties, funds,  liens,  or  equities  against  the  principal  debtor,  oi*  as  a  means 
of  enforcing  payment  from  him.  And,  as  we  have  said,  in  substance, 
in  this  case  appellee  could  not  be  benefited  by  any  supposable  subroga- 
tion, for  the  reason  that  he  could  recover  nothing  but  a  personal  judg- 
ment against  the  principal  maker  of  the  note,  and  such  judgment  could 
not  exceed  in  amount  the  sum  paid  by  him  to  the  bank,  with  interest.        y 

By  the  terms  of  the  note  the  makers  agreed  to  pay  to  the  bank  rea- 
sonable attorney's  fees  for  its  collection;   but  the  principal  maker  of 
Hen.  Sub.— 16 


242  THE   EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

u  <►  ^,/  the  note  did  not  thereby  agree  to  pay  to  appellee,  as  his  surety,  such  at- 
j  ''•■'.'  torney's  fees,  nor  any  other  amount.  As  already  stated,  the_£ights  d£ 
the  surety  and  the  obligation  of  the  principal,  as  between  themselves, 
in  a  case  like  this,  rest  upon  an  implied  promise  on  the  part  of  the 
principal  maker  which  arises  under  the  law  for  the  indemnity  of  tlie 
surety. 

The  action  by  appellee,  the  surety,  against  the  principal  niaker^  is 
not  upon  the  note,  but  upon  the  implied  promise  of  indemnity.  And 
hence  it  is  that  his  right  of  action  is  not  limited  by  the  statute  of  lim- 
itations applicable  to  the  note,  but  by  the  statute  of  limitations  appli- 
cable to  accounts  and  contracts  not  in  writing,  which,  in  this  state,  is 
six  years.  And  hence,  too,  it  is  not  necessary,  in  a  case  like  this,  under 
our  statute,  which  requires  that,  when  any  pleading  is  founded  on  a 
written  instrument  or  on  account,  the  original  or  a  copy  must  be  filed 
with  the  pleading,  that  the  note  paid  by  the  surety,  or  a  copy,  shall  be 
filed  with  the  complaint  in  an  action  by  him  against  the  principal  for 
indemnity.  See  Sexton  v.  Sexton,  35  Ind.  88 ;  Arbogast  v.  Hays,  98 
Ind.  26;  Lilly  v.  Dunn,  96  Ind.  220,  227;  Marker  v.  Glidewell,  23  Ind. 
219 ;  Cameron  v.  Warbritton,  9  Ind.  351 ;  White  v.  Miller,  47  Ind. 
385 ;  1  White  &  Tudor,  Leading  Cases  (4th  Am.  Ed.)  p.  145  ;  Neilson 
V.  Fry,  16  Ohio  St.  552,  91  Am.  Dec.  110. 

Upon  any  view  that  may  be  taken  of  the  case,  the  attorney's  fee 
should  not  have  been  allowed,  and  to  that  extent  the  judgment  is  too 
large. 

If  within  60  days  appellee  shall  enter  a  remittal  of  $15  as  of  the  date 
of  the  judgment,  the  judgment  will  stand  affirmed,  at  his  costs;  other- 
wise, reversed,  at  his  costs, ^* 


\ 


DAVIS  V.  BOARD  OF  COM'RS  OF  STOKES  COUNTY  et  al. 
(Supreme  Court  of  North  Carolina,  1875.     72  N.  C.  441.) 

Civil  actions,  originally  instituted  in  the  Superior  Court  of  Stokes 
County,  and  thence  removed  to  the  Superior  Court  of  Forsythe  Coun- 
ty, and  tried  by  Wilson,  J.,  at  Fall  Term,  1874. 

The  two  suits,  1  and  2,  involving  the  same  points,  were  agreed  to  be 
trigd  together  by  his  honor,  without  tlie  intervention  of  a  jury,  who 
found  the  material  facts  to  be : 

(1)  That  the  county  of  Stokes,  by  her  justices,  a  majority  being 
present,  at  June  term,  1861,  authorized  the  borrowing  from  the  Branch 
Bank  of  Cape  Fear,  at  Salem,  $10,000,  in  four  equal  installments  of 
$2,500  each,  on  the  bonds  of  the  county,  to  be  executed  by  their  chair- 

14  See  Beville  v.  Boyd,  16  Tex.  Civ.  App.  491.  41  S.  W.  G70,  42  S.  W.  318 
(1897),  where,  upon  payment  by  a  surety  of  the  face  of  a  note  and  indorse- 
ment of  the  note  to  him,  he  was  allowed  to  recover  attorney's  fees.    — 

On  the  same  point  see  note,  11  H.  L.  R.  200. 


Ch.  2)  THE  surety's  equity  of  reimbursement.  243 

man  and  five  associate  justices,  for  the  purpose  of  equipping  four  mil- 
itary companies,  of  which  the  Brown  Mountain  Boys  was  one. 

(2)  The  court  appointed  an  agent  for  each  company,  to  carry  into 
effect  the  order;  M.  T.  Smith  being  agent  for  the  Brown  Mountain 
Boys,  and  Wm.  Flynt  agent  for  the  Town  Fork  Invincibles. 

(3)  At  their  September  term,  18G1,  a  majority  of  justices  being  pres- 
ent, the  court  authorized  an  additional  $1,000  to  be  borrowed  of  the 
same  bank  for  each  of  the  companies. 

(4)  The  first  installment  of  $2,500  was  drawn  by  the  agent,  M.  T. 
Smith,  as  to  a  part  thereof,  to  wit,  $325,  and  the  balance  by  Milton 
Smith,  the  captain  of  Jhe  Brown  Mountain  Boys,  who  paid  the  money 
to  one  Fries  for  cloth  for  the  company,  and  filed  his  vouchers  for  such 
payment  with  M.  T.  Smith,  the  county  agent.  Only  $500  of  the  $1,000 
was  applied  by  the  agent  himself  for  the  use  of  the  company. 

(5)  Bonds  of  the  county,  signed  by  J.  J.  Martin,  chairman,  and  by 
sureties,  were  executed  for  these  sums  severally,  and  the  bond  for  the 
larger  sum  was  several  times  renewed  at  the  bank  before  payment. 

(6)  At  March  term,  1863,  the  justices,  a  majority  present,  author- 
ized money  to  be  borrowed  from  individuals  to  pay  the  debt  due  to 
said  bank, 

(7)  At  the  ensuing  June  term  of  the  court,  the  authority  was  re- 
newed, and  money  again  authorized  to  be  borrowed  from  individuals. 

(8)  On  the  10th  day  of  June,  1862,  W.  Flynt  had  executed  a  bond 
with  security  to  John  F.  Poindexter,  the  defendant  in  the  sum  of 
$3,050,  for  which  the  agent,  M.  T.  Smith,  received  the  money  and  sent 
it-hX-Fjynt  to  the  bank,  who  paid  the  debt  of  $2,500,  and  the  debt  of 
$500j..the  bonds  being  produced  in  evidence. 

(9)  Poindexter  subsequently  obtained  a  judgment  in  the  superior 
court  against  Davis,  the  plaintiff,  in  this  action,  and  the  other  sureties, 
for  the  $3,050  loaned  the  county  to  pay  the  bank  debt.  For  this  re- 
covery, Davis  has  paid  $500.  After  this  payment,  Poindexter  assigned 
his  judgment  to  one  James  Davis. 

(10)  Before  Poindexter  sued  on  his  debt,  he  presented  the  claim  to 
the  board  of  commissioners  of  Stokes  county,  who  audited  the  same 
and  allowed  it. 

The  foregoing  facts  relate  chiefly  to  the  first  case  (No.  1)  but  also 
pertain  to  the  points  raised  in  case  No.  2,  the  second,  to  which  his  hon- 
or also  found  the  following  additional  facts : 

That  Flynt,  as  the  county  agent  of  the  other  company,  the  Town 
Fork  Invincibles,  borrowed  of  said  bank  $2,500.  This  debt  was  paid 
by  money  borrowed  of  the  plaintiff,  Wm.  Davis,  who  knew  all  the  cir- 
cumstances attending  the  borrowing  the  money  from  the  bank  and  to 
what  purposes  said  money  was  to  be  applied. 

The  case  states  that  the  plaintiff,  on  the  trial  before  his  honor,  aban- 
doned his  causes  of  action  against  the  board  of  commissioners.  ^  iUo^mtva  r{  i 

Hisjionor,  upon  the  foregoing  facts,  adjudged:, That  the  bank  debts   *-*"(^^^ 
referred  to  were  contracted  by  the  county  of  Stokes  for  war  purposes. 


U^(^ 


244  THE  EQUITABLE  AND  LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

in  aid  of  the  Rebellion.  That  the  money  obtained  from  the  plaintiff, 
Davis,  and  also  that  from  Poindexter,  was  procured  and  used  for  an 
innocent  purpose,  which  was  neither  calculated  nor  intended  to  aid  the 
Rebellion.  That  the  acts  of  the  General  Assembly,  under  which  the 
justices  of  Stokes  borrowed  the  money,  were  passed  expressly  to  aid 
the  Rebellion,  and  were  therefore  void,  and  conferred  on  the  county 
no  authority  to  borrow  money  for  any  purpose.  That  the  auditing 
Poindexter's  debt  by  the  county  commissioners  on  the  3d  of  January, 
1870,  did  not  place  the  county  under  a  legal  obligation  to  pay  it.  And 
therefore  the  plaintiff  cannot  recover  in  either  of  his  actions. 
Judgment  accordingly,  from  which  plaintiff  appealed. 
;  ^  .^  ^  Reade,  J.  In  Poindexter  v.  Davis,  67  N.  C.  112,  it  was  decided_that 
^  I  .■»<K  ^  bond  given  for  money  loaned  to  pay  off  a  debt  which  had  been  con- 
,  vuhM  tracted  in  aid  of  the  Rebellion  was  not  affected  by  the  illegality  of  the 
original  debt.  In  that  case  the  county  court  of  Stokes  county  had  bor- 
rowed money  of  a  bank  to  equip  soldiers  for  the  Confederate  service. 
That  was  of  course  illegal.  The  county  court  subsequently  borrowed 
money  of  Poindexter  to  pay  off  the  bank  debt.  And  we  held  that  the 
illegal  consideration  of  the  bank  debt  did  not  affect  the  consideration 
pi  the  Poindexter  debt.  The  county  court  gave  a  bond  to  Poindexter 
for  the  money  borrowed  of  him,  and  the  present  plaintiff,  Davis,  was 
a  surety  upon  that  bond;  and  the  Poindexter  suit  was  against  him, 
and  a  recovery  was  had  against  him,  and  he  has  paid  a  part  of  tlie 
debt,  and  now  seeks  to  compel  the  county  of  Stokes  to  reimburse  him 
the  amount  he  has  paid,  and  to  exonerate  him  from  the  balance  by  the 
payment  thereof  by  the  county,  upon  the  ground  that  the  county  is 
primarily  liable. 

S^>f  VMfy^  X  There  is  no  doubt  of  the  rule  that  the  principal  is  responsible  to  the 
Uytu^  dt  h"  surety  for  any  liability  incurred  by  the  surety  at  the  request  of  the  prin- 
^  cipal.    But  that  rule  is  subject  to  exceptions.    A  surety  for  an  idiot,  in- 

fant, feme  covert,  etc.,  may  be  liable  when  the  principals  are  not  liable 
either  to  the  obligee  or  to  him.  So  a  surety  for  a  corporation,  in  a 
transaction  where  the  corporation  has  not  the  power  to  contract,  may 
be  liable  when  the  corporation  is  not.  And  a  corporation  may  exceed 
its  powers  where  there  is  no  moral  turpitude,  as  a  board  of  county 
commissioners  contracting  a  debt  to  build  a  church,  a  very  praiseworthy 
object,  but  still,  it  is  beyond  their  power,  and  they  would  not  be  bound, 
while  their  surety  would  be.  Grant,  then,  that  the  borrowing  of  mon- 
ey of  Poindexter  by  the  county  court  of  Stokes  county  to  pay  the  bank 
debt  was  not  tainted  with  political  turpitude,  yet  the  county  court  had 
no  power  to  borrow  the  money,  or  to  give  the  bond.  It  may  be  true 
that  there  were  statutes  of  a  rebel  Legislature  which  authorized  it;  but 
such  statutes  were  void.  But  while  the  county  court  had  no  power  to 
give  the  bond,  the  plaintiff,  Davis,  had  the  power  to  do  it ;  and,  there 
being  no  moral  or  political  turpitude,  he  is  bound  by  it.  But  when  he 
calls  upon  the  people  of  Stokes  county  to  reimburse  or  indemnify  him, 
they  have  the  right  to  answer  that  he  was  not  their  surety;    that  the 


Ch.  2)  THE  surety's  equity  of  reimbursement.  245 

county  court  was  not  their  agent  with  power  to  contract  that  debt,  and 
therefore  they  are  not  liable. 

It  may  seem  hard — it  is  hard — that  the  plaintifif  should  have  to  bear 
the  whole  burden  of  what  was  a  common  cause ;  and  the  "pomp  and 
circumstance"-  of  equipping  soldiers  for  the  field  lost  much  of  its  glory 
when  tarnished  by  the  refusal  to  pay  for  it ;  but  still  there  is  no  obliga- 
tion which  the  courts  of  this  government  can  enforce. 

The  principles  governing  this  case  are  discussed  more  at  large  in 
Weith  &  Avents  v.  City  of  Wilmington,  68  N.  C.  24,  and  a  number  of 
cases  in  this  court  within  the  last  few  years  growing  out  of  transac- 
tions in  aid  of  the  Rebellion,  to  be  found  collected  in  4  Bat.  Digest. 

The  other  branch  of  this  case  is  governed  by  the  same  principles  as 
are  enunciated  in  this  branch. 

There  is  no  error. 

Per  Curiam.    Judgment  affirmed.^" 


GODFREY  v.  RICE. 
(Supreme  Judicial  Court  of  Maine,  1871.    59  Me.  308.) 

On  report. 

Assumpsit,  one  count  for  money  had  and  received,  and  one  for  $2,- 
712.91  laid  out  and  expended  for  the  use  of  the  defendant.  The  writ 
was  dated  November  1,  1870. 

Butler  &  Co.,  Bartlett's  indorsees,  paid  the  note  to  the  holder,  and  on 
March  17,  1863,  commenced  an  action  against  Bartlett  as  their  indorser 
on  the  note.  The  action  was  entered  at  the  April  term,  1863.  At  the 
October  term,  187,0  (Bartlett  having  deceased  and  the  present  plaintiff 
having  appeared  as  his  administrator),  judgment  was  rendered  against 
the  present  plaintiff  for  $2,712.91,  which  was  satisfied  by  the  plaintiff 
out  of  his  intestate's  estate. 

The  remaining  facts  sufficiently  appear  in  the  opinion. 

AppIvETon,  C.  J.  On_2d  May,  1859,  Woodbury  &  Grover  gave  their 
note,  payable  in  a  year  from  its  date,  for  $1,500,  to  Joseph  Bartlett,  or 
order,  by  whom  it  was  indorsed  to  James  H.  Butler  &  Co.  The  note 
was  discounted  for  the  benefit  of  Butler  &  Co.  upon  their  indorsement ; 
but  before  its  maturity,  Woodbury  &  Grover  having  failed,  it  was  pro- 
tested and  the  indorsers  seasonably  notified. 

On JTth  March,  1863,  Butler  &  Co.,  having  been  compelled  tolake 
upJh£note,  commenced  a  suit  against  Joseph  Bartlett,  the  plaintiff's 
int^ate,_as~indorser,in  which,  after  a  long  and  tedious  litigation,  they 
recQiJ£r£d  judgment  at  the  October  term,  1870,  in  Penobscot  county, 
for  the  amount  of  debt  and  the  accruing  costs,  which  this  plaintiff, 
Bartlett  having  deceased,  paid  out  of  the  estate  of  his  intestate. 

15  Affirmed  on  rehearing  in  74  X.  C.  374  (187G). 


?6^^ 


246  THE   EQUITABLE  AND  LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

Assuming,  in  the  discussion  of  the  question_£resented,  that  the  de- 
fendant was  a  member  of  the  firm  of  Woodbury  &  Grover,  \vHich  the 
,  plaintiff  ofTers  to  prove,  is  this  action  maintainable  against  him? 

r  It  is  obvious  that  Butler  &  Co.,  if  the  present  .holders  of  the  note, 
could~nor  recover  upon  it,  inasmuch  as  the  statute' of  limitations, -if 
ple"aded,  would  be  a  bar  to  the  maintenance  of  the  suit.  For  thc-sa-me 
reason  the  plaintiff,  as  the  present  holder,  must  fail  in  a  suit  on  the  note. 

^  As  the  payment  was  made  by  plaintiff,  long  after  fHe  staFute  of  liini- 
tations  would  constitute  a  bar  to  the  note,  if  it  had  been  voluntary,  it 
would  not  have  entitled  him  to  recover.  Wheatfield  v.  Brush  Valley 
Township,  25  Pa.  112.t 

7  But  it  was  not  voluntary.  It  was  by  compulsion  of  legal  process. 
WTien  the  suit  was  commenced,  the  note  was  in  force,  though  when  the 
payment  was  made  in  satisfaction  of  the  judgment  recovered  it  had 
long  been  barred  by  the  statute. 

It  is  very  clear  that  the  indorser  had  no  right  of  action  against  the 
maker  for  money  paid  until  payment,  and  the  question  now  presented 
is  whether  he  had  then. 

X  In  the  case  of  co-sureties,  it  is  well  settled  that  one  surety,  when  his 
payment  is  compulsory,  may  recover  the  amount  paid  of  his  co-surety, 
notwithstanding  the  statute  of  limitations  would  have  been  a  bar  .it 
the  time  of  such  payment.  In  Crosby  v.  Wyatt,  23  Me.  156,  the  suit 
was  commenced  against  the  surety  before  the  statute  of  limitations 
attached,  but  the  judgment  and  payment  thereon  were  subsequent 
thereto.  The  plaintiff's  right  of  action  was  held  to  arise  when  the  pay- 
ment was  made  by  him  on  such  execution.  "It  is  no  sufficient  defense, 
therefore,"  observes  Shepley,  J.,  "for  the  defendant  to  show  that  he 
could  not  have  been  compelled  by  law  to  pay  any  part  of  that  note, 
when  it  was  paid  by  the  plaintiff ;  for  that  would  not  show  that  he  had 
not  broken  his  implied  contract  with  the  plaintiff  to  save  him  from  loss, 
by  his  being  compelled  to  pay  that  half  of  the  note  which  he  ought  him- 
self to  have  paid."  In  Norton  v.  Hall,  41  Vt.  471,  the  payment  was 
made  more  than  six  years  after  the  maturity  of  the  note  by  the  surety, 
and  the  principal  was  held  liable.  In  that  case,  when  the  note  became 
due,  the  surety  being  unable  to  pay  it,  the  bank  holding  it  demanded 
additional  security,  which  he  gave,  and  wdiich  the  bank  held  until  the 
note  was  paid  by  such  security,  which  was  more  than  six  years  after 

t  A  mere  YOlunteerJs-nQt  a  surety,  and  his  paj-ment  of  the  debt  of  another 
does  not  ipso  facto  give  rise  to  a  right  to  reimbursement.  Carter  v.  Black,  20 
N.  C.  42.T  (1S39). 

But  the  payment  may  be  subsequently  ratified  and  assented  to  by  the4)erson 
for  whose  benefit  it  has  been  made,  .and,  if  accompanying  this  ratification 
there  is  an  express  promise  to  reimburse,  that  promise  should  be  enforceable, 
as  any  principal  is  liable  to  reimburse  his  surety.  But  without  either  such 
subsetiueut  promise  or  antecedent  request  no  recovery  is  possible.  Bevan  v.' 
Tomlinson.  25  Ind.  2-33  (ISGo). 

A,  rnntxary  view  (denying  the  efficacy  of  a  subsequent  promise  iuised  on  a 
ptist  consideration  uurequested)  has  been  held  in  Thoms'in  v.  Thomson,  76 
App.  Div.  178,  78  N.  Y.  Supp.  389  (1002). 


Ch.  2)  THE  surety's  equity  of  reimbursement.  247 

its  maturity.  It  »vas  held  that,  the  maker  having  failed  to  pay  the  note 
when  due,  the  surety  had  a  right  to  make  this  arrangement  with  the 
bank,  and  that  the  maker  could  not  avail  himself  of  the  statute  of  lim- 
itations in  a  suit  brought  within  six  years  from  the  payment  of  the 
note,  the  payment  not  being  voluntary.  "It  was  the  duty,"  remarks 
Wilson,  J.,  "of  the  defendant,  at  all  times,  so  long  as  the  plaintiff  re- 
mained surety,  by  force  of  the  liability  incurred  by  signing  or  indorsing 
the  note,  to  indemnify  the  plaintiff  by  paying  the  note.  The  neglect  of 
the  defendant  to  pay  the  note  when  it  became  due  compelled  the  plain- 
tiff to  give  the  bank  additional  security,  and  to  request  further  time 
of  payment.  All  this  was  done  while  both  plaintiff  and  defendant  were 
liable  to  pay  the  note."  ^  /  ^_    J^^^ 

Where  the  last  indorser  in  part  pays  the  note  indorsed,  he  can  re-  .  ■  ^ 
cover  of  his  indorser,  in  an  action  for  money  paid,  laid  out,  and  ex-  ^  -'^v^A-y' 
pended,  the  amount  so  by  him  paid,  notwithstanding  the  note  remained 
in  the  hands  of  the  indorsee,  not  fully  paid.  Butler  v.  Wright,  20 
Johns.  (N.  Y.)  367.  So  a  second  action  will  lie  against  the  first  in- 
dorser for  money  paid  on  account  of  the  note  after  a  former  action 
and  recovery  for  money  previously  paid.  Wright  v.  Butler,  6  Wend. 
(N.  Y.)  284,  21  Am.  Dec.  323.  And  such  action  may  be  maintained 
before  the  final  payment  of  the  note,  and  while  it  remains  in  the  hands 
of  a  third  person  as  the  legal  holder  thereof.  "The  moment  the  surety 
has  been  compelled  to  pay  anything  on  account  of  the  suretyship,  he 
may  bring,"  says  Walworth,  Ch.,  "an  action  for  money  paid,  and  the 
law  raises  a  promise  to  repay  the  amount ;  but  it  does  not  raise  a  prom- 
ise to  repay  any  amount  until  he  has  been  compelled  to  pay  more,  as  it 
cannot  then  be  known  that  the  principal  himself  will  not  prevent  the 
necessity  of  further  payment."  To  the  same  effect  is  the  decision  in 
Rushworth  v.  Mootc,  36  N.  H.  189.  X  CT- ''/  ^^ 

But  the  present  is  the  case  of  an_in.dQ-rser  against  the  maker.  It  was  ,,.  r>s^]l> 
held  in  Cole  v.  Cushing,  8  Pick.  (Mass.)  48,  that  the  maker  of  a  note, 
who  has  been  committed  to  jail  on  a  judgment  in  favor  of  the  holder, 
is  liable  to  be  sued  by  an  indorser,  who  pays  the  note  to  the  holder,  and 
that  the  indorser  may  bring  his  suit  while  the  maker  is  in  jail  on  the 
prior  suit.  The  action  for  money  paid,  laid  out,  and  expended  will  lie. 
Wild  V.  Fisher,  4  Pick.  (Mass.)  421.  In  Pownal  v.  Ferrand,  6  B.  &  C. 
439,  the  plaintiff,  the  indorser  of  a  bill  of  exchange,  having  been  sued 
by  the  holder  and  compelled  to  pay  a  part  of  it,  sought  to  recover  the 
money  so  paid  of  the  acceptor.  Lord  Tenterden,  C.  J.,  said :  "I  am  of 
opinion  that  the  plaintiff  is  entitled  to  recover,  upon  the  general  prin- 
ciple that  one  man,  who  is  compelled  to  pay  money  which  another  is 
bound  by  law  to  pay,  is  entitled  to  be  reimbursed  by  the  latter;  and  I 
think  that  money  paid  under  such  circumstances  may  be  considered  as 
money  paid  to  the  use  of  the  person  who  is  bound  to  pay  it."  "If  I  pay 
your  debt,"  says  Bayley,  J.,  "because  I  am  forced  to  do  so,  then  I  may 
recover  the  samr;,  for  the  law  raises  a  promise  on  the  part  of  the  person, 
whose  debt  I  pay,  to  reimburse  me."    In  Hubbly  v.  Brown,  16  Johns. 


24S  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

(N.  Y.)  71,  Spencer,  J.,  says:  "We  have  regarded  the  indorser  in  the 
nature  of  a  surety,  and  the  maker  of  the  note  as  the  principal  debtor." 

Nor  does  it  matter  that  the  holder  could  not  maintain  an  action  on 
the  note.  When  one  of  two  makers  of  a  note  is  discharged  by  the  stat- 
ute of  limitations,  and  the  other  remains  liable  and  pays  the  note,  he  is 
entitled  to  recover  contribution  of  the  former,  Peaslee  v.  Breed,  10 
N.  H.  489,  34  Am.  Dec.  178.  The  rule  of  law  seems  to  be  that  when 
one  of  two  or  more  co-promisors,  without  assuming  any  new  ground  of 
liability,  continues  liable  upon  his  original  contract,  and  is  compelled,  by 
virtue  of  such  contract,  to  pay  the  debt  of  his  co-promisors,  in  such 
case  the  equitable  liability  of  the  other  co-promisors,  for  contribution, 
will  still  remain,  notwithstanding  such  other  co-promisors  may  be  dis- 
charged by  the  operation  of  the  statute  of  limitations  from  liability  to 
the  original  promisee.  Boardman  v.  Paige,  11  N.  H.  432.  So  an  ac- 
tion for  money  paid,  laid  out,  and  expended  will  lie  at  the  suit  of  the 
last  indorser  against  his  prior  indorser,  for  money  paid  the  holder  of 
the  note,  though  such  payment  is  but  in  part  satisfaction  of  the  same. 
Butler  V.  Wright,  2  Wend.  (N.  Y.)  3G9.  In  that  case,  it  was  held  the 
cause  of  action  accrued  when  the  payment  was  made.  Tlie  cause  of 
action  was  not  upon  the  note,  but  for  the  part-payment. 

The  maker  of  a  note,  payable  to  order,  authorizes  its  indorsement 
and  subjects  himself  to  all  the  liabilities  arising  therefrom.  It  has  been 
seen  that  the  indorsee,  making  payments  on  an  overdue  note  on  ac- 
count of  his  liability  as  such,  may  sue  for  the  amount  so  paid,  though 
the  note  is  in  judgment  or  in  the  hands  of  the  indorsee,  unpaid,  and 
that  his  right  of  action  accrues  when  the  payment  is  made,  when  made 
before  the  statute  of  limitations  constitutes  a  bar.  The  right  of  action 
arising  upon  such  payment,  it  follows  that  the  statute  of  limitations, 
as  between  the  indorser  thus  paying  and  the  maker  for  whose  use  the 
payment  is  made,  commences  running  at  the  time  of  the  payment.  It 
is  apparent,  therefore,  that,  though  the  statute  would  be  a  bar  if  a  suit 
were  brought  upon  the  note,  it  would  not  be  if  for  money  paid  for  the 
use  of  the  maker,  which  it  was  his  duty  to  have  paid.  If  the  payment 
is  by  legal  compulsion,  as  upon  a  judgment  in  a  suit  commenced  before 
the  intervention  of  the  statute,  the  same  result  would  follow. 

If  the  holder  of  the  note  of  Woodbury  &  Grover  had  recovered  judg- 
ment against  the  makers  and  the  several  indorsers,  the  last  indorser, 
paying  in  whole  or  in  part,  could  have  recovered  the  amount  by  him 
paid  of  his  prior  indorser  or  the  makers.  If  he  collected  it  of  an  in- 
dorser, his  right  of  action  would  not  arise  until  payment.  It  would 
arise  when  he  paid  it,  if  the  payment  was  by  legal  compulsion  in  a  suit 
commenced  before  the  statute  attached.  In  this  case,  Bartlett,  the 
plaintiff's  intestate,  could  not  have  pleaded  the  statute  bar  in  Butler's 
suit  against  him,  for  the  suit  was  seasonably  commenced.  He  could 
not  avoid  his  liability.  He  could  not  sue  the  maker  until  he  paid,  and 
only  for  what  he  paid.  If  judgment  had  been  recovered  against  him 
during  the  life  of  the  note,  but  it  had  not  been  collected  until  within 


Ch.  2)  THE  surety's  equity  of  reimbursement.  249 

more  than  six  years,  from  inability  to  find  property,  and  it  was  then 
paid,  the  delay  would  not  have  prevented  his  recovery  of  the  makers. 
So  here  the  delay-cannot  defeat  tlie  plaintiff's  equitable  rights.  He  has 
been  compelled  to  pay  money  for  the  use  of  the  defendant.  He  could 
not  avoid  such  payment.  His  right  of  action  accrued  in  consequence 
of  his  payment  and  when  it  was  made.  The  defendant's  liability  to 
him  then  first  arose,  and  not  before.  He  is  not  sued  as  the  maker  of 
the  note,  for  that  may  be  in  the  indorsee's  hands,  but  for  money  paid 
to  his  use  and  for  his  benefit,  which  the  plaintiff's  intestate  has  been 
compelled  to  pay,  and  which  it  was  the  duty  of  the  defendant  to  have 
pai_d.  The  statute  commences  running  from  the  date  of  the  payment, 
and  not  the  date  of  the  note.  ^  (l/v^^TtV  .c**< 

The  counsel  for  the  defendant,  in  his  able  argument,  relies  upon  the  ^-^X^^J^I 
case  of  Luce  v.  McLoon,  58  Me.  325.  It  seems  that  on  28th  April, 
1855,  A.  G.  Luce,  the  plaintiff's  intestate,  N.  A.  Farwell,  and  the  de- 
fendant signed  a  note  as  surety  for  one  Jackson,  who  on  the  same  day 
gave  a  mortgage  of  certain  goods  to  the  defendant  and  L  K.  Kimball 
to  secure  this  and  other  notes.  This  mortgage  they  discharged  Octo- 
ber 1,  1855. 

On  the  29th  of  December,  1858,  N.  A.  Farwell,  one  of  the  sureties, 
took  up  the  note,  and  on  24th  December,  1864,  the  plaintiff,  as  ad- 
ministratrix, paid  him  one-third  of  the  amount,  and  on  the  same  day 
commenced  a  suit  against  the  defendant.  It  is  obvious  that  she  had  no 
claim  on  the  money  counts  against  the  defendant,  as  she  had  only  paid 
her  just  contributory  proportion. 

The  suit,  if  sustainable  at  all,  could  only  be  sustained  because  of 
the  wrongful  or  fraudulent  discharge  of  the  mortgage,  for  the  doing 
which  the  writ  contained  a  special  count.  But  the  wrong  for  which 
redress  was  sought  was  done  October  1,  1855.  The  right  of  action 
then  accrued.  But  the  suit  was  not  commenced  until  24th  December, 
1864,  and  it  was  then  held  to  be  barred  by  the  statute  of  limitations. 
It  will  be  perceived,  therefore,  that  the  decision  does  not  affect  the 
questions  here  presented.  The  plaintiff  failed  on  the  money  counts 
because  she  was  not  entitled  to  recover  anything.  She  had  only  paid 
her  third.  If  the  defendant  owed  a  third  to  anybody,  it  was  to  Far- 
well,  by  whom  the  note  had  been  paid.  No  suit  could  be  maintained 
upon  the  note,  because  that  had  long  been  barred  by  the  statute  of 
limitations,  and  could  not  be  offered  to  support  the  money  counts,  if  . 

the  plaintiff  then  had  it,  which  was  not  shown  to  be  the  case.  /S}-^,>^  t**^^ 

Whether  the  defendant,  if  liable,  is  to  be  held  for  the  costs  accru- 
ing in  the  litigation  between  the  plaintift''s  intestate  and  his  indorsee, 
a  litigation  in  which  it  does  not  appear  that  he  had  any  interest,  is 
a  question  which  has  not  been  presented  for  our  consideration.  ^n^jCuti^^^J tl 

Th#-£eaulLis_tb.3t  the  indorser  of  a  note  may  recover  of  the  maker  ^~^*'^''^*^^  /    ''' 
foi:_aiiy_^ayment  made  upon  the  note  after  its  dishonor,  before  the 
statute  of  limitation  attaches. 


250  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    3 

He  may  recover  for  any  payment  made  subsequent  to  the  inter- 
vening of  the  statute,  if  made  by  legal  compulsion  and  upon  a  suit 
commenced  before  such  intervention. 
'  The  statute  of  limitations  commences   running  against  the  maker 
from  the  time  of  such  payment  or  payments  made  by  the  indorse'r. 

The  case  to  stand  for  tjjal. 

Cutting,  Walton,  Dickerson,  and  Danforth,  JJ.,  concurred. 


HARLEY  V.  STAPLETON'S  ADM'R. 

(Supreme  Court  of  Missouri,  1857.     24  Mo.  248.) 

Scott,  Judge,  delivered  the  opinion  of  the  court. 

This  was  auLaction  by  a  surety  to-recover  from  his  principal  a  sum 
of  money  he  was  compelled  to  pay  as  such  surety.  The  plaintiff  signed 
a  note  as  surety,  given  to  secure  a  sum  of  money  bet  in  this  sTaTe  on 
a  presidential  election..  The  nonrt  instructed  the  jury  that  if  the  note 
paid  by  plaintiff  ,\vas  given  to  secure  a  bet  on  the  presidentTal^elec- 
tioh,  and  the  plaintiff,  at  the  time  he  signed  the  notCj  kne\v]jr_  was 
given  for  that  purpose,  the  plaintiff'  cannot  recover.  There  was  a 
verdict  for  the  defendant.  "" '■ 

In  our  opinion,  the  fact  that  the  surety  (Harley)  was  compelled  by 
the  judgment  of  a  court  in  the  Mexican  dominions  to  pay  tlTC~Tiebt-d«es 
not  affect  the  merits  of  this  controversy.  The  instruction  given  by 
the  court  assumed,  and  the  court  have  so  found,  that  the  plaintiff  know- 
ingly entered  into  an  illegal  contract.  Whether  he  paid  the  money 
voluntarily,  or  was  compelled  thereto  by  process  of  law,  it  is  equally 
against  the  policy  of  the  law  that  he  should  recover  in  this  action. 
We  may  presume  that  but  for  the  plaintiff'  the  contract  would  never 
have  been  made,  nor  the  law  violated.  This  is  an  attempt  to  obtain 
an  indemnity  for  knowingly  entering  into  an  illegal  contract. '  Tt  is  a 
rule  that,  whenever  the  party  seeking  to  recover  appears  to  have  been 
in  any  respect  contaminated  with,  or  even  privy  to,  the  illegal  trans- 
action on  which  the  claim  is  originally  bottomed,  his  remedy,  whether 
upon  the  primary  consideration,  or  a  security  substituted  for  it,  is 
gone.  Paley  on  Agency,  120.  If  a  surety  to  a  note,  securing  a  sum 
bet  on  an  illegal  wager,  can  recover  against  his  principal  by'paytng^the 
sum  secured,  then  the  policy  of  the  law  which  forbids  the  rec6v'5ry  of 
money  lost  at  unlawful  gaming  would  be  defeated. 

Judge  Ryland  concurring,  the  judgment  will  be  affirmed.  Judge 
Leonard  not  sitting.  " 


Ch.  2)  THE  surety's  equity  of  reimbursement.  251 

ODLIN  V.  GREENLEAF. 

(Superior  Court  of  Judicature  of  New  Hamspliire,  1825.    3  N.  H.  270.) 

Indebitatus  assumpsit  for  money  paid,  laid  out,  and  expended.  The 
defendant  pleaded  the  general  issue  and  the  statute  of  limitations. 

The  cause  was  tried  here  at  January  term,  1825,  when  it  appeared  ^  '^^ 
that  in  the  year  1813  the  defendant,  as  principal,  and  W.  A.  Kent  and 
Thomas  Wilson,  the  plaintiff's  testator,  as  sureties,  made  and  deliv- 
efed  to  the  Concord  Bank  a  promissory  note  for  $750,  payable  to  the 
bank  in  sixty  days.  In  1816  W.  A.  Kent,  one  of  the  sureties,  paid  to 
the  bank  the  amount  of  the  note ;  but  this  was  done  without  suit,  and 
without  consulting  the  defendant.  Wilson  died  in  1818,  and  the  plain- 
tiff, as  executor  of  Wilson,  in  1820,  voluntarily  paid  to  Kent  one- 
liaTTThe  sum  the  latter  had  paid  to  discharge  the  note.  This  payment 
w^s  made  without  the  knowledge  of  the  defendant. 

A  verdict  was  taken  for  the  plaintiff,  subject  to  the  opinion  of  thfiS-  d->:>'v 
court  upon  the  foregoing  case.  ,         Jl    \. 

The  defendant  contended  that,  ten  ysars  having-  elapsed  since  he  ''^  ^^ 
had  known  or  heard  anything  of  the  transaction,  he  had  a  right  to 
rely  upon  the  statute  of  limitations — first,  upon  its  letter;  and,  sec- 
ondly, upon  its  spirit — because  he  was  deprived  by  the  lapse  of  time 
of  the  means  of  proving  that  he  had  paid  the  note;  his  evidence  in 
writing  being  lost  and  his  witnesses  dead. 

He  further  contended,  that  a  surety  had  no  right,  particularly  after 
six  years,  to  make  a  voluntary  payment,  without  consulting  his  prin- 
cipal, so  as  to  create  a  new  cause  of  action  against  the  principal,  when 
the  original  cause  of  action  was  barred  by  the  statute  of  limitations. 

By  the  Court.  The  defense  upon  which  this  defendant  relies  is 
founded  upon  a  very  great  misapprehension  in  relation  to  the  principles 
of  law  by  which  the  cause  must  be  settled. 

Whether  a  surety,  who  voluntarily  pays  the  debt  after  all  remedy  to 
recover  it  is  barred  by  the  statute  of  limitations,  can  maintain  an  ac- 
tion against  the  principal  to  recover  the  money  thus  paid,  or  against  his 
co-surety  for  a  contribution,  is  a  question  which  does  not  arise  in 
this  case,  and  need  not  be  examined. 

It  is  settled  that,  as  soon  as  the  debt  becomes  due  by  the  terms  of 
the  contract,  a  surety  may  pay  it  and  at  once  have  his  remedy  against 
his  principal.  13  Johns.  (N.  Y.)  58,  Mauri  v.  Heffernan;  4  Johns. 
(N.  Y.)  461,  Sluby  v.  Champlin;  16  Mass.  41,  Skillin  v.  Merrill;  17 
Mass.  464,  Bachelder  v.  Fiske. 

And  it  seems  that  a  surety,  who  thus  pays,  may  have  his  remedy 
against  his  co-surety,  without  showing  any  inability  in  the  principal 
to  pay.  2  B.  &  P.  268,  270,  Cowell  v.  Edwards;  2  Esp.  N.  P.  C. 
478,  Turner  v.  Davis. 

In  this  case,  when  W.  A.  Kent,  in  1816,  paid  the  debt,  he  at  once 
became"  entitled  to  an  action  against  Wilson,  to  compel  him  to  con- 


252  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

tribute,  and  might  have  maintained  an  action  for  that  purpose  at  any 
time  within  six  years  after  the  payment.  But  it  was  not  necessary 
that  Wilson,  or  his  executor,  should  be  compelled  by  suit  to  pay,  in 
order  to  render  the  defendant  liable  to  them. 

When,  therefore,  the  plaintiff,  as  executor,  in  1820,  paid  to  Kent 
one-half  of  the  sum,  which  the  latter  paid,  the  right  of  a^iftiOTTTn-rtiis 
case  accrued ;  and  there  is  no  pretense  that  it  is  barred  by  the  statute 
of  limitations.  An  action  is  barred,  not  by  a  lapse  of  ten  years,  dur- 
ing which  a  negligent  and  ungrateful  debtor,  leaving  all  to  the  care 
of  his  sureties,  has  heard  nothing  and  known  nothing  of  the  debt, 
but  by  a  lapse  oj  six  years  after  the  ri^ht  of  action  accrues. 

JudgmenFon  the  verdict. 


TARLETON  v.  TARLETON. 

(Court  of  King's  Bench,  1815.    4  M.  &  S.  20.) 

Covenant  upon  an  indenture,  of  the  13th  of  September,  1800,  made 
between  the  plaintiff,  of  the  one  part,  and  the  defendant  and  one  D. 
Backouse,  since  deceased,  of  the  other  part,  whereby  the  defendant 
and  the  said  D.  B.  jointly  aud  severally  covenanted  with  the  plaintiff 
to  pay  and  satisfy,  or  cause  to  be  paid  and  satisfied,  within  two  y^ars 
from  the  23d  of  July  then  last,  all  such  debts  as  were  remaining  due 
from  the  late  partnership  of  the  plaintiff,  defendant,  and  D^R.,..find 
to  "indemnify  the  plaintiff  from  all  debts  due  from  the  said  partner- 
ship, and  from  all  actions,  suits,  costs,  charges,  damages,  and  expenses 
by  reason  of  the  non-payment  thereof,  and  from  all  claims  and  de- 
mands whatsoever  which  might  be  made  on  him  on  account  of  the 
partnership,  and  from  all  costs,  charges,  and  expenses  which  might 
be  incurred  in  consequence  of  such  claim  or  demand,  etc.  Breach : 
That  the  defendant  and  D.  B.  did  not,  within  two  years,  etc.,  pay  all 
such  debts,  etc.,  nor  indemnify  the  plaintiff,  etc. ;  2dly,  that  upwards 
of  two  years  from  the  23d  of  July  in  the  indenture  mentioned,  to 
wit,  on  the  21st  of  July,  1810,  a  certain  valid  and  sufficient  claim  and 
demand  to  the  amount  of  £6,000.  remained  due  from  the  partnership, 
and  thereupon  one  F.  B.  and  C.  B.  and  J.  U.  B.,  being  entitled  to 
receive  and  enforce  payment,  filed  their  bill  for  the  recovery  thereof 
in  the  Court  of  Chancery  of  thelsland  of  Grenada  against  the  plain- 
tiff, one  W.  P.,  the  defendant,  and  D.  B.,  which  suit  was  abated  by 
the  death  of  D.  B.  and  C.  B.,  but  was  afterwards,  by  bill  of  revivor, 
revived  against  the  plaintiff,  W.  P.,  and  the  defendant,  and  such  pro- 
ceedings were  had  that  afterwards  it "W^r?"  d&creed-tliat  £5,978.  2s.  7d. 
currency  of  Grenada  should  be  paid_bxJth^_jiefendants_  in_that_suit 
to  the  plaintiffs  in  tharsuit,  with  full  costs,  as  by  the  said  decree,  etc. 
And  thereupon  afterwards  a  writ  of  sequestration  was  issued  against 
the  plaintiff's  real  and  personal  estate,  under  which  his  lands,  build- 


Ch.  2)  THE  surety's  equity  of  reimbursement.  253 

ing-s,  slaves,  etc.,  were  sequestered  until  the  plaintiff  afterwards  was 
forced  and  obliged  to  pay  the  said  debt  and  costs,  etc.  Pleas  (amongst 
others) :  Non  damnificatus ;  2dly,  that  no  such  claim  or  demand  as 
alleged  in  the  2d  breach  remained  due,  etc. ;  3dly,  that  F.  B.,  C.  B., 
and  J.  U.  B.  had  not  any  such  claim  or  demand  of  which  they  were 
entitled  to  receive  and  enforce  payment,  etc.  Issue  taken  on  these 
pleas. 

At  the  trial,  before  Lord  Ellenborough,  C.  J.,  at  the  London  sittings 
after  last  term,  the  plaintiff  proved  the  indenture,  and  also  an  ex- 
amined copy  of  the  proceedings  in  the  court  of  Grenada,  by  which  it 
appeared  that  the  decree  passed  against  the  defendant  and  W.  P.  in 
the  original  suit  pro  confesso  for  want  of  an  answer.  The_defendant, 
in  maintenance  of  his  pleas,  proposed  to  show  that  the  proceedings  in 
the  court  of  Grenada  were  erroneous,  inasmuch  as  the  account  was  in- 
correctfy "taken.  His  Lordship,  however,  ruled  that  the  defendant 
could  not  go  into  that  question,  inasmuch  as,  the  foreign  court  being 
a  court  of  competent  jurisdiction,  what  was  done  in  it  must,  for  the 
purpose  of  this  action,  be  taken  to  be  rightly  done;  and  the  plain- 
tiff  had  a  verdict. 

Casberd  moved  for  a  new  trial,  upon  the  ground  that  the  proceed- 
ings in  the  foreign  court  were  not  conclusive  evidence.  He  said"  that, 
wliere  a  foreign  judgment  is  the  subject-matter  of  a  suit  in  this  court, 
it  was  but  prima  facie  evidence,  and  the  defendant  might  impeach  the 
justice  of  it.    See  Walker  v,  Whitter,  Dougl.  I.,  and  notes  to  that  case. 

Lord  Ellenborough,  C,  J.  I  thought  that  I  did  not  sit  at  nisi  prius 
to  try  a  writ  of  error  in  this  case  upon  the  proceedings  in  the  court 
abroad.  The  defendant  had  notice  of  the  proceedings,  and  should 
haxe^  appeared  and  made  his  defense.  The  plaintiff,  by  this  neglect, 
has  been  obliged  to  pay  the  money  in  order  to  avoid  a  sequestration. 

BaylEY,  J.  How  is  this  plaintiff  to  be  called  upon  to  unravel  these 
proceedings?  As  between  the  parties  to  the  suit  the  justice  of  it  might 
be  again  litigated,  but  as  against  a  stranger  it  cannot.  The  defend- 
ant was  a  party  to  the  suit,  and  has  concurred,  by  his  not  appearing 
to  it,  in  suffering  the  plaintiff  to  be  damnified. 

Per  Curiam.    Rule  refused. 


CAHILL  V.  BIGELOW  and  Trustee. 

(Supreme  Judicial  Court  of  Massachusetts,  1836.    18  Pick.  369.) 

The  answer  of  Windsor  Hatch,  the  alleged  trustee,  set  forth  that 
the  principal  defendant  had  kept  a  boarding  house  for  the  workmen 
eiIlX>loyed  in  the  respondent's  manufactory,  and  that  he  became  debtor 
for  their-ltoard ;  that  at  the  time  when' the  defendant  began  to  keep 
the  boarding  house  it  was  agreed  verbally  between  the  respondent,  the 
defenclaht,  and  several  persons  named,  who  subsequently  furnished  her 


^PV/«/^(f 


254  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.       (Part    2 

with  provisions  and  other  supplies,  that  the  suppUes-should  be-d£liy^ 
erecPah"^  charged  to  her,  and  that,  at  the  end  of  each  quarter,  the 
respondent  would  see  that  the  persons  who  furnished  them  weie  ptiid; 
that  the  supplies  were  accordingly  charged  to  the  defendant,  and'the 
respondent  paid  all  such  charges  up  to  January  1,  1835 ;  thajL^t  the 
time  of  the  service  of  the  writ  the  amount  due  on  account  of  sup- 
plies furnished  upon  the  strength  of  the  respondent's  guararity—^x- 
ceeded  the  amount  due  to  the  defendant  for  board;  that  the  balance 
had  never  been  less  since  that  time,  as  she  very  soon  afterwards  left 
the  boarding  house,  and  had  not  paid  any  part  of  the  bills ;  jhatjf 
the  respondent  was  legally  liable  for  those  charges  which  remamed 
unpaid,  in  consequence  of  such  verbal  arrangement,  then  hehad  no 
goods,  effects  or  credits  of  the  defendant  in  his  hands  and  posses- 
sion at  the  time  of  the  service  of  the  writ ;  that  otherwise  there' was  a 
balance  due  to  her  at  that  time ;  that  the  respondent  had  always'been 
in  the  habit  of  making  such  arrangements  respecting  the  boarding  of 
his  workmen;  and  tliat  he  considered  himself  bound  to  pay  such 
charges,  as  those  who  furnished  supplies  for  the  boarding  houTelvDtild 
not  have  done  it,  if  it  had  not  been  for  his  engagement  to  see  them 
paid.^' 

Shaw,  C.  J.,  delivered  the  opinion  of  the  court. 
r    The  only  question  is  whether  the  trustee  is  chargeable  on  his  answer, 
'^"^  las  having  goods,  effects  or  credits  of  Mrs.  Bigelow,  the  principal  de- 

\fendant,  at  the  time  of  the  service  of  the  writ.    On  the  facts  disclosed 
^  /^  i^j^  /.  in   the   answer,   the   attaching   creditor   contends   that  the   trustee   is 
I      f*vK*>       chargeable,  on  the  ground  that  he  was  indebted  to  the  principal  for 
the  board  of  his  workmen,  and  that  his  undertaking  to  pay  those  who 
supplied  her  was  void  by  the  statute  of  frauds,  because  it  was  the 
promise  to  pay  the  debt  of  another,  without  any  note  or  memorandum 
in  writing.     On  the  contrary,  the  trustee  insists  that  he  is  entitled  to 
be  discharged,  first,  because  his  undertaking  to  pay  those  who   fur- 
nished supplies  to  Mrs.  Bigelow  was  original,  and  not  collateral,  and 
so  not  within  the  statute  of  frauds;    and,  secondly,  because,  if  other- 
wise, the  trustee  is  not  bound  to  set  up  the  statute  of  frauds  to  avoid 
his  engagements,  his  contract  was  voidable  and  not  void,  and,  if  he 
does  not  elect  to  avoid  it,  he  is  not  bound  to  do  so,  to  aid  an  attach- 
.    •         ing  creditor. 
*i  V**^"***^  ^   A      On  the  first  point  the  court  are  all  of  opinion  that  the  undertaking 
t'  ^f  ■  of  Hatch,  the  trustee,  to  pay  for  supplies  furnished  to  Mrs.  Bigelow, 

was  collateral  and  conditional,  to  pay  if  she  did  not,  to  pay  her  debt, 
and  so  was  within  the  statute  of  frauds. ^^    *    *    * 
■v«  Ut^-wV  "     A     Upon  the  other  point,  the  court  are  of  opinion  that  the  guarantor 
^•I^Y#  c«v,,^Ai».vw  by  parol  was  not  bound,  against  his  own  choice,  to  set  up  th£  statute 
1^ .  I  j^  ^  /    of  frauds,  to  avoid  his  promise  to  pay  for  the  supplies  furnislTed  to 

^"^^"''^****'*'*'*^"'      16  The  arguments  of  counsel  have  been  omitted. 

IT  The  further  discussion  of  the  question  whether  the  trustee's  promise  was 
within  the  statute  has  been  omitted. 


Ch.  2)  THE  surety's  equity  of  reimbursement.  255 

i\Irs.  Bigelow.  The  contract  entered  into  by  him  with  these  persons 
was  a  lawful  one,  made  on  sufficient  consideration,  and  would  be  good 
at  common  law.  But  the  statute,  on  considerations  of  policy,  inter- 
venes and  declares  that  such  a  contract  shall  not  be  enforced  by  ac- 
tion, unless  the  agreement  or  some  memorandum  thereof  shall  be  in 
writing.    St.  1788,  c.  16,  §  1. 

But  the  statute  is  intended  as  a  shield,  and  is  to  be  used  for  the 
protection  of  those  who  would  be  in  danger  of  suffering  injury  from 
false  testimony  by  setting  up  pretended  parol  promises  of  guaranty. 
The  statute  does  not  declare  the  contract  void,  but  merely  provides  . 
that  no  action  shall  be  brought  whereby  to  charge,  etc.,  unless  the 
contract,  or  some  memorandum  thereof,  be  in  writing.  The  effect  of 
the  statute  is  that  the  promisor,  who  would  otherwise  be  liable  to  such 
an  action,  may  avoid  it. 

The  guaranty  having  been  given  by  the  request  of  the  debtor,  and 
for  her  benefit,  whatever  should  be  paid  upon  it  by  the  guarantor  must 
be  deemed  to  be  paid  at  her  request,  and  for  her  account,  and  would 
be  chargeable  to  her,  and  must  go  to  discharge  the  debt  due  from  him 
to  her.  The  trustee  in  effect  declares  his  election,  not  to  avail  himself 
of  .the  statute  of  frauds  to  avoid  his  parol  undertaking  to  pay  these 
debts,  but  to  pay  them  according  to  the  original  understanding— be- 
tween him  and  the  other  parties;  and  the  court  are  of  opinion  that 
he  has  a  right  to  do  so  and  to  charge  the  payments  in  his  account  with 
Mrs.  Bigelow,  in  which  case  there  is  nothing  remaining  in  his  hands 
due  to  her  liable  to  the  attachment.  See  Alexander  v.  Vane,  1  Mees. 
&  Welsby,  511. 

Trustee  discharged.^ ° 

MARSHALL  v.  HUDSON. 
(Supreme  Ck)urt  of  Tennessee,  1836.  9  Yerg.  57.) 
Lewis  Earthman,  James  Alarshall  and  Zenas  Tate,  on  the  19th  day  f(^^' 
of  November,  1819,  made  and  executed  their  certain  note  or  writing 
obligatory,  sealed  with  their  seals,  to  the  Nashville  Bank,  for  the  sum 
of  $284,621/9,  due  three  years  after  date,  bearing  interest  from  the 
date.  Lewis  Earthman  was  the  principal  debtor  in  said  note,  and 
James  Marshall,  the  plaintiff  in  this  motion,  and  Zenas  Tate  were 
securities  to  said  note.  Lewis  Earthman  died  in  1828,  and  administra- 
tion upon  his  estate  was,  in  July,  1828,  granted  to  his  widow,  Judith 
Earthman,  now  Judith  Hudson,  the  defendant,  and  John  S.  Cox,  who 
at  the  July  term,  1828,  of  the  court  of  pleas  and  quarter  sessions  of 
Davidson  county  court,  duly  qualified  according  to  law.  The  admin- 
istrator and  administratrix  gave  due  notice  of  their  appointment  ac- 
cording to  law.  No  claim,  demand,  or  suit  was  exhibited  or  brought 
against  the  administrator  and  administratrix  within  two  years  after 
their  qualification,  nor  was  any  request  made  to  the  Nashville  Bank 

18  Accord:   Beal  v.  Brown,  13  Allen,  114  (ISGG). 


256  THE  EQUITABLE  AND   LEGAL   RIGHTS  OP  THE  SURETY,      (Part   2 

by  the  administrators  to  delay  the  bringing  of  suit  on  said  note.  The 
Nashville  Bank  instituted  suit  against  said  Judith,  who  pleaded  the 
act  of  1789,  c.  23,  limiting  actions  against  executors  and  administra- 
tors, upon  which  plea  judgment  was  rendered  in  her  favor;  where- 
upon the  Nashville  Bank  instituted  suit  against  said  Marshall  alone, 
upon  said  note,  in  the  county  court  of  Davidson  county,  in  wliic&.-suit 
iMarshall  relied  upon  the  statute  of  limitations  of  two  years  in  favor 
of  the  estate  of  deceased  persons  (Act  of  1789,  c,  23),  and  the  judg- 
ment in  favor  of  defendant  as  discharging  the  estate  of  Lewis  Earth- 
man  the  principal,  and  that  as  security  he  was  discharged.  The  county 
court  decided  that  said  Marshall  was  discharged,  and  upon  appeal  to 
the  Supreme  Court  the  judgment  of  the  county  court  "was  riTeversfd 
and  judgment  rendered  against  said  Marshall  for  the  full  amount  of 
said  note  and  interest,  amounting  to  $9o.l-ii4,  and  interest  tliereon, 
and  also  the  costs  of  suit. 

Tate  was  dead,  and  no  suit  was  brought  against  his  representatives 
within  two  years  after  his  death.     The  Nashville  Bank  was  incor- 
porated by  the  Legislature  of  Tennessee,  and  Lewis  Earthman,  James 
Marshall  and  Zenas  Tate  were  citizens  of  Tennessee,  and  defendant 
is  a  citizen  of  Tennessee,  and  surviving  administratrix  of  said  Lewis 
Earthman  deceased.    Said  defendant  now  relies  upon  the  act  of  1789, 
(c.  23,  as  a  bar  to  plaintiff's  right  of  recovery,  believing  that  no  cause 
I  of  action  exists  against  her,  and  insists  that  the  payment  of  the  money 
/  by,  or  a  recovery  of  the  judgment  against,  plaintifif,  raises  no  obliga- 
A    .^      A  '•^^^  °^  liability  on  behalf  of  the  plaintiff  against  the  defendant.     The 
\  parties  agreed,  if,  upon  these  facts,  the  law  is  in  favor  of  the  plain- 
tiflf,  judgment  is  to  be  rendered  for  the  sum  of  $95,141/^,  and  interest, 
'the  amount  of  the  judgment  of  the  Nashville  Bank  against  plaintiff, 
land  the  costs  of  that  suit,  and  interest  from  the  rendition  of  the  judg- 
jment;   if  in  favor  of  the  defendant,  judgment  is  to  bejcenckxed  for 
'defendant  for  costs.^° 
/      Reese,  J.,  delivered  the  opinion  of  the  court. 

The  Nashville  Bank,  at  the  last  term  of  this  court,  recovered  a  judg- 
►^  ment  against  the  plaintiff,  who  was  indebted  to  it  as  the  security  of 

the  defendant's  intestate,  although  the  plaintiff  then  urged  that  he 
was  not  liable,  because  the  administratrix  had  by  the  judgment  of  the 
court  been  previously  exonerated  on  the  ground  of  the  operation  of 
the  statute  of  limitations  against  executors  and  administrators.  The 
question  in  the  case  is  whether,  having  since  paid  the  money  to  the 
bank,  he  can  now  recover  it  from  the  defendant?  And  the  court 
r  is  of  opinion  that  he  can.  To  maintain  the  correctness  of  this  opinion, 
it  is  proper  to  inquire  first,  into  the  origin  of  the  plaintiff's  cause  of 
action,  for  the  purpose  of  ascertaining  whether  at  the  time  defend- 
ant became  administratrix  he  was  a  creditor  within  the  meaning  of 
the  act  referred  to,  and,  secondly,  into  the  effect  upon  his  rights,  pro- 

18  The  arguments  of  counsel  are  omitted. 


Ch.  2)  THE  surety's  equity  of  reimbursement.  237 

duced  by  the  fact  that  lapse  of  time  had  barred  the  claim  of  the 

bank  against  his  principal.  '^  v^h' 

As  to  the  first  point,  it  has  been  settled  that  the  cause  of  action,  al-  f"^     y,    ^ 
though  growing  out  of  a  relation  of  principal  and  surety  created  by  '^^'   '^2^  ^      ' 
the  original  contract,  commences  in  point  of  time  with,  and  is  founded  '^ 
upon,  the  payment  of  the  debt  by  the  surety,  or,  at  the  earliest,  by  a 
statute  of  our  own,  upon  the  rendition  of  a  judgment  against  him.     It 
is  then  he  becomes  a  creditor  of  his  principal.    It  is  true  that  previously 
to  this,  and  arising  from  the  relation  between  them,  he  is  not  without 
some  protective  and  preventive  remedies  against  his  principal.     He 
may  file  a  bill  against  his  principal  and  the  creditor.    He  may  give  the 
creditor  notice  to  bring  suit.     But  it  seems  to  us  that  these  remedies 
are  not  founded  upon,  nor  does  their  existence  create,  the  relation  of 
creditor  and  debtor,  within  the  meaning  of  the  act  of  1789,  c.  23.        X'U^  Jlrrt^i' 

Secondly,  what  effect  is  produced  by  the  fact  that  time  had  barred  .  i  ^  dj  m 
the  claim  of  the  bank  against  the  defendant?  It  is  urged  that  the  ^^J^  ^/r^ 
operation  of  the  statute  for  the  limitation  of  actions  against  executors  ^ J;^0yy/  mC'  ^ 
and  administrators  differs  from  the  general  statute  af  limitations,  in  ^ 

this:    That  the  latter  takes  away  the  remedy  only,  while  the  former 
entirely  extinguishes  the  debt.^')  *    *    * 

We  are  therefore  of  opinion  that  the  plaintiff  take  his  motion. 

Judgment  for  plaintiff. 

HATCHETT  v.  PEGRAM. 
(Supreme  Court  of  Louisiana,  1869.     21  La.  Ann.  722.) 

Appeal  from  Second  District  Court,  Parish  of  Orleans;  Thomas,  J. 
Wyly,  J.  Plaintiff  paid  the  note  of  N.  J.  Pegram,  on  which  he 
was  security,  and  now  sues  the  succession  of  the  latter  to  recover  the 
amount  liFalleges  he  was  compelled  to  pay  on  account  thereof,  basing 
hTs^  demand  on  the  following  note  and  receipt,  viz. : 
"$1,136.26.  New  Orleans,  January  9,  185-4. 

"Two  years  after  date  we,  or  either  of  us,  promise  to  pay~"to"'the 
order  of  Crisp,  McGee  &  Co.,  eleven  hundred  and  thirty-six  dollars 
and  twenty-six  cents,  with  interest  at  six  per  cent,  per  annum. 
"[Signed]  N.  J.  Pegram. 

"[Signed]  William  T.  Hatchett, 

Indorsed:  "Security." 

"Received,  Montgomery,  Alabama,  January  4,  1867,  from  William 
T.  Hatchett,  the  security  of  this  note,  the  sum  of  sixteen  hundred 
dollars,  in  full  payment  of  same. 

"[Signed]  R.  B.  McGee, 

"By  his  attorneys.  Cook,  Enoch  &  Allen." 

2  0  That  portion  of  the  opinion  reaching  the  conclasion  that  the  statute  of 
limitations  in  favor  of  a^ecutors,  etc.,  did  not  extinguish  the  debt,  has  been 
omitted. 

Hen.  Sub. — 17 


258  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

",.,^.  The  defense  is  a  general  denial,  and  averments  that  the  note  was 

a  Louisiana  contract,  entered  into  by  parties  residing  in  this  state,  and 
that  the  obligation  was  extinguished  by  prescription  at  the  time  the  se- 
curity, Hatchett,  professes  to  have  paid  it ;  the  note  being  then  eleven 
years  past  due.  The  defendant  also  alleges  that  if  the  plaintiff  paid 
the  note  in  Alabama  on  4th  January,  1867,  as  alleged,  it  was  a  mere 
voluntary  act  on  his  part,  which  imposed  no  obligation  on  the  succes- 
sion of  N.  J.  Pegram;  that  the  latter  was  residing  in  this  city  at  the 
time  he  made  the  note,  and  continued  so  to  reside  until  his  death,  which 
occurred  long  after  the  note  had  been  prescribed  by  the  laws  of  this 
state. 

The  court  rendered  judgment  in  favor  of  the  defendant,  and  the 

>plaintifflias~appeale3^  ' 

^  r  uj-      f  There  can  be  no  doubt  that  the  note,  as  regards_the  succession  of 

jf  ti,^jjc,    Pegram,  was  extinguished  by  prescription  under  the  laws  ofUiis  state 
«  where  the  succession  was  opened.     Civ.  Code,  art.  3505.  ~~~ 

^      r       But  was  the  obligation  extinguished  as  regards  the  security,  Wil- 
^<i^*X^  liani  T.  Hatchett,  on  the  4th  January,  1867,  when  he  paid  it  in  the 

state  of  Alabama,  where  he  then  resided?  Was  he  bound  by  the  laws 
of  that  state  to  pay  it?  If  so,  can  he  recover  the  amount  so  paid  from 
the  estate  of  the  principal  debtor? 

These  are  the  main  questions  to  be  determined  in  this  case.  As  to 
the  liability  of  the  security,  Hatchett,  in  the  state  of  Alabama,  where 
he  resided  at  the  time,  the  laws  of  that  state  must  govern;  the  only 
defense  to  the  note  being  the  plea  of  prescription. 

Was  the  note  prescribed  under  the  laws  as  administered  in  the  state 

.  of  Alabama? 

^  ,     r  (      /*•     We  find  in  the  record  the  opinions  of  Judge  Walker  and  other  emi- 

il   /(2^*^  ^^"^  jurists  of  that  state,  which  were  received  as  evidence  without  ob- 

^  ^   »      jsction.     In  determining  the  liability   of  the   plaintiff,  great   weight 

'  **^  '*     should  be  given  to  these  opinions.    They  were  received  as  testimony  in 

this  case. 

Judge  Walker  testifies  that  he  had  no  means  of  judging  of  Hatchett's 
liability,  except  from  what  appeared  upon  the  note  itself,  and  in  his 
opinion  he  was  liable  thereon  at  the  time  he  paid  it ;  that  six  years 
was  the  period  prescribed  in  the  statute  of  limitations,  "but  on  the 
21st  September,  1865,  the  convention  of  the  state  of  Alabama  adopted 
an  ordinance  directing  that,  in  computing  the  time  necessary  to  create 
the  bar  of  the  statute  of  limitations,  the  time  elapsing  between  tlie  11th 
day  of  January,  1861,  and  the  passage  of  this  ordinance  (21st  Septem- 
ber, 1865),  should  not  be  estimated.  This  ordinance  is  law  in  the  state 
of  Alabama.  After  deducting  the  interval  prescribed  in  the  ordinance 
from  the  period  intervening  between  the  time  when  the  note  became 
due  and  the  4th  January,  1867,  there  will  not  remain  six  years.  "It  is 
therefore  my  opinion,"  says  he,  "that  under  the  laws  of  the  state  of 
Alabama  the  defense  of  the  statute  of  limitations  would  not  have  been 
available  to  Hatchett  in  a  suit  commenced  against  him  on  4th  Jan- 


Ch.  2)  THE  surety's  equity  of  reimbursement.  259 

uary,  1867.  In  attaining  this  conclusion  I  have  considered  the  ques- 
tion springing  from  the  fact  that  a  suit  on  the  note  was  barred  in 
1S62,  before  the  adoption  of  the  ordinance,  unless  the  operations  of 
the  statute  were  interfered  with  by  Hatchett's  absence  from  the  state, 
of  which  I  am  not  informed.  The  question  thus  arising,"  says  he,  "is 
this :  Whether  it  was  competent  for  the  convention  of  the  state  of 
Alabama  to  change  the  period  of  limitation  to  an  action  on  a  contract 
after  the  time  necessary  to  perfect  a  bar  under  the  pre-existing  law. 
In  my  opinion  on  the  law  as  recognized  and  administered  in  this  state,  . 
it  was  competent." 

He  further  states  that  this  view  has  been  sustained  by  the  Supreme 
Court  of  Alabama  recently  in  a  case  presenting  an  analogous  ques- 
tion, and  that  the  principle  has  been  settled  by  decisions  extending  as 
far  back  as  1850.  When  asked  by  the  defendant  in  his  second  cross- 
interrogatory  what  would  be  the  effect  of  the  accessory  obligation  of 
surety  if  from  any  cause  the  principal  obligor  had  been  discharged, 
the  witness  said:  "In  1837  it  was  decided  by  the  Supreme  Court  of 
Alabama  that  as  a  general  rule  the  extinction  of  the  liability  of  a  prin- 
cipal debtor  was  also  an  extinction  of  the  liability  of  the  surety,  but 
that  an  exception  prevailed  when  the  extinction  was  caused  by  opera- 
tion of  law,"  etc.  He  referred  to  various  subsequent  decisions  to  the 
same  effect,  and  said,  in  his  opinion,  the  law  as  thus  laid  down  in  1837 
was  the  law  of  Alabama  on  4th  January,  1867. 

The  other  distinguished  jurists,  who  were  examined  in  this  case, 
entertained  the  same  view  of  the  subject  as  Judge  Walker,  and  they| 
adopted  his  opinion  as  a  true  exposition  of  Alabama  law.  A(Vi-     r,A^' 

It  appears,  however,  that  the  opinions  of  these  witnesses  were  based         '    Tit 
uponJvTTaTappeared  on  the  face  of  the  note,  without  reference  to  the  ^'^fir^  ^'  ^ 
effect  of  Hatchett's  absence  from  the  state  of  Alabama,  of  which  they    ^j'^'^^^V 
say.  thev  were  not 'informed.     If  Hatchett  only  moved  from  this  state   rT^  i^^n^y 
to  Alabama  after  prescription  had  accrued  upon  the  contract  which     -''^  ^^  *** 
he  made  here,  does  the  ordinary  statute  of  limitations  of  that  state 
apply  ? 

It  appears  by  the  Code  of  Alabama  (article  2487)  that  "when  the 
statute  of  hmitations  of  another  state  or  foreign  country  has  created 
a  bar  to  an  action  upon  a  contract  or  act  done  in  such  state  or  coun- 
try, whilst  the  party  sought  to  be  charged  thereby  was  a  resident  of 
such  state  or  country,  the  bar  thus  created  is  effectual  in  this  state 
against  any  suit  brought  therein,  in  the  same  manner  it  would  have 
been  in  the  state  or  country  where  the  act  was  done  or  contract  made." 

This  seems  to  be  the  law  of  the  state  of  Alabama,  specially  applicable 
to  persons  of  that  state  who  are  sought  to  be  held  liable  on  contracts 
made  in  other  states  and  barred  by  the  statutes  thereof  before  mov- 
ing therefrom.  Assuming,  then,  that  the  ordinance  of  the  Alabama 
Convention  of  1865  was  valid,  and  that,  in  computing  the  time  neces- 
sary to  create  the  bar  of  the  statute  of  limitations,  no  estimation  is  to 
be  made  of  the  time  elapsing  between  the  11th  January,  1861,  and 


260  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

21st  September,  1865,  how  does  that  affect  the  article  of  the  Code 
of  Alabama  just  quoted  in  reference  to  contracts  made  in  another 
state  and  prescribed  by  the  laws  thereof  before  the  party  sought  to 
be  held  liable  moved  from  that  state  to  Alabama? 

Did  the  ordinance  necessarily  repeal  the  article  of  the  Code?  We 
think  not.  That  article  designated  a  certain  class  of  cases  where  the 
prescription  law  of  other  states  should  be  permitted  to  apply.  We  un- 
derstand the  action  of  the  convention,  if  valid,  to  modify  the  statute 
of  limitation  in  Alabama,  so  that  in  making  the  estimate  the  period  of 
the  war  was  not  to  be  computed. 

The  ordinance  does  not  expressly  repeal  the  article  referred  to,  nor 
is  it  inconsistent  therewith.  It  does  not  pretend  to  interfere  with 
the  law  which  permits  the  prescription  laws  of  other  states  to  be  ap- 
plied in  certain  cases. 

The  contract  was  entered  into  in  this  state,  where  the  maker  of  the 
note  and  the  payee  thereof  resided,  and  where  we  presume  the  se- 
curity, Hatchett,  also  resided.  In  the  absence  of  proof  to  the  con- 
trary, we  will  presume  that  the  surety  on  a  Louisiana  contract  was 
an  inhabitant  of  the  state.  If  Hatchett  moved  to  Alabama  after  the 
note  had  prescribed  here,  under  the  article  of  the  Alabama  Code  re- 
ferred to,  we  think  he  was  not  bound  to  pay  it ;  and  that  the  payment 
of  an  obligation,  already  extinguished  as  to  both  principal  and  surety, 
by  the  latter,  does  not  give  him  a  cause  of  action  against  the  former. 
\/  Civ.  Code,  art.  3025. 
^,  As  Hatchett  paid  the  note  without  being  sued,  he  cannot  recover 

M^Kv-i^         against  the  defendant  without  proving  that  he  was  bound  to  do' so. 
/^,     '^'        '^^^  ^*^^^  w^s  as  its  face  prescribed,  and  the  onus  is  on  him  to  show 
that  he  was  liable  at  the  time  he  paid  it. 

It  is  proved  that  the  plaintiff  lived  in  Alabama  when  he  paid  the  note 
(January  4,  1867),  and  that  he  resided  there  several  years  previously. 
According  to  our  laws  the  note  had  been  prescribed  nearly  six  years 
when  he  paid  it.  He  may  have  lived  there  several  years  prior  to  the 
payment,  and  yet  the  note  may  have  been  prescribed  before  he  moved 
from  this  state.  -  JMoreover,  it  does  not  appear  from  the  record  that 
the  note  had  been  indorsed  by  the  payees.  Crisp,  McGee  &  Co.,  or 
that  they  authorized  R.  B.  McGee  to  collect  it.  On  the  whole,  we 
think  plaintiff  has  failed  to  make  out  his  case.  He  has  not  established 
with  legal  certainty  that  he  was  bound  by  the  laws  of  Alabama  to  pay 
the  note. 

It  is  therefore  ordered  that  the  judgment  appealed  from  be  set 
aside,  and  it  is  now  ordered  that  there  be  judgment  as  of  non-suit,  and 
that  appellee  pay  costs  of  appeal. 

Rehearing  refused. 


/L    I 


Ch.  2)  THE  surety's  equity  of  reimbursement.  261 

NORTON  V.  HALL. 

(Supreme  Court  of  Vermont,  1868.    41  Vt  471.) 

General  assumpsit.  The  defendant  pleaded  the  general  issue  and 
statute  of  limitations.  The  plaintiff  replied  to  the  special  plea  that  the 
cause  of  action  did  accrue  within  six  years.  The  writ  is  dated  Sep- 
tember 29,  1866,  and  was  served  October  21,  1866.  Trial  by  the 
court,  August  term,  Caledonia  county,  1868 ;   Steele,  J.,  presiding. 

The  plaintiff  introduced  in  evidence  a  note,  of  which  the  following 
is  a  copy :  "Concord,  July  2,  1855. 

"For  value  received,  I  promise  to  pay  Ira  Foster,  or  his  order,  one 
thousand  dollars,  the  first  day  of  December  next,  at  the  Mechanics' 
Bank,  $1,000.  [Signed]     Dudley  P.  Hall. 

"Indorsed:  Demand  and  notice  waived.    Ira  Foster. 

"Demand  and  notice  waived.    C.  H.  Norton. 
"Demand  and  notice  waived.     Albert  Foster." 

The  Mechanics'  Bank  referred  to  is  in  Concord,  N.  H.,  where  the 
three  indorsers  lived  when  the  note  was  given,  and  have  ever  since. 
The  defendant  lived  in  Vermont  when  the  note  was  given,  and  has 
ever  since.  The  plaintiff,  the  second  indorser,  paid  to  said  bank,  De- 
cember 19,  1861,  the  balance  then  due  on  the  note,  which  was  $980.21, 
and  it  is  to  recover  this  sum,  and  the  interest  upon  it  since  it  was 
paid,  that  this  suit  was  brought. 

When  this  note  was  given,  Ira  Foster  and  Dudley  P.  Hall  were  in- 
terested together  in  an  unsettled  partnership.  Foster  was  accustomed 
to  send  notes  to  Hall,  and  he  would  sign  and  indorse  them,  and  the 
funds  would  be  obtained  at  some  bank,  and  be  used  in  the  company 
business,  or  in  private  business  of  either  one,  as  might  be  agreed,  and 
it  was  understood  between  the  parties  that  the  matter  of  these  funds 
was  to  be  left  to  be  settled  in  the  final  adjustment  of  the  partnership. 
The  partnership  business  resulted  in  a  failure,  and  is  still  unsettled. 
The  note  in  question  was  written  at  Concord  and  sent  to  Vermont,  to 
Hall,  who  signed  and  returned  it  to  Ira  Foster,  who  procured  the 
plaintiff  and  Albert  Foster,  without  compensation  and  as  an  accom- 
modation, to  indorse  it  and  draw  the  funds  at  the  bank.  When  the 
note  became  due,  Ira  Foster  sent  a  new  note  for  the  same  amount  to 
Hall,  which  he  signed  and  returned  to  take  up  the  note  in  question. 
The  following  is  a  copy  of  the  new  note: 

"$1,000.  Burke,  December  1,  1855. 

"Four  months  from  date,  for  value  received,  I  promise  to  pay  to  the 
order  of  Ira  Foster  one  thousand  dollars,  at  the  Mechanics'  Bank,  Con- 
cord, N.  H. 

"[Signed]  Dudley  P.  Hall." 

By  the  time  the  new  note  was  given  Hall  had  become  satisfied  that 
Ira  Foster  was  owing  him  on  the  partnership  account  and  that  the 


262  THE  EQUITABLE  AND   LEGAL   UIGHTS  OF  THE   SURETY.      (Part    2 

note  in  question  had  been  so  used  that  it  was  the  equitable  duty  of 
Ira  Foster  to  pay  it.  He  therefore  decHned  to  sign  a  new  note,  un- 
less Ira  Foster  would  give  him  a  note  of  the  same  amount.  Ira  Foster 
complied  with  this  demand,  but  still  claimed  that  Hall  was  owing  him 
on  the  partnership  account.  How  the  fact  was  the  court  did  not  think 
it  material  or  possible  to  find  in  this  case.  The  new  note  was  in- 
dorsed by  the  same  parties  and  left  at  the  bank ;  but,  the  bank  refus- 
ing to  give  up  tlie  first  note  for  the  second,  the  last  two  indorsements 
were  erased,  and  the  note  never  discounted.  On  the  1st  of  December, 
1855,  the  plaintiflf  was  unable  to  meet  the  note  that  then  became  due, 
and  the  bank  demanded  of  him  additional  security,  and  accordingly 
the  plaintiff  assigned  to  them  as  collateral  certain  notes  for  $1,800  on 
five  years,  secured  by  mortgage.  Ira  Foster  was  not  solvent  at  that 
time,  and  his  means  have  remained  more  or  less  in  supposition  ever 
since.  The  plaintiff's  securities  were  held  by  the  bank  as  collateral  un- 
til December  19,  1861,  when  the  plaintiff  took  them  up  with  the  note 
on  paying  the  $980.21  for  which  this  suit  is  brought.  The  plaintiff' 
had  remained  liable  to  the  bank  up  to  the  time  he  paid  the  note.  The 
bank  had  regarded  him  responsible,  and  never  allowed  matters  to  get 
into  such  a  situation  that  he  could  plead  the  statute  of  limitations. 

The  plaintiff  never  had  any  conversation  or  communication  with 
the  defendant  about  the  note  until  long  after  he  paid  it;  and  the  de- 
fendant never  knew  anything  about  the  note  after  he  signed  the  new 
note  of  December  1,  1855,  but  supposed  it  w^as  taken  up  by  the  new 
note.  He  never  made  any  acknowledgment  or  promise,  either  oral 
or  written,  to  pay  the  note  after  it  was  given,  other  than  by  the  giving 
of  the  note  of  December  1,  1855,  to  take  up  the  old  note. 

Since  December  1,  1855,  the  defendant  has  had  no  known  prop- 
erty in  New  Hampshire,  and  has  never  resided  there,  but  has  occa- 
sionally been  in  Lancaster,  Littleton,  Claremont  and  Charlestown,  in 
New  Hampshire,  on  business,  but  in  no  one  of  these  places  more  than 
a  day  at  a  time.  He  has  also  been  at  Concord,  N.  H.,  once  in  1855, 
once  in  1856,  and  two  or  three  times  since,  but  never  to  stop  more  than 
one  night.  He  was  never  in  the  Mechanics'  Bank,  and  the  officers 
of  the  bank  and  the  plaintiff  had  no  actual  knowledge  of  the  defend- 
ant being  in  the  state  of  New  Hampshire  on  any  of  these  occasions, 
but  the  defendant  made  no  effort  to  keep  out  of  their  sight.  The  law 
of  New  Hampshire  on  the  subject  of  the  statute  of  limitations,  so  far 
as  it  may  be  material  in  this  case,  was  proved ;  but,  as  this  appears  in 
the  statutes  and  reports  of  that  state,  the  court,  by  the  consent  of  the 
parties,  did  not  state  any  finding  upon  questions  of  New  Hampshire 
law,  but  left  such  questions,  so  far  as  they  may  be  material,  to  be  de- 
cided by  the  Supreme  Court. 
„  (      Upon  these  facts  the  court  rendered  judgment  for  the  defendatrt  to 

y»^  1  recover  his  costs.     If  judgment  is  reversed,  final  judgment  is  to  be 


Ch.  2)  THE  surety's  equity  of  reimbursement.  2G3 

rendered  then  for  the  plaintiff  for  $980.21,  and  interest  since  Decern- \  ^''-f 
ber  19,  ISGIV   Exceptions  by  the  plaintiff.-^ 

The  opinion  of  the  court  was  delivered  by  Plo^Ji  ■       n. 

Wilson,  J.  This  is  an  action  of  assumpsit,  by  which  the  plaintiff  '  '^^^^''^^^ 
seeks  to  recover  for  money  paid  by  him  to  the  Mechanics'  Bank,  Con- 
cord, N.  H.,  on  the  defendant's  note,  on  which  the  plaintiff  says  he 
was  liable  as  surety  for  the  defendant.  The  defendant  pleaded  the 
general  issue  and  the  statute  of  limitations.  The  plaintiff"  replied  to 
the  plea  of  the  statute  of  limitations,  that  the  cause  of  action  did  ' 
accrue  within  six  years.  / 

I.  The  defendant  claims  that  the  liability  of  the  plaintiff'  on  the  P/v>^^fi  c^Tj 
note  was  not  that  of  surety,  but  that  he  was  liable  as  an  original 
promisor  or  guarantor  of  the  note,  and  that  he  incurred  that  liability  • 
not  by  the  request  of  the  defendant.  This  proposition  of  the  defend- 
ant is  not  warranted  by  the  facts  in  the  case.  It  appears  that,  when 
this  note  was  given,  Ira  Foster,  the  payee,  and  the  defendant,  Dudley 
B.  Hall,  were  interested  together  in  an  unsettled  partnership.  Foster 
was  accustomed  to  send  notes  to  Hall,  and  he  would  sign  or  indorse 
them,  and  the  funds  would  be  obtained  at  some  bank,  and  be  used  in 
the  company  business,  or  in  the  private  business  of  either  one,  as  might 
be  agreed,  and  it  was  understood  between  them  that  the  matter  of 
these  funds  was  to  be  left  to  be  settled  in  the  final  adjustment  of  the 
partnership.  The  case  states  that  the  note  in  question  was  written 
at  Concord,  and  sent  to  Vermont,  to  Hall,  who  signed  and  returned  it 
to  Ira  Foster,  who  procured  the  plaintiff'  and  Albert  Foster,  without 
compensation  and  as  an  accommodation,  to  indorse  it,  and  the  bank 
purchased  and  became  the  owner  of  the  note.  The  finding  .of,  the.,  court 
below  leaves  no  doubt  that  the  note  was  given  for  the  accommoda- 
tion and  benefit  of  the  defendant,  as  well  as  for  Ira  Foster,  and  that 
the  liability  incurred  by  the  defendant  to  the  plaintiff,  by  reason  of 
the  plaintiff's  Hability  to  the  bank  on  the  note,  is  precisely  the  same  as 
it  would  be  if  the  note  had  been  executed  and  indorsed  in  the  presence 
and  at  the  request  of  both  Ira  Foster  and  the  defendant,  at  the  time 
it  was  given.  Upon  the  facts  of  this  case,  it  is  quite  clear  that  the 
liability  of  the  plaintiff  to  the  Bank  was  that  of  surety  for  the  defend- 
ant. '       ^         ^^  ^ 

It  is  insisted  by  the  defendant's  counsel  that  a  recovery  on  the  note  '^^  oy*M9*' 
against  him,  at  the  time  the  plaintiff  made  the  payment,  was  barred  by  P-^?*^'^*^^ 
the  statute  of  limitations,  because  it  was  more  than  six  years  from  the  '^■^^■U'^^-  ^ 
time  the  note  became  due  to  the  time  of  such  payment  by  the  plain-    i-  j^'^ 
tiff ;   the  defendant  not  having  made  any  acknowledgment  or  promise 
within  that  time  to  pay  the  note.  The  note  became  due  December  1, 
1855,  the  defendant  neglected  to  pay  it,  the  plaintiff  was  unable  to 
meet  the  note,  and  the  bank  demanded  of  him  additional  security ;  and 
accordingly  the  plaintiff  assigned  to  them  as  collateral  certain  notes 

21  The  arguments  of  counsel  are  omitted. 


264  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

for  $1,800,  on  five  years,  secured  by  mortgage,  and  those  securities 
were  held  by  the  bank  as  collateral  until  December  19,  ISGl,  when  the 
plaintiff  took  them  up,  with  the  note,  on  paying  the  $980.21  for  which 
this  suit  is  brought.     TlTe_county_  court  found  that  the  _plain tiff  had 
remained  liable  to  the  bank  up  to  the  time  he  paid  the  note,  and  that 
the  bank  regarded  him  responsible,  and  never  allowed  matters  toIg5t 
into  such  a  situation  that  he  could  plead  the  statute  of  limitations. 
The  plaintiff's  right  of  action  at  law,  as  surety  for  the  defendant,  ac- 
crued on  payment  of  the  note  to  the  bank,  which  was  within  six 
years  next  before  the  commencement  of  this  suit.     Bishop  v.  Day  et 
al.,  13  Vt.  81,  37  Am.  Dec.  582 ;  Ex'r  of  Baker  v.  Marshall  et  al.,  16 
Vt.  522,  42  Am.  Dec.  528. 
iA/4''Wc  -^o  T      It  is  further  insisted  by  the  defendant  that  the  note,  having  been 
■r^JtytJto^yr'^t.iu,  ^^Pt  o^  foot,  by  an  arrangement  between  him  and  the  bank,  for  more 
•    '  than  six  years  after  it  fell  due,  was  not  a  subsisting  debt  against  the 
defendant  at  the  time  the  payment  was  made  by  the  plaintiff';    and 
A  44- 1^         therefore  the  defendant  claims  it  should  be  treated  as  a  voluntary  pay- 
'  ment  by  the  plaintiff,  for  which  he  ought  not  to  recover  of  the  de- 

fendant. But  this  position  of  the  defendant  is  not  sustained  by  the 
authorities  cited  by  him.  The  case  does  not  show  that  the  delay  of 
the  plaintiff  to  pay  the  note  was  in  fraud  of  the  rights  of  the  defend- 
ant, or  that  he  was  thereby  in  any  manner  prejudiced.  It  is  not  a  case 
where  the  surety  revived  his  own  liability  after  it  was  barred  bv_the 
statute  of  limitations.  The  defendant  as  principal  and  the  plaintiff  as 
surety  were,  on  the  1st  day  of  December,  1855,  when  the  note  became 
due,  liable  to  pay  it.  The  defendant  should  have  paid  the  note  and 
saved  the  plaintiff  harmless.  It  was  the  duty  of  the  defendant,  at  all 
times  so  long  as  the  plaintiff  remained  surety  by  force  of  the  liability 
incurred  by  signing  or  indorsing  the  note,  to  indemnify  the  plain- 
tiff by  paying  the  note.  The  neglect  of  the  defendant  to  pay  the  note 
when  it  became  due  compelled  the  plaintiff  to  give  the  bank  addlEonal 
security  and  to  request  further  time  of  payment.  All  this  was  done 
while  both  plaintiff'  and  defendant  were  liable  to  pay  the  note.  The 
arrangement  made  between  the  bank  and  the  plaintiff^. as  surety  for 
the  defendant,  was  one  that  could  be  properly  made,  and  it  is  consistent 
with  the  original  obligations  and  rights  of  the  parties  and  with  the 

relation  of  the  plaintiff'  as  surety  for  the  defendant.  " 

The  law  will  treat  the  arrangement  so  made  by  the  plaintiff  with 
the  bank,  in  respect  to  said  note  and  its  payment,  as  having-jreccjved 
the  sanction  of  the  defendant.  The  defendant,  by  his  neglect  tp  pay 
the  note,  left  the  matter  of  its  payment  to  be  arranged  and  mad.e_by 
the  plaintiff ;  but  the  arrangement  made  between  the  plaintiff  and  the 
bank  did  not  prevent  the  defendant  from  making  payment  to  the  bank 
at  any  time.  It  is  clear,  we  think,  that  where  the  liability  of  the  surety 
has,  in  good  faith,  continued  more  than  six  years  from  the  lime  the 
note  became  due,  and  payment  of  the  note  is  made  by  him,  such  contin- 
ued liability  of  the  surety  carries  with  it  the  relation  of  principal  and 


Ch.  2)  THE  surety's  equity  of  reimbursement.  265 

surety,  and  the  liability  of  the  principal  to  reimburse  the  surety  for 
the  money  so  paid  by  him.  The  defendant's  liability  to  his  surety,  the 
plaintiff,  was  not  barred  by  the  statute  of  limitations  at  the  time  the 
plaintiff  paid  the  note;  but,  as  between  these  parties,  the  statute 
began  to  run  on  the  plaintiff's  claim  when  he  paid  the  note,  December 
19,  1861. 

The  judgment  of  the  county  court  is  reversed,  and  judgment  for 
the  plaintiff  to  recover  the  sum  of  $980.21  and  interest  since  Decem- 
ber 19,  1861,  and  his  costs. 


SMITH  V.  WHEELER. 

(Supreme  Court,  Appellate  Division,  Third  Department.  New  York,  1900.     55 
App.  Div.  170,  66  N.  Y.  Supp.  780.) 

i  Appeal  by  the  plaintiff,  Orrin  W.  Smith,'  from  a  judgment  of  the 
Supreme  Court  in  favor  of  the  defendant,  entered  in  the  office  of  the 
clerk  ot  the~rottnty--0f~Delavvare~oTr the  31st  day  of  January,  1900, 
upon  the  decision  of  the  court,  rendered  after  a  trial  before  the  court 
without  a  jury  at  the  Delaware  Trial  Term,  dismissing  the  complain- 
antiipon  the  merits.  A 

"011  The  T9tH~bf  November,  1896,  the  defendant  executed  and  de- 
livered to  the  plaintiff  his  promissory  note,  dated  that  day,  for  $550.19, 
payable  to  the  order  of  plaintiff  four  months  from  the  date  thereof 
at  the  Delaware  National  Bank.  The  note  was  given  for  a  debt  on 
contract  then  due  from  defendant  to  plaintiff.  It  was  duly  indorsed 
and  transferred  by  the  plaintiff  to  the  bank  above  named,  was  not 
paid  at  maturity,  and  was  duly  protested.  The  bank  afterwards 
brought  an  action  in  the  Supreme  Court  on  the  note  against  both 
partiesVand  on  the  16th  day  of  August,  1897,  duly  recovered  a  judg- 
ment against  them  for  the  sum  of  $586  damages  and  costs.  An  ex- 
ecution was  issued  thereon,  and  on  the  31st  of  October,  1898,  the 
plaintiff  paid  the  amount  thereof,  being  the  sum  of  $650.39.  That 
anioilnt'fhe  plaintiff  in  this  action  seeks  to  recover  of  the  defendant. 
On  the  18th  day  of  August,  1898,  the  defendant  filed  in  the  proper 
court  his  petition  in  bankruptcy,  and  was  on  that  day  adjudicated  a 
bankruptT  In  the  schedule  of  liabihties  attached  to  the  petition  there  / 
was"^  statement  of  the  judgment  recovered  by  the  bank.  On  the  7th  ( 
day  of  February,  1899,  a  discharge  was  duly  granted  to  the  defend- 
ant, pursuant  to  the  act  of  Congress  on  that  subject  then  in  force. 
The,  defendant  set  up  the  discharge  as  a  defense  to  this  action.  The 
court  held  the  defense  a  good  one  and  dismissed  the  complaint. 

Merwin,  J.  The  question  here  is  whether  the  discharge  is  a  bar  to 
the  claim  of  the  plaintiff. 

A  discharge  in  baiokruptcy  releases  a  bankrupt  from  all  of  his  prov- 
able  debts,  with  certain  exceptions  not  important  here.  Bankr.  Act 
July  1,  1898,  c.  541,  §  17,  30  Stat.  550.     If  the  claim  of  the  plaintiff 


26G  THE   EQUITABLE   AXD   LEGAL   raGHTS   OF  THE   SURETY.       (Part    2 

was  a  provable  debt  within  the  meaning  of  the  bankrupt  act^then 
the~  discharge  is  a  bar. 

By  subdivision  i  of  section  57  of  the  act  it  is  provided  as  follows : 
"Whenever  a  creditor,  whose  claim  against  a  bankrupt  estate~is  se- 
cured by  the  individual  undertaking  of  any  person,  fails  to  prove  such 
claim,  such  person  may  do  so  in  the  creditor's  name,  and  if  he  dis- 
charge such  undertaking  in  whole  or  in  part  he  shall  be  subrogated 
to  that  extent  to  the  rights  of  the  creditor." 

In  the  bankrupt  act  of  j\Iarch  2,  1867  (14  Stat.  525,  c.  176,  §  19; 
Rev.  St.  U.  S.  §  5070),  there  was  a  similar  provision,  and,  under  it, 
it  was  held  in  Hunt  v.  Taylor,  108  Mass.  508,  that  the  liability  of  the 
drawee,  upon  a  bill  of  exchange  accepted  and  dishonored  by  him. 
to  an  indorser,  who  then  pays  it,  is  barred  by  a  discharge  of  the 
drawee  in  bankruptcy  proceedings  begun  after  his  dishonor  of  the  bill, 
though  before  the  payment  by  the  indorser.  The  action  in  that  case 
was  for  money  paid  to  the  defendant's  use. 

In  Mace  v.  Wells,  7  How.  272,  12  L.  Ed.  698,  a  similar  provision 
in  the  bankrupt  act  of  1841  was  under  consideration,  and  it  was  held 
that  the  bankrupt  was  discharged  by  his  certificate  from  all  liability 
to  the  surety  for  money  subsequently  paid  on  account  of  the  debt. 

These  authorities  are  quite  persuasive,  if  not  controlling,  on  the 
question  before  us.  No  different  rule  was,  I  think,  intended  to  be 
adopted  by  the  act  of  1898,  although  the  wording  of  the  provision  dif- 
fers in  some  respects  from  the  prior  acts.  See  Lowell  on  the  Law  of 
Bankruptcy,  132,  316,  465. 

It  must  be  held,  I  think,  that  the  claim  of  the  plaintiff  was  prov- 
able under  the  bankrupt  act,  and  that,  therefore,  tlie  discharge  is  a 
bar.     All  concurred. 


Judgment  affirmed,  with  costs. 


22 


THAYER  V.  DANIELS. 

(Supreme  Judicial  Court  of  Massachusetts,  3872.    110  Mass.  345.) 

Contract.  The.jieclaration  alleged  that  the  defendantj  as_principal, 
and  the  plaintiff,  as  surety,  signed  a  note  for  $500,  dated  S.epLcmber 
28,  1861,  and  payable  on  demand  to  Nathan  George  or  order,  with 
interest;  that  the  plaintiff'  signed  as  surety  without  consideratioUj  and 
for  the  accommodation  of  the  defendant;    that  the  defendant  failed 

22  Accord:  Haver  v.  Comstock,  115  Iowa,  1S7.  88  N.  W.  351  (1901) ;  Post  v. 
Losey.  Ill  Ind.  74,  12  N.  E.  121.  60  Am.  Rep.  677  (18S7) ;  Lipscomb  v.  Grace, 
26  Ark.  231,  7  Am.  Rep.  607  (1870) ;  Hunt  v.  Taylor,  108  Mass.  508  (1871) ; 
Fairbanks  v.  Lambert.  137  Muss.  373  (1884) ;  Hamilton  v.  Reynolds,  88  Ind. 
191  (1SS2).  But  see  Leighton  v.  Atkins,  35  Me.  118  (1853),  where  the  surety  on 
a  joint  note  due  before  bankruptcy  proceedings  commenced  paid  a  joint  judg- 
ment recovered  thereon  after  his  principal's  discharge,  and  it  was  held  that 
the  surety  was  entitled  to  reimbursement 


Ch.  2)  THE  surety's  equity  of  reimbursement.  267 

to^ajLthe  note ;  and  that -the  plaintiff  had  to  pay  to  George  the  prin- 
cipal  of  the  note  to  take  it  up.  The  answeridenied  the  allegations  of 
the  declaration,  and  also  set  uji'^tlie^statute  of  limitations,  and-^  dis- 
charge of  the  defendant  in  insolvency. 

At  the  trial  in  the  superior  court,  before  Bacon,  J.,  it  appeared  that 
the  plaintiff  executed  the  note  without  any  consideration,  and  for  the 
accommodation  of  the  defendant;  that  the  defendant  on  Febriiarx H' 
1862,  filed  his  petition  for  the  benefit  of  the  insolvent  law ;    that  a  ^ . 
warrant  was'^dlily  issuedl    that  at  the  third  meeting  of  the  creditors  ^ 
George  proved  the_jiote  against  tHFUefendant's  estate ;    thatar-srrrail 
dividend~was  then  declared;   that  afterwards,  in  August,  1862,  tlie.de- 
fendant  was  duly  discharged   from  his  debts ;    and  that  on  May  1, 
1865,  the  plaintiff'  paid  to  George  on  the  note  $500,  which  was  less 
than  the  amount  then  due  upon  it,  and  took  it-  up.     The  defendant 
asked  the  judge  to  rule'-rhat  the  statute  of  limitations  began  to  run  / 
against  the  plaintiff's  cause  of  action  from  the  time  the  note  fell  due,  i  , 
{and  that  the  discharge  in  bankruptcy  was  a  bar  to  the  action ;    but  V  'IW^^ 
the  judge  refused  so  to  rule,  and  ruled  that  on  the  foregoing  facts~tHe   I 
pTamtitt  was  entitled  to  recover.    The  jury  returned  a  verdict  for  the    \ 
plaintiff,  and  the  defendant  alleged  exceptions.  V 

Ames,  J.  There  was  an  imphed  promise,  on  the  part  of  the  defend-  S^-S^^''^-"^^' 
ant,  as  principal,  to  indemnify  the  surety,  and  to  repay  to  him  all  the 
money  that  he  might  be  compelled,  in  consequence  of  his  liability  as 
surety,  to  pay  to  the  creditor.  Until  the  surety  has  been  compelled 
to  make  such  payment,  there  is  no  breach  of  this  implied  promise. 
The  cause  of  action  accrues  then  for  the  first  time,  and  the  statute  of 
limitations  then  begins  to  run.  Of  course  the  exception  that  the  claim 
of  the  plaintiff  is  barred  by  that  statute  cannot  be  maintained.  Ap- 
pleton  v.  Bascom,  3  Mete.  169 ;  Hall  v.  Thayer,  12  Mete.  130.  X  ^  J-;^^ 

At  the  time  when  the  defendant  petitioned  for  the  benefit  of  the  --'..J  ^tf^, 
insolvent  law,  the  plaintiff's  cause  of  action  against  him  had  not  ac- 
crued. Nothing  was  due  at  that  time  from  the  insolvent  to  the  plain- 
tUF^  and  whether  anything  would  become  due  depended  upon  the 
contingency  of  his  being  compelled  to  pay,  and  actually  paying,  the 
note,  in  whole  or  in  part.  If  the  plaintiff  had  taken  up  the  note,  or 
made  a  payment  upon  it,  at  any  time  before  the  making  of  the  first 
•dividend,  his  claim  for  the  money  so  paid  would  have  been  provable 
against  the  estate  of  the  insolvent,  under  Gen.  St.  c.  118,  §  25,  and 
would  therefore  have  been  barred  by  the  discharge.  But  it  appears 
from  the  report  that  no  money  was  paid  by  the  plaintiff  as  surety,  and 
no  cause  of  action  accrued  to  him  against  the  insolvent,  until  long 
after  the  first  and  only  dividend  was  paid  from  his  estate.  \  ^xU^-u.^j^ 

The  case  of  Mace  v.  Wells,  7  How.  272,  12  L.  Ed.  698,  which  is  ^-U^a^ 
relied  upon  by  the  defendant,  arose  under  the  bankrupt  act  of  1841, 
a  statute  which  differed  from  our  insolvent  law,  in  allowing  sureties 
and  other  parties  under  a  contingent  liability  to  prove  such  contingent 


268  THE  EQUITABLE  AND  LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

liabilities  as  claims  upon  the  estate,  and,  "when  their  debts  and  claims 
become  absolute,"  to  have  them  allowed. 

The  defendants  also  insTsFth'at  t"he  debt  itself  was  provable  and  was 
therefore  discharged ;  but  this  is  not  true  as  to  the  contingent  claim 
of  the  surety.  He  had  no  claim  that  was  provable  under  the  statute, 
at  the  date  of  the  discharge. 

Two  other  cases  relied  upon  by  the  defendant,  Wood  v.  Dodgson, 
2  M.  &  S.  195,  and  Vansandau  v.  Corsbie,  8  Taunt.  550,  were  decided 
under  English  statutes  which  in  express  terms  make  the  contingent 
liability  of  a  surety  a  provable  claim  against  the  bankrupt's  estate.  In 
the  first  of  these  cases  the  court  say  that  the  statute  was  intended  to 
benefit  the  sureties,  by  allowing  them  to  share  in  the  dividend  before 
the  estate  is  all  gone,  and  before  the  actual  payment  of  their  liabil- 
ities. Neither  of  these  decisions  is  applicable  to  a  case  under  our  in- 
solvent laws. 

Exceptions  overruled. 


SMITH  v.  SCHNEIDER  et  al. 
(Supreme  Court  of  Missouri,  1S56.    23  Mo.  447.) 

Appeal  from  St.  Genevieve  Circuit  Court. 

This  cause  was  decided  on  a  demurrer  to  the  petition.  The  peti- 
tion "set  forth  substantially  that  at  a  public  sale  in  partition  -6«-the 
17th  of  ]\Iay,  1853,  one  Simms  became  the  purchaser  of  certain  real 
estate ;  that,  in  compliance  with  the  terms  of  the  sale,  he  paid  10  per 
cent,  of  the  purchase  money  and  gave  his  bond  to  the  sheriff  for  the 
residue,  about  $92,  with  Smith,  the  plaintiff,  as  his  security,  the  bond 
being  payable  in  12  months ;  that,  the  bond  not  being  paid  on  its  ma- 
turity, judgment  was  obtained  thereon,  and,  Simms  being  insolvent, 
the  plaintiff,  Smith,  was  compelled  to  pay  said  Judgment,  etcT;  that 
since  the  purchase  of  Simms  the  defendant  Schneider  had  become  the 
purchaser  at  sheriff's  sale  of  all  Simms'  right,  title,  and  interest,  and 
had  received  a  deed  from  the  sheriff ;  that  Simms  is  insolvent.  Plain- 
tiff therefore  prays  judgment  against  Simms,  who  is  a  party  To  the 
suit,  for  the  amount  of  his  debt;  also  that  the  land  in  the  hands~of 
Schneider  be  subjected  to  the  payment  thereof.  The  sheriff  was^also 
made  a  party  defendant  to  this  suit. 

The  demurrer  of  defendants  was  overruled,  and  judgrnent  given  ior 
the  plaintiff.    Defendant  Schneider  appeaLed.^^ 

Scott,  Judge,  delivered  the  opinion  of  the  court. 

Schneider  became  the  purchaser  of  Simms'  equitable  title  at  a  sher- 
iff's sale.  He  took  that  title  with  its  incumbrances.  As  Simms  could 
not  have  obtained  a  title  to  the  land  without  paying  the  balance  of  the 
purchase  money,  Schneider,  claiming  under  him,  was  in  no  better  sit- 

2s  The  argumeDts  of  counsel  are  omitted. 


Ch.  2)  THE  surety's  equity  of  reimbursement.  269 

uation.  He  could  only  get  the  land  by  paying  the  sum  he  bid  k>r  it 
and'lhe  balance  of  the  purchase  money.  That  was  the  bargain  he 
made  when  he  became  the  purchaser  at  the  sheriff's  sale.  Smith,  be- 
ing the  security  of  Simms  for  the  purchase  money,  when  he  paid  it  he 
had  a  right  to  be  substituted  to  the  equity  of  the  owner  of  the  land^ 
which  equity  was  to  hold  the  title  until  the  purchase  money  was  paid^^lJ 
Now,  as  Schneider  bought  the  land  subject  to  the  payment  of  the  un- 
paid purchase  money,  and  as  Smith,  the  surety  of  Simms,  has  paid  the 
money,  he  is  entitled  to  have  the  land  sold  in  order  that  it  may  be  re- 
funded to  him. 

~The  doctrine  in  relation  to  the  discharge  of  the  lien  for  the  payment 
of  the  purchase  money  is  not  appHcable  to  this  case,  as  the  owners  of  • 
the  land  had  never  parted  with  their  title  by  the  execution  of  a  deed. 
The  legal  title  was  in  them,  and  they  had  an  equity  to  have  the  land 
sold  for  the  purchase  money,  and  Smith,  the  surety  of  Simms  for  that 
money,  having  paid  for  it,  is  entitled  to  be  substituted  in  the  place 
of  the  holders  of  the  legal  title,  whoever  they  may  be.  The  other 
judges  concurring,  the  judgment  will  be  affirmed. 

24  As  to  mortgagor's  action  for  indemnity  against  his  grantee,  who  has  per- 
sonally assumed  the  mortgage  debt,  see  15  H.  L.  R.  583 ;    Id.  398. 


270  THE  EQUITABLE  AND  LEGAL  KIGHTS  OF  THE  SURETY.      (Part   2 

CHAPTER  III 
THE  SURETY'S  EQUITY  OF  SUBROGATION 


PARSONS  &  COLE  v.  BRIDDOCK  et  al. 
(High  Court  of  Chancery,  1708.    2  Vern.  608.) 

Plaintiffs^ jn_  1694  were  bound  as  sureties  for  Mr.  Briddock,  and 
had  counter-bonds.  Briddock.  the  principal,jwas  afterwards  arrested, 
and  the  defendant,  his  brother,  became  his  bail,  an3^  judgment-was 
obtained  against  the  bail.  The_2laintiffSj  being  sued  on  the  oripinal 
Gond,  were  forced  to  pay  the  money,  and  now  brought  their  bill  to 
have  the  judgment  obtained  against  the  bail  assigned  unto  them,  in 
order  to  be  reimbursed  what  they  jiad  paid. 

Per  Lord  Chancellor.  The  bail  stand  in  thp  plarp  of  thp  pHnripal, 
and  cannot  be  relieved  on  other  terms  than  on  payment  of  principal, 
interest  and  costs,  and  the  sureties  in  the  original  bond  are -not  to  "be 
contributory ;  and  therefore  decreed  the  jud.QT'i^^t  pgaingt-  tVip  hni]  to 
b6  assigned  to  Jhe  plaintiffs,  in  order  to  reimburse  them  what  they 
had  paid,  with  interest  and  costs. 

And  although  the  plaintiffs  by  their  bill  had  unadvisedly  charged 
that  they  had  agreed  to  pay  an  equal  proportion  of  the  debt,  yet  the 
defendants  having  by  answer  denied  they  made  any  such  agreement, 
that  set  the  plaintiffs  at  large,  and  left  them  at  liberty  to  demand  the 
whole  against  the  defendants ;   and  decreed  it  accordingly.^ 

1  "Still  another  important  class  of  equitable  obligations  created  by  equity 
alone  are  those  commonly  kuowd "as  rights  of  suii-o^Hon.  For  exampie.  a 
debtor  becomes' personally  bound  to  his  creditor  for  the  payment  of  the  debt, 
and  also  pledges  his  property  to  the  creditor  for  the  s;ime  purpose.  A  third 
person  also  becomes  personally  bound  to  the  creditor  for  the  payment  of  the 
same  debt  as  surety  for  the  debtor,  and  pledges  his  property  to  the  creditor 
for  the  same  purpose.  In  this  state  of  things  justice  clearly  requires  that 
the  debt  be  thrown  upon  the  debtor,  or  upon  the  pledge  belonging  to  him,  and 
that  the  surety  and  the  pledge  belonging  to  him  be  exonerated  from  the  debt, 
I>roTided  this  can  be  done  without  interfering  with  the  rights  of  the  creditor. 
The  latter,  however,  has  the  right  to  enforce  payment  of  his  debt  in  what- 
ever way  he  thinks  easiest  and  best,  i.  e.,  in  whatever  way  he  chooses ;  and 
equity  cannot  prevent  the  exercise  of  that  right  without  a  violation  of  law. 
If.  then,  the  surety  or  his  property  should  be  compelled  to  pay  the  debt,  the 
legal  consequences  would  be.  first,  that  the  debt  would  be  gone,  and  the  debt- 
or's personal  obligation  to  the  creditor  be  extinguished,  for  the  payment  by 
the  surety  or  by  his  property  has  the  siime  legal  effect  as  payment  by  the 
debtor  or  by  his  property  ;  secondly,  that,  the  personal  obligation  of  the  debtor 
being  extinguished,  the  real  obligation  of  his  property  would  be  extinguished 
also,  for  the  latter  is  only  accessory  to  the  former,  and  hence  it  cannot  exist 
without  it.  Moreover,  other  legal  consequences  to  the  surety  would  be,  first 
that  the  surety  would  lose  the  benefit  of  any  legal  priority  that  the  creditor 
might  have  had  over  other  creditors  of  the  same  debtor :  secondly,  that  the 
surety  would  have  no  means  of  obtaining  indemnity  from  the  debtor  unless 


Ch.  3)  •  THE  surety's  equity  of  subrogation.  271 

BRANDON  V.  BRANDON. 
(High  Gouvt  of  Chancery,  1859.    3  De  Gex  &  J.  524.) 

Lord  Justice  Turner.^     The  sole  question  we  have  to  decide  is 
whether  the  shares  in  the  testator's  property  which  \^•ere  purchased  by 
W.  Barnard  John  Brandon,  the  receiver  in  the  cause,  are  liable  to 
make  good  to  his  sureties  the  sums  which  they  as  such  sureties  have 
been_Qbliged  to  pay  in  consequence  of  his  default  in  not  paying  the 
balance  due  from  him.    These  shares  have  been  declared  liable  to  make? 
good  to  the  parties  to  the  cause  those  parts  of  that  balance  for  whichV  ftryvy.^^ 
the  sureties  are  not  liable,  and  from  this  declaration  there  is  no  ap-\ 
peal.     We  must,  therefore,  consider  that  the  shares  in  question  are 
liable  to  the  parties  to  the  suit.     The  sureties  have  paid  to  these  par- 
ties part  of  the  moneys  due  to  them,  and  in  the  absence  of  special  cir- 
cumstances must  be  entitled  to  stand  in  their  place ;  prima  facie,  there- 
fore, the  sureties  have  a  right  against  th6  shares  in  question.  ^ jt^?  (Ur>vfe,Z^ 

It  is  urged  by- the  appellants  that  Jke  suj:e_tie_s__accepted  a  security  on 
the  shares  whichjdescendedT  to  W.  Barnard  John  Brandon,  exclusive 
of  the  shares  which  he  had  purchased,  and  that  it  is  to  be  inferred 
from  this  that  they  intended  to  abandon  all  claim  against  the  "pur- 
chased shares.    But  it  must  be  observed  that  the  sureties  had  not-then/'^^^-^j*^'''^'''^-^- 
paid  anything;   and  to  hold  the  indemnity  deed  to  operate  as  a  release  f^f'-'^^'^^K^ 
of  all  the  rights  which  by  operation  of  law  the  sureties  on  payment  <^  lif  oko-rv(.  1/  / 
would  have  against  the  other  shares  would  be  going  too  far,  there 
being  no  words  of  release  in  the  deed.    The  parties  may  have  thought 
that  there   would   not  be   any   necessity   to   resort  to  the  purchased 
shares,  and  may  have  intended,  therefore,  to  leave  them  subject  to 
such  liability  only  a§  attached  to  them  by  law.     I^o  not  think  that 
the  mere  omission  of  them  from  the  specific  security  takes' away  "the 
general  right  of  the  sureties  against  them. 

Cord  Justice  Knight  Bruce  concurred. 

he  could  prove  a  contract  by  the  latter  (either  express  or  implied  in  fact)  to 
indemnify  him.  Ttnt  hfr^  "miity  P"^pinvs  a  nspfnl  firfinn  in  aid  nf  the  surety: 
fnv  it.jLi-nntr.  tho  Infter  nn  4ia.Yiug  (aot_Daid.  hiitV  pui-xdiased  the  debt.  Hence 
it  treats  the  debt  as  still  subsisting  in  equity  until  it  is  paid  by  the  debtor 
or  by  his  property.  In_other  words,  payment-^by  the  surety  or  by  his  proi^ettj' 
does  not  extinguish  any  of  the  rights  of.  the  creditor  in  equity,  though  it  does 
at-liiw;_jind  yet,  after  payment  by  the  surety  or  by  his  property,  the  credit- 
or holds  his  rights,  not  for  his  own  benefit,  but  for  the  benefit  of  the  surety. 
This,  therefore,  is  an  instance  in  which  equity  creates  one  equitable  right 
(namely,  iu  the  creditor),  in  order  to  make  it  the  subject  of  another  equitable 
right  ("namely,  in  favor  of  the  surety)."  C.  C.  Langdell,  A  Brief  Survey  of 
Equity  Jurisdiction,  1  Harvard  Law  Review,  pp.  G8,  69. 

OiT^snhrng.ntion  between  co-sureties,  see  16  H.  L.  R.  439. 

O]i_subrogation  of  surety^  to  rights  of  his  principal  to  obtain  reimbursement    ■ 
from  the  latter's  debtor,  see  note,  21  H.  L.  R.  545. 

-SnliiSubvogiLtioji^in  Behalf  of  a  Surety's  Surety,"  see  note  in  17  H.  L.  R. 
27C. 

2  The  facts  sufficiently  appearing  in  the  opinion,  the  statement  of  facts  and 
the  arguments  of  counsel  have  been  omitted. 


W'- 


272  THE  EQUITABLE  AND  LEGAL  RIGHTS  OF  THE  SURETX.      (Fait   2 

MUSGRAVE  V.  DICKSON  et  al. 

(Supreme  Court  of  Pennsylvania,  189G.     172  Pa.  629,  33  Atl.  705,  51  Am.  St 

Rep.  765.) 

Exceptions  to  commissioner's  report. 

From  the  record  it  appears  tliat:"Samuel_ Musgrave  obtained  a  rule 
on  H.  A.  Dickson  to  show  cause  why  the  said  Musgrave  shouTTf  not 
have  subrogation  of  the  judgment  Dickson  had  obtained  agamst  tsailey 
&  Boler  in  an  action  in  replevin  founded  on  a  distraint  fcfl'  rwrl,  be- 
cause he,  the  said  Musgrave,  had' paid  the  judgment  ubliTTned  against 
Bailey  &  Boler,  J.  C.  Dickson  and  himself,  in  the  action  on  the  bond 
that  had  been  given  as  required  by  law  when  the  replevin  action  was 
instituted.  H.  A.  Dickson  in  his  answer  claimed  that  subrogation 
should  not  be  allowed,  for  the  reasons :  First,  that  there  was  still  due 
him  $143.45  and  $45  costs  on  account  of  the  judgment  of  which  sub- 

{  rogation  was  desired :  second,  that  said  Musgrave,  by  going  on  the 
bond,  enabled  Bailey  &  Boler  to  retain  possession  of  a  brickyard,  there- 
by becoming  further  indebted  to  him  for  rent  in  the  sum  of  $600, 
which  had  not  been  paid. 

The  case  was  referred  to  J.  H.  Miller,  Esq.,  as  commissioner,  who, 
without  taking  into  consideration  the  averments  of  the  answer  above 
stated,  recommended  a  decree  in  favor  of  S.  Musgrave  to  the  amount 
of  $872.70. 

H.  A.  Dickson  filed,  among  others,  the  following  exception  to  the 
commissioner's  report: 

"The  commissioner  erred  in  not  finding  that  on  December  31,  1893, 
there  remained  unpaid  on  the  judgment  entered  in  this  case  $143.45 
and  $45  costs,  no  part  of  which  has  since  been  paid." 
/'    Thg^court  overruled  exceptions  to  the  commissioner's  report,  and 
entered  a  decree  in  accordance  with  his  recommendation. 
'', ,  ;\v^l      Error  assigned,  among  others,  was   (1)  in  not  finding  that  of  the 
i  ju(!gment  of  which  subrogation  is  asked  there  remained  unpaid  $143.45 
land  $45  costs. ^ 
7^       Mr.  Justice  Fell.     This  proceeding  is  founded  upon  a  petition  by 
^  Samuel  Musgrave,  one  of  the  sureties  on  a  replevin  bond,  fOT~sirbro- 

gation  to  the  rights  of  the  plaintiff  in  the  judgment.    An  answer~vas 
filed  by  the  appellant,  the  plaintiff,  in  which  he  averred  that  the  judg- 
ment had  not  been  fully  paid,  and  in  which  he  stated  other  supposed 
equitable  grounds  in  denial  of  the  right  claimed.     A  separate  answer 
was  filed  by  the  defendants,  in  which  they  alleged  that  they  had  trans- 
!  ferred  their  property  and  business  to  the  co-surety,  J.  C.  Dickson,  to 
■•/  yrf  Ly<.        '  secure  him  and  Samuel  Musgrave  from  any  loss  they  might  sustain  by 
yj  =■,  reason  of  the  bond,  and  that  from  the  management  of  their  business 

'  an  amount  had  been  realized  by  Dickson  more  than  sufficient  to  cover 
/  the  payment  made  by  Musgrave.    It  was  agreed  by  both  sureties  that 

»  The  arguments  of  counsel  are  omitted. 


Ch.  3)  THE  surety's  equity  of  subrogation.  273 

the  amount  due  the  defendants  from  the  management  of  the  business 
should  be  credited  by  Musgrave  on  account  of  the  money  which  he 
had  paid.  The  issues  thus  raised  were  referred  to  a  commissioner. 
The  terms  of  the  reference  do  not  appear  from  the  record,  but  it  is 
stated  in  the  appellee's  history  of  the  case  that  the  commissioner  was 
"to  take  testimony  and  find  the  facts  in  issue  by  the  petition  and  an- 
swers." ^ 

The  commissioner,  having  taken  and  considered  the  testimony,  re-  fi^-'f'^^v^,,''- 
ported  that  the  defendants,  after  the  allowance  of  all  proper  credits,  <«t*ypi^  ) 
were  indebted  to  the  petitioner  in  the  sum  of  $872.70,  and  to  this 
amount  subrogation  was  ordered  by  the  court.     A  large  part  of  the 
testimony  has  not  been  brought  up  with  the  record.     From  an  ex- 
amination of  what  appears  we  see  no  reason  to  doubt  the  correctness 
of  the  conclusion  reached  either  as  to  the  obligation  to  account  or  as  ^ ^        ^^^ 
to  the  amount  due.     The  issue  raised  bv.JJie.  answer  of  the.plaintiff     .      '       ^     J 
seems  to  have  been  wholly  ignored.    Whether  any  testimony  was  taken  ^'^'Tf^'^  ,<v*M 
under  this  issue  we  are  not  informed.     None  appears  with  the  record.   fe-d'^Lj^ 
Its  omission  would  be  ground  for  the  affirmance  of  the  order,  if  there 
was  a  finding  and  report  by  the  commissioner.     Neither  has  been 
made.     In  the  whole  proceedings  as  it  is  presented  no  reference  is 
made  to  this  issue  from  the  time  it  is  raised  by  petition  and  answer 
until  it  is  finally  disposed  of  by  the  order  making  absolute  the  rule  to 
show  cause  why  subrogation  should  not  be  allowed.     Its  importance 
may  have  been  an  afterthought,  but  the  issue  is  one  which  cannot  now 
be  disregarded.     It  is  distinctly  raised,  and  is  the  subject  of  an  excep- 
tion to  the  report  of  the  commissioner  and  of  a  specification  of  error. 

Subrogation  rests  upon  purely  equitable  grounds,  and  it  will  not  be  , 
enforced  against  superior  equities.  T  Tri]leg^_thf  <;nrpty  pay<L-th^-dpht 
in^uU  he  is  not  entitled  to  subrogation,  and  untn__this  is.  done-the 
creditor  will  be  left  in  full  possessroh  anJ~control  of  the  debt  and 
the  r_emedies  for  its  enforcement.  Bering  vT^arl  of  Wmchelsea,  1 
Heading  Cases  in  Equity,  120  ;  Kyner  v.  Kyner,  6  Watts,  221 ;  Bank 
V.  Potius,  10  Watts,  148;  Hoover  v.  Epler,  52  Pa.  522;  Allegheny 
National  Bank's  Appeal,  19  Wkly.  Notes  Cas.  (Pa.)  78.  The  settle- 
ment ofjhe._account.j3et,ween  the  sureties  and  the  defendant  fixed  the 
amount  of  the  liability  of  the  latter  and  the  extent  of  the  rlgHnoTn- 
demnity ;  but  it  did  not  affect  the  right  of  subrogation,  which  will 
never  be  allowed  to  the  prejudice  and  injury  of  the  creditor. 

THe^  judgment  is  reversed,  and  the  record  is  remittedlb  the  court 
of  common  pleas, 'in  order  -that  there  may  be  a  finding  upon  the  is^ue 
raised  by  the  answer  of  the  appellant. 
Hen.  Sub.— 18 


274  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE   SURETY.      (Part    2 

LEE  et  al.  v.  GRIFFIN  et  al. 
(High  C!ourt  of  Errors  and  Appeals  of  Mississippi,  1856.    31  Miss.  632.) 

Appeal  from  the  District  Chancery  Court  at  Yazoo  City;  Hon. 
George  \V.  Dogherty,  Vice-Chancellor.* 

Fisher,  J.,  dehvered  the  opinion  of  the  court. 

This  is  an  appeal  from  a  decree  of  the  Vice-Chancery  Court  at  Ya- 
,'  zoo  City,  sustaining  a  demurrer   to  the  complainant's  original   and 

amended  bill  of  complaint.  ^ 

^  The  f^acts  are  as  foflovvs :  John  and  Thompson  Brister,  as  executors 
of  the  last  will  and  testament  of  one  T.  Brister,  deceased,  sold  certain 
property  of  the  testator  under  an  order  of  the  probate  court  of  Yazoo 
county,  at  public  sale,  on  a  credit  of  eight  months,  when  one  James 
Perry  became  the  purchaser.  Perry  executed  his  note,  with  the  com- 
plainants as  securities.  He  afterwards  sold  the  property,  which  con- 
.sisted  of  mules,  wagon,  etc.,  to  the  defendant  Griffin,  who  has  since 
.sold  or  secreted  the  same.  Perry  being  insolvent,  the  securities  insist 
that  they  have  a  right  to  go  into  a  court  of  equity,  to  enforce  the  stat- 
utory mortgage  in  favor  of  the  executors,  before  paying  or  otherwise 
securing  the  debt.  This  is  briefly  the  case  as  presented  by  the  orig- 
mai  and  amended  bill — which  may  be  considered  as  one  bill — the 
amended  bill  being  intended  to  correct  certain  errors  as  to  fact  in  the 
original  bill. 
,jrtta  (T  ^  The  first,  and  indeed  the  only,  question  requiring  consideration  is 
,  ,  whether  the  securities. , before  pa.ying-Qr-securing  the-jj^ht^  ran  he.  snh- 
'  rogated  to  the  rights  of  the  executors,  or  compel  them  to  resort  to  the 

mortgaged  property,  before  proceeding  to  collect  the  debt  from  the 
securities.  ~ 

This  point  has  been  settled  by  this  court  in  the  Bank  of  England  v. 
Tarleton  et  al.,  23  Miss.  182.  The  court  in  that  case  say :  "The  privi- 
lege of  substitution  in  behalf  of  a  surety  who  has  paid  the  debt  of  his 
principal  is  of  purely  equitable  origin,  and  is  based  exclusively  on  the 
principles  of  natural  justice.  It  has  been  uniformly  held  to  exist  only 
in  cases  where  the  surety  has  actually  paid,  or  has  secured  the  payment 
of,  the  debt  due  by  his  principal." 

This  would  be  the  rule  which  would  govern  the  case  presented  by 
the  original  bill,  alleging  the  property  to  be  in  the  possession  of  the 
-    sub-vendee,  Griffin.     But  the  rule  could  not  even  be  so  favorably  ap- 
»-^  VN^^x     r  plied  under  the  amended  bill,  which  alleges  that  the  property  has  been 
■   ^  ^  '    either  disposed  of  or  secreted  by  the  sub-vendee.    The  question  in  such 

case  is,  not  whether  the  executors  shall  first  proceed  to  subject  the 
property  to  the  payment  of  the  debt,  but  whether  they  shall  proceed  to 
hold  the  sub-vendee  liable  by  an  action  or  proceeding  to  recover  dam- 
ages before  proceeding  against  the  sureties. 

*  The  arguments  of  counsel  are  omitted. 


Ch.  3)  THE  surety's  equity  of  subrogation.  275 

A  bill,  no  doubt^  before  payment,  could  be  maintained  by  the  sure- 
ties^__to_pX£-Yf.nt  the^parties  from  selling  or  otherwise  disposing  of  the 
progfirty;  but,  when  such  disposition  was  made  before  the  bill  was 
filed,  it  is  then  merely  a  question  of  damages,  if  there  be  any  remedy 
at  all  against  the  parties. 

Decree  affirmed.^ 


e^ti 


ORVIS  V.  NEWELL. 

(Supreme  Court  of  Errors  of  Connecticut,  1845.     17  Conn.  97.) 

This  was  a  biUJiuJiajacery,  brought  originally  by  Roger  S.  Newell 
against  William  Orvis  and  Ebenezer  Orvis,  for .  a  decree  of  fore- 
closure. The  bill  stated  that  the  defendants,  on  the_3d^  of  January, 
1g42,  mnrtgayed  six  pieces  of  land  in  Farmington  to  the  First  School 
bociety  of  Farmington,  to  secure  the  payment  of  a  note  given  by  them 
and  Adna  Whiting,  on  the  17th  of  January,  1837,  in  which,  for  value 
received,  they  jointly  and  severally  promised  to  pay,  on  demand,  the 
sum  of  $-150,  with  annual  interest ;  that  nr;_tVip  ni-h  nf  M^y^  JRAR^  the 
First  Schripl  Snriety  of  Farmington  assigned  all  their  interest  in  the 
note  and  mortgage  to  the  plaintiff,  by  virtue  of  which  he  became  the 
legal  owner  thereof ;  and  that  no  part  of  the  mortgage  debt  had  ev-er 
been  paid.  ^         ^  ^(^ 

William  Orvis  filed  a  cross-bill,  showing  that,  of  the  six  pieces  of  ^"^^^^ 
land"  m  the  plamtitt's  bill  mentioned,  three  were  his  own  property  and 
three  the  property  of  Ebenezer  Orvis;  that  he  was  merely  a  surety 
for  Ebenezer,  whose  duty  it  was  to  pay  the  mortgage  debt ;  that  on 
th.e_l£lh.- of  February,  1843,  Ebenezer  mortgaged  one  of  his  aforesaid 
pieces' of  land  to  Newell  to  secure  a  note  for  $100,  which  last-men- 
tion"ed  mortgage  Newell  has  since  foreclosed;  prajing  that,  upon  his 
payings  the  school  society  debt,  Nevv-ell  should  be  compelled  to  convey 
to  Him  all  the  right  derived  from  the  first-mentioned  mortgage. 

The  court  found  the  facts  stated  in  the  bill  and  the  cross-bill  to  be' 
true,  and  passed  a  decree  in  the  usual  form,  regarding  the  first  mort- 
gage, and  further  decreed  that,  if  William  Orvis  should  pay  to  NewsH/ 
both  debts,  Isrewetr  should  convey  all  his  interest  in  all  the  mortgaged! 
lands  to  him!         ■ 

This  decree_William  Orvis  sought,  by  motion  in  error,  to  reverse.® 

WiLUAMS,  C.  J.  The  facts  staTecT  and  found,  so  far  as  they  are  'ff..% 
important  to  the  question  arising  in  the  case,  are  these:  William  and 
Ebenezer  Orvis  were  indebted,  jointly  and  severally,  in  a  debt  now  the 
property  of  Newell,  and  secured  by  lands  owned  by  them  individ- 
ually; William  owning  three  pieces  and  Ebenezer  three.  Ebenezer, 
being  indebted  to  the  plaintiff',  Newell,  mortgages  one  of  his  pieces  of 

5  Accord:  Gilliam  v.  Esselman,  5  Sneed  (Tenn.)  SG  (1857). 
«  Arguments  of  counsel  are  omitted. 


)■>»'■'( 


^ 


276  THE   EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

land  to  Newell;  and  William  Orvis  claims  to  redeem,  paying  the  first 
mortgage  only,  as  he  was  a  mere  surety  for  his  son  Ebenezer.  On  the 
other  hand,  Newell  claims  that,  if  he  would  redeem  Ebenezer  Orvis's 
land,  he  must  pay  all  the  cliarges  upon  it,  before  he  can  be  entitled  to  it. 
"5**  William  Orvis  rests  his  claim  upon  the  fact  that  he  is  surety,  and 
as  a  surety,  upon  payment  of  the  debt,  is  entitled  to  all  the  benefits 
which  the  creditor  was  entitled  to,  by  virtue  of  the  original  mortgage ; 
and  there  can  be  no  doubt  that  as  between  him  and  his  principal  and 
the  creditor,  who  knows  of  this  relation,  this  position  is  correct. 

But  the  claim  of  William  Orvis  goes  further,  and  extends  to  all  per- 
sons deriving  title  under  Ebenezer  Orvis.  He  says  such  persons  can 
have  no  greater  rights  than  Ebenezer  Orvis  himself ;  that  Ebenezer 
had  no  equity  until  this  debt  was  paid,  and  so  his  creditors  can  have 
none.  It  is,  however,  to  be  remarked  "that  this  right  of  substitution 
or  subrogation  rests  upon  the  basis  of  mere  equity  and  benevolence" 
(Phillips  V.  Thompson,  2  Johns.  Ch.  419,  7  Am.  Dec.  535),  and  itjs 
not  to  beji^plied  so  as  to  defeat  the  very  equityjwhich  led  to  its  adop- 
tion.  This  has  been  attempted,  in  several  cases,  and  has  met  \vTth 
no  countenance  from  this  court.  Belcher  v.  Hartford  Bank,  15  Conn. 
381;  Stamford  Bank  v.  Benedict,  15  Conn.  437.  There  are  many 
cases  where  a  bona  fide  purchaser  can  acquire  rights,  which  the  vendor 
himself  had  not — as  where  one  purchases  from  another  an  article 
which  he  had  no  right  to  sell,  but  the  owner  stands  by,  without  ob- 
jecting; or  where  one  purchases  bona  fide  of  a  person  who  had  be- 
fore conveyed  by  a  fraudulent  deed,  or  by  a  good  deed  which  remains 
unrecorded.  In  this  case,  Newell  is  in  a  condition  similar  to  that  last- 
mentioned  ;  he  is  a  bona  fide  purchaser  of  Ebenezer  Orvis,  to  the  ex- 
tent of  his  debt,  having  no  knowledge  of  the  claims  of  any  other  per- 
son, so  far  as  the  records  show.  He  examines  the  title ;  he  finds  no 
incumbrance,  except  that  of  the  school  society ;  and  he  finds  that  this 
debt  rests  upon  five  other  pieces  of  land.  He  makes  his  calculations, 
therefore,  and  becomes  satisfied  that  if  this  debt  is  paid  frnm  three 
several  pieces  of  land,  in  equal  proportions,  there  is  enough  left  to 
pay  his  debt,  by  the  land  on  which  he  takes  a  new  mortgag&T  ^'liy 
thgrTshall  he  not  be  protected  in  it?  He  is  ready  to  do  entire  justice 
to  the  real  creditor,  and  does  it,  by  paying  him  his  debt,  thus  gaining 
to  himself  adequate  security  for  his  own  debt. 

But  then  he  is  met  by  a  claim,  which  the  original  creditor  could  not 
have  made,  a  claim  in  fact  that  this  incumbrance,  spread  over  six  ^ces 
of  _land,  should  be  paid  by  three  of  them  ;  iri 'sh"or"t,  he  is  surprise'l;"by 
the  springing  up  of  a  private  invisible  mortgage,  unknown  to  the 
law,  but  which,  he  claims,  is  the  olTspring  of  equity,  by  which  his 
supposed  security  is  rendered  worthless.  Had  William  Orvis  taken 
a  mortgage  deed  from  Ebenezer  to  secure  hTm  frdrn  this  suretyship, 
it  would  have  availed  him  nothing,  unless  he  had  put  it  upon  i  euOTd, 
Arid  is  it  possible  that  this  invisible  lien,  resting  upon  the  mere  basis 
of  equitjj  the  mere  creature  of  equity,  and  to  be  moulded"^i3y  the 


Ch.  3)  THE  surety's  equity  of  subrogation.  277 

principles  of  equity,  is  to  have  an  operation  which  a  deed  itself  could 
nof have  ?  Irr"sEort^  is^Ihe  implied  contract,  raised  by  a  court  of  eq"- 
uity,  more  extensive  and  efficient  than  an  actual  agreement  to  the  same 
effect,  made  by  the  parties,  would  have  been? 

No  writings  between  these  parties  show  that  William  Orvis  was  a 
surety.  If  NewelTlooks  at  the  note,  "he" "finds  it  is  signed  by  Ebenezer 
and  William^  jointly  and  severally.  If  he  looks  at  the  deed,  he  find's 
it  is  given  to  secure  that  note.  Now,  if  a  deed  of  land  is  given  to  two 
or  more,  the  rule  of  law  is  that  they  take  in  equal  proportions.  Tread- 
well  V.  Bulkley,  4  Day,  395,  4  Am.  Dec.  225 ;  1  Sw.  Dig.  104.  It  is 
so  in  a  conveyance  of  personal  property.  So  an  obligation  to  two  or 
more  persons  implies  they  are  equal  owners.  And  so,  if  there  are  sev- 
eral partners,  it  is  supposed  they  are  partners  in  eqvial  shares.  In  case 
of  personal  property,  however,  it  may  be  shown  that  the  fact  is  other- 
wise. On  the  other  hand,  if  two  sign  a  receipt  for  money  had,  or  an 
obligation  that  they  will  pay  money,  the  import  is  that  they  have  re- 
ceived it,. and  will  pay  it,  equally.  But  it  was  held  in  Stratton  v.  Ras- 
tall,  2  Term  R.  366  (by  two  judges  to  one),  that  one  of  the  signers 
of  a  receipt  might  show  he  was  a  surety,  and  that  the  parties  did  not 
stand  exactly  in  the  relation  that  the  writing  seemed  to  import.  The 
same  has  been  holden  with  respect  to  the  signers  of  a  note.  Harris 
V.  Brooks,  21  Pick.  (Mass.)  195,  32  Am.  Dec.  254.  And  so  it  was  held, 
by  the  superior  court,  in  this  case. 

This,   however,  is   not  all.      To   rlairnJ-liPj-igbtg  ni  a    gnrpty     it  fp"'^^ 

be  shown  that  those  who  are  to  Geaffected  by  it  know  the  fact,  or  had 
the  means  of  knowing  it.  Thus,  in  the  case  of  Stratton  v.  Rastall, 
the  court  proceeded  upon  the  ground  that  that  fact  is  admitted  by  the 
answer.  In  Harris  v.  Brooks,  where  it  was  claimed  that  a  joint  signer 
of  the  note  was  a  surety,  and  discharged  by  certain  conditions  of  the 
plaintiff,  the  judge  left  it  to  the  jury  whether  he  was  a  surety,  and 
that  known  to  the  holders ;  and  it  was  said,  by  the  Chief  Justice,  that 
the  words  "principal"  and  "surety"  would  not  affect  the  terms  of 
the  contract,  but  indicate  the  relations  the  parties  stood  in  to  each  oth- 
er, and  not  such  relations  to  the  holder ;  and  he  said,  further,  that  the 
presumption  that  they  were  equally  responsible  might  be  rebutted, 
by  showing  that  one  signed  as  a  surety  for  the  other.  And  in  the 
case  of  Neimcewicz  v.  Gahn,  where  a  wife  had  mortgaged  her  own 
property  to  secure  the  bond  debt  of  her  husband,  the  court  held  that 
she  was  to  be  treated  as  surety  for  her  husband,  but  that  the  fact  of 
suretyship  must  be  proved ;  it  not  appearing  upon  the  face  of  the  in- 
strument. 3  Paige,  651.  This  case  was  taken  to  the  Supreme  Court 
of  Errors,  and  the  decree  affirmed,  without  a  dissenting  opinion,  ex- 
cept on  the  point  whether  there  was  evidence  of  knowledge  of  that 
fact.     11  Wend.  312. 

It  was  said  in  the  argument  that  Newell  had  constructive  notice 
from  the  record  that  this  land  was  pledged  for  this  debt  and  must  be 
applied  to  that  purpose.     He  had,  indeed ;   but  he  did  not  know  that 


278  THE  EQUITABLE  AND   LEGAL  RIGUTS   OF  THE   SURETY.      (Part    2 

three  pieces  of  the  six  were  first  to  be  taken  for  this  purpose,  and 
that  is  the  very  difficulty  of  the  case.  By  the  record  he  could  see  that 
the  land,  and  the  whole  land,  was  devoted  to  that  object;  and  William 
Orvis  would  now  show  that  the  only  part  of  the  land,  viz.,  that  of 
Ebenezer  Orvis,  should  be  first  taken,  and,  of  course,  that  the  whole 
land  was  not  so  pledged,  unless  the  whole  was  necessary  to  pay  the 
debt. 

It  is  saidjhere  was  here  enoug-h  to  put  the  party  "  -(-|uir_v.     If 

the  presumption  of  law  is  as  has  been  shown,  we  sn.  j  for  him 

to  inquire  about.  If  these  writings  had  a  legal  import,  such  as  we 
have  shown,  he  might  fairly  act  accordingly.  If  he  looked  at  the  deed, 
he  would  get  all  the  notice  in  relation  to  their  contract  that  the 
parties  had  chosen  to  publish  to  the  world.  If  he  went  further,  and 
examined  the  note,  he  obtained  all  that  they  chose  to  give  even  to 
those  with  whom  they  immediately  contracted.  The  case  is  not  like 
that  of  Bolles  v.  Chauncey,  8  Conn.  390,  where,  there  having  been 
record  evidence  given,  the  court  held  that  the  party  who  acted  in  face 
of  that  notice  must  see  that  he  gained  true  information,  or  must  suffer 
for  it.  Here  is  no  intimation  from  the  record  or  the  note  of  the  real 
state  of  facts  as  now  claimed  by  the  party;  of  course,  nothing  is  shown 
to  excite  inquiry.  The  case  from  New  York,  above  cited,  was  a  much 
stronger  case.  There  the  debt,  upon  its  face,  appeared  to  be  the  hus- 
band's debt ;  but,  as  it  might  have  been  contracted  for  the  benefit  of  the 
wife's  estate,  the  court  held  that  the  creditor  was  justified  in  treating 
her  as  a  principal ;  and  Nelson,  C.  J.,  says  that,  to  discharge  the  surety, 
not  only  the  fact  of  suretyship  must  exist,  but  it  must  be  known  to 
the  creditor,  at  the  time  complained  of.  If  the  fact  appear  upon  the 
face  of  the  security,  that  is  enough ;  if  not,  the  knowledge  of  it  must 
be  brought  home  to  the  creditor,  by  the  surety,  clearly  and  satis- 
factorily, because,  as  all  parties  appear  upon  the  instrument  as  prin- 
cipals, it  is  deceptive  and  calculated  to  mislead.  The  surety,  therefore, 
should  be  holden  to  strict  proof. 
Y  Apply  the  reasoning  of  the  learned  judge  to  this  case.  If  William 
Orvis  would "cTalrnTRe 'right  of  a  surety,  and  he  appeals  as  a  surety 
upon  the  note  and  deed,  that  is  enough ;  if  not,  he  must  bring  home  to 
Newell,  the  creditor,  clearly  and  satisfactorily,  knowledge  of  the  fact 
that  he  was  surety,  instead  of  saying  he  was  put  on  inquiry.  But  there 
is  here  no  pretense  that  Newell  had  knowledge.  \Mlliam  Orvis,  in- 
stead of  appearing  on  the  written  instruments  as  a  surety,  gives  the 
public  to  understand  he  is  principal ;  and  now,  when  a  third  person 
has,  upon  faith  of  this  supposed  fact,  placed  his  property  in  the  hands 
of  another  party  to  this  contract,  William  Orvis  throws  himself  upon 
his  unknown,  invisible  rights  as  surety,  and  asks  the  aid  of  a  court  of 
equity  to  protect  him  in  that  character. 

Something  was  said  that,  as  our  law  does  not  allow  of  tacking 
mortgages,  Newell  could  not  tack  his  last  debt  to  the  former.  We 
cannot  see  anvthingf  in  this  case  analogous  to  the  doctrine  of  tack- 


Ch,  3)  THE  surety's  EQUITY  OF  SUBROGATION.  279 

ing,  repudiated  by  our  courts.  We  have,  indeed,  held  that  the  creditor 
could  not  tack  a  debt  not  secured  by  mortgagee  onto  his  mortgage 
debt ;  nor  could  he  tack  a  subsequent  mortgage  to  a  prior  one  against 
an  intervening  incumbrance.  But  it  has  not  been  decided  that  the 
mortgagor  could  not  tack  another  incumbrance  onto  that  which  he  had 
already  given,  and  that  this  would  not  be  vahd  against  an  implied  or 
equitable  incumbrance. 

On  the  whole,  we  are  of  opinion  that  neither  principle  nor  author- 
ity is  shown  to  require  the  reversal  of  this  judgment. 

In  this  opinion  the  other  Judges  concurred. 

Judgment  affirmed. 


DIXON  V.  STEEL  et  al. 
{Supreme  Court  of  Judicature,  Chancery  Division,  [1901]  L.  R.  2  Ch.  Div.  G02.) 

This  was  a  summons  by  a  married_womanjo_redeem  leasehold  house 
property  which  she  had  mortgaged  to  secure  a  deFt  oFTieFlmsband, 
secured  also  on  a  leasehold  house  of  the  husband.  The__defendants 
were  the  mortgagees _ and ^the  husband.  The  mortgagees  were  also 
j  u^ment  creilitQLLis  of  the  husband  in  respect  of  a  debt  not  covered  by 
the  mortgage.  They  had  obtained  equitable  execution  of  the  husband's 
interesTTn^his  mortgaged  property.  The  husband's  mortgaged  property 
had  been  sold  by  order  of  the  court  in  the^procecdihgs  to  enforce 
equitable  execution.  The  question  now  before  the  court  on  .further 
cohsideration_wa cj  whether  the  plainti£E.  was  entitled  to  have  the  whole 
of  the  sum  realized  taken  into  account  in  ascertaining  the  amount  of 
redemption  money,  or  whether  the  mortgagees  were  entitled  to  pay- 
ment  of  their  judgment  debt  and  costs,  so  that  the  balance  only  oLthe 
amount  realized  should  be  deducted  from  the  mortgage  debt  in  ascer^ 
taming  what  was  due.  The  facts  are  set  out  in  more  detail  in  the  judg- 
ment.' X  _ 

Cozens-Hardy,  J.  By  a  mortgage  dated  January  12,  1894,  John     \'£~^^ 
Dixon  mortgaged  certain  property  (A)  to  Thomas  Steel  to  secure  £225. 
and  interest.     By  a  mortgage   dated   March   20,   1896,   Mrs.   Dixon 
mortgaged  certain  other  property  (B)  to  Thomas  Steel  to  secure  £275. 
and  interest. 

By  a  mortgage  dated  August  5,  1896,  and  made  between  John  Dixon 
of  tHe^rst^art,JvIrs.  Dixon  "of  the  second  part,  and  Thomas  Steel  of 
theTETrd  part,  in  consideration  of  £500.  advanced  by  Thomas  Steel 
to  John  Dixon,  John  Dixon  and  his  wafe  jointly  and  severally  cove- 
iTanted  to  pay  the"~"£5"0n.  with  interest;  and  John  Dixon  as  to  property  ' 
A,  and  Mrs.  D^ixon  as  to  i>roperty  B,  charged  the  properties  with 
t'He^  £500.  and  interest.  And  Mrs.  Dixon  mortgaged  certam^  other 
property  (C)  to  Thomas  Steel  to  secure  the  £500.,  and  also  the  two 
sums  of"2^25.  and  £2757  secured  by  the  prior  mortgages. 

7  The  arguments  of  counsel  are  omitted. 


280  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY,      (Part    2 

The  i500.  advanced  on  this  security  had  been  paid  off,  but  the  deed 
was  used  again  as  security  for  a  sum  of  £500.  advanced  by~niomas 
Steel  on  April  20,  1898,  It  had  never  ceased  to  be  a  further  security 
for  the  £225,  and  £275. 

On  the  evidence  I  am  satisfied  that  Mrs.  Dixon  was  only  a  surety  for 
her  husband. 

OiiJ"une  13,  1899^  Messrs,  Steel,  Maitland  &  Steel,  who  were  judg- 
ment creHitors  of  John  Dixon,  obtained  pgi ^ J t^ bTp  'ex erji tiQP.  ,g^ ' " '^t 
him,  S£.fore  thisjate  they  had  been  informed  .that  Mxs^IiixQnjvvas 
a  suret^'^for  her  liusband. 

On  August  14,  1899,  Thomas  Steel  transferred  all  his  mortg-as^e^^ 
toMessrsT  Steel.  Maitlana  &  csteel!       '        ' 

"By  an  order  made  by  North,  J.,  on  December  2,  1899,  in  the  matter 
of  the  statute  27  &  28  Vict.  c.  112,  an  act  to  amend  the  law  relat- 
ing to  future  judgments,  statutes,  and  recognizances,  and  in  the 
matter  of  John  Dixon,  on  the  application  of  Messrs.  Steel,  Maitland 
&  Steel,  certain  inquiries  were  directed  to  ascertain  what  was  due 
under  the  judgment,  what  interests  in  land  of  the  said  John  Dixon 
had  been  delivered  in  execution,  and  what  liens,  charges,  and  incum- 
brances there  were. 

The  master  made  his  certificate,  dated  April  3,  1900,  and  found  that 
the  property  delivered  in  execution  was  an  equity  of  redemption  in 
property  A,  and  that  the  incumbrances  were  the  mortgages  of  January 
12,  1894,  and  August  5,  1896,  but  that  Mrs,  Dixon  claimed  to  bejarty 
to  the  mortgage  of  August  5,  1896,  as  surety  for  John  Dixpn. 

Pursuant  to  subsequent  orders,  the  property  was  sold  for  £375.  to 
one  Thomas  Stockdale,  who  was  authorized  to  pay  to  MessrsT~Steel, 
Maitland  &  Steel,  as  transferees  of  the  first  mortgage,  the  amount 
due  on  that  mortgage.  Messrs.  Steel,  Maitland  &  Steel  have  since 
received  the  balance  of  the  purchase  money,  £130.  4s.  Id.,  and  claim 
to  apply  it  towards  satisfaction  of  their  judgment  debt. 

This  action  was  commenced  by  Mrs.  Dixon  as  plaintiff  against 
Messrs.  Steel,  Maitland  &  Steel  and  John  Dixon  as  defendanfs~tQ~fe- 
deem  property  Cj,  and  the  only  question  is  whether  Messrs.  St^el, 
Maitland  &  Steel-'are  justified  in  applying  that  sum  towards  satisfac- 
tion of  their  judgment  debt,  or  whether  it  ought  not  to  go  in  relief 
of  Mrs.  Dixon's  mortgage. 
^  This  sum  represents  the  equity  of  redemption  in  A.  That  equity 
of_ redemption  was  charged  together  with  C  with  the  £.500.~  As  be- 
tween  A  and  C,  A  was  primarily  liable.  This  primary  liabiHty_cannot 
be  affected  by  the  subsequerit  incum'brance  created  by  the  delivery  of 
A  in  execution.  The  money  must  be  applied  in  partial  satisfaction 
of  the  £500.  secured  on  C,  the  surety's  property, 

p  The  case  thus  put  does  not  seem  to  present  much  difficulty.  But  it 
was  urged  by  Mr.  Martelli  in  his  very  able  argument  that  as  the  surety 
has  paid  nothing  her  right  has  not  arisen,  and  he  relied  upon  some 
observations  by  Wood,  V.  C,  in  South  v.  Bloxam,  2  H,  &  M,'  457, 


Ch.  3)  THE  surety's  equity  of  subrogation.  2S1 

in  support  of  this  contention.     It  is  necessary  to  consider  what  wa*  ^j^:X-^j^<^^,J»^-j 
decided  in  that  case. 

Arnold  mortgaged  (a)  and  (b)  to  Marcon  for  i2,800. ;  his  mother, 
Susannah  Arnold,  joining  as  surety  in  the  covenant  for  payment. 
After  the  surety's  death  Arnold  gave  a  further  charge  to  Marcon  on 
(a)  and  (b)  for  i600.  Subsequently  Arnold  mortgaged  (a)  to  the 
plaintiffs  to  secure  £2,000. 

In  March,  1853,  Marcon  commenced  an  action  against  the  defendant 
Bloxam,  the  surety's  executor,  upon  her  covenant  in  the  mortgage 
deed.  Before  the  defendant  pleaded,  Marcon  had  sold  (a)  for  a  sum 
less  than  was  due  on  the  first  mortgage.  He  sought  to  pay  off  his 
further  charge  of  £600.  out  of  this  sum.  The  defendant  succeeded  as 
to  the  £600.,  but  failed  on  other  points.  The  court  ordered  the  de- 
fendant to  pay  the  balance  of  the  debt  and  interest  and  costs,  and 
thereupon  Marcon  was  to  assign  (b)  to  the  defendant,  and  this  was 
done.  See  Marcon  v.  Bloxam  (1856)  11  Ex.  586.  The  defendant's 
own  costs  of  action  were  £658.  In  1859  the  defendant  received  £2,800. 
in  respect  of  (b),  being  the  amount  of  two  policies  on  the  mortgagor 
Arnold's  life.  The  plaintiffs  in  1863  filed  a  bill  claiming  to  have  the 
balance  of  the  policy  moneys  after  payment  of  the  first  mortgage 
marshaled,  so  as  to  make  good  pro  tanto  what  had  been  taken  from 
(a)  towards  payment  of  the  first  mortgage.  Wood,  V.  C,  held  the 
plaintiffs  entitled.  His  judgment,  so  far  as  material,  is  as  follows  (2 
H.  &  M.  462): 

"Upon  these  facts  the  usual  equity  of  marshaling  is  claimed  in  favor 
of  the  second  mortgagees,  who  insist  that  they  are  entitled  to  be  re- 
couped, out  of  any  balance  of  the  policy  moneys  remaining  after  satis- 
faction of  the  first  mortgage,  the  amount  which  was  realized  from 
the  chattels  and  applied  towards  payment  of  the  first  mortgage.  The 
plaintiffs  would  clearly  be  entitled  to  payment  out  of  this  balance  if 
the  whole  property  had  been  included  in  both  mortgages,  and  (the 
balance  being  less  than  the  sum  obtained  by  the  sale  of  the  chattels) 
the  same  right  arises  in  the  actual  circumstances  on  the  principle  of 
marshaling,  subject  to  any  right  which  may  arise  from  the  defend- 
ant's position  as  surety.  Now,  what  are  the  rights  of  a  surety?  His 
right  arises  as  soon  as  he  pays  the  debt  due  from  his  principal,  and  not 
before.  Until  such  payment,  the  fact  of  a  person  having  become 
surety  for  a  mortgage  debt  in  no  way  prevents  the  principal  from 
dealing  with  the  property  by  assignii|gf  it  to  a  second  mortgagee.  The 
surety's  right  is  not  like  a  charge  created  in  the  inception  of  the  deed 
and  to  arise  on  a  certain  contingency,  but  only  a  possibility  of  the 
principal  becoming  indebted  to  him  for  what  he  may  pay  towards  the 
debt,  and  for  any  costs  he  may  incur  by  reason  of  his  suretyship. 

"In  this  case  the  surety,  when  called  upon  to  pay,  disputed  his 
liability.  Of  course  he  was  justified  in  having  an  account  taken  of 
what  was  due  on  the  mortgage.  So  far  there  could  be  no  complaint 
of  his  conduct ;  but  he  went  further,  and  raised  other  questions  which 


■282  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY,       (Part    2 

occasioned  enormous  costs.  In  this  contest  he  partially  failed,  and 
did  not  succeed  in  reducing  the  claim  against  himself,  except  by  an 
amount  less  than  the  costs  incurred,  and  did  not  effect  any  reduction 
of  the  claim,  which  took  priority  over  the  second  mortgage,  except  by 
some  trilling  rectification  of  interest. 

"Upon  paying  the  debt  and  costs  of  the  action,  the  defendant  as 
surety  became  entitled  to  take  from  the  first  mortgagees  their  security 
for  principal,  interest,  and  costs ;  and  as  between  himself  and  the 
mortgagor  (if  there  had  been  no  second  mortgage),  the  mortgagor 
would  be  liable  to  repay  all  the  surety's  expenses,  and  probably  would 
not  have  been  entitled  to  redeem  the  security  without  making  such 
further  payment.  This  question  does  not  depend  on  the  principle  of 
Copis  V.  Middleton  (1S23)  T.  &  R.  224,  220.  29  R.  R.  73,  note.  There, 
when  the  bond  was  paid,  there  was  no  security  for  the  surety  to  take ; 
but  that  is  no  reason  why,  when  there  is  a  security,  the  principal  should 
be  allowed  to  get  back  the  property  without  first  paying  the  ex- 
penses which  his  surety  has  incurred. 

"As  against  a  second  mortgagee  the  case  is  very  different.  The 
debt  recovered  in  the  action  was  less  than  ioOO.  The  costs  paid  by  the 
defendant  were  nearly  ^1,100.,  of  which  iG58.  were  costs  of  his  de- 
fense. As  regards  these  costs  of  defense,  I  do  not  think  that  the  de- 
fendant can  charge  any  part  of  them  against  the  second  mortgagees. 
They  became  a  debt  from  the  mortgagor  to  the  surety,  but  the  pos- 
sibility of  such  a  debt  arising  at  a  future  time  does  not  prevent  the 
mortgagor  from  executing  an  eft'ectual  second  mortgage.  As  to  the 
costs  paid  to  the  plaintiff  in  the  action,  it  is  clear  that  the  defendant 
cannot  be  allowed  to  charge  any  costs  which  were  not  incurred  for  the 
benefit  of  the  estate  and  all  persons  interested  in  it  after  the  first  mort- 
gagees." 

This  only  decided  that  the  surety  was  not  entitled  to  tack  to  his 
security  as  against  a  second  mortgagee  costs  mcurred  in  resistmg  the 
creditor's  claim,  except  so  far  as  they  were  properly  incurred  for  the 
benefit  of  the  estate.    It  does  not  seem  to  me  to  hnvp  any  hparincr  ^n 


tlie_present_case.  The  observations  of  Wood,  V,  C,  must  be  read  with 
reference  to  the  particular  point  with  which  he  was  dealing.  It  cer- 
tainly is  not  the  law  that  a  surety  has  no  rights  until  he  pays  the  debt 

.    due  from  his  principal, 

/       I  must,  therefore,  declare  that  the  £130._4s.  Id.  is  to  be_takenjil_re- 
duction  of  the  £500.  mortgage  debt. 

I  understand  that  tlie^figures  are  agreed,  except  as  to  this  sum, 
and  that  a  proper  tender  was  made  by  the  plaintiff. 

The  defendants  other  than  John  Dixon  must  pay  the  costs  of  the 
action.! 

t  Accord:  Drew  v.  Lockett,  32  Beav.  499  (1863):  Forbes  v.  Jackson,  19  Ch. 
Div.  615  (1882);  also  National,  etc.,  Bank  v.  Silliman,  05  N,  Y.  475  (1875), 
post.  p.  283. 


Ch.  3)  THE  surety's  equity  of  subrogation.  283 

NATIONAL  EXCHANGE   BANK  OF  LANSINGBURGH   v. 
SILLIMAN  et  al. 

(Commission  of  Appeals  of  New  York,  1875.    65  N.  Y.  475.) 

^Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  Third  Judicial  Department,  affirming  a  judgment  in. favor  of 
plaintiff  entered  upon  a  verdict. 

This  action  was  brought  against  the  defendants  as  second-  in4orsers 
of  a  note  made  by  E.  Babcock,  on  or  about  May  19,  1864,  payable  to 
the  order  of  S.  E.  Babcock,  and  indorsed  by  him.  The  indorsement  of 
the  defendants  was  in  their  firm  name,  of  Silliman,  Matthews  &  Co.^  , 
The  answer  admits  the  making  and  indorsement  of  the  note,  but  denies^ 
the  other  allegations  of  the  complaint.  It  also  alleges  that,  at  the 
time  of  the  commencement  of  the  action,  E.  Babcock  and  S.  E.  Bab- 
cock, the  maker  and  indorser,  transacted  business  and  kept  an  ac- 
count with  the  plaintiff,  and  that  during  a  greater  part  of  the  time  in- 
tervening between  May  19,  1864,  and  the  commencement  of  this  action, 
and  at  the  maturity  of  the  note,  the  plaintifiLlieldjiecurities.  pledged  to 
it  by  E.  Babcock  and  S.  E.  Babcock,  as  collateral  securities  for  all 
mbneys  a(l\  anccd  to  them  upon  business  paper,  of  which  the„.note  in 
litigation  was  a  part.  It  was  further  set  forth  that,  after  the  maturity 
of  the  note,  the  plaintiff  had  sufficient  funds  in  its  possession  be- 
longing to  the  Babcocks  to  pay  and  satisfy  the  note  and  all  other 
indebtedness  due  from  them,  which  it  was  its  legal  duty  to  apply  to  such 
indebtedness,  and  to  discharge  the  defendants  from  their  liability,  and 
the   defendants    were    accommodation    indorserSj^  receiving    no    con- 


sideration or  benefit, trom  their  indorsements.  v 

It  appeared,  at  the  trial,  that  previous  to  the  opening  of  an  account  ^  r^^^^^ 
with  the  plaintiff's  bank,  and  obtaining  loans  therefrom,  the  Babcocks 
deposited  collaterals  belonging  to  Armena  Babcock,  wifeo?~ET' Bab- 
cock,  and  mother  of  S^.  E.  Babcock,  as  security  for  the  transactions 
between  the  parties.  There  was  a  dispute  as  to  whether  the  collaterals 
were  given  to  secure  loans  or  discounts,  or  whether  no  discretion  what- 
ever was  given  on  this  subject.  The  evidence  bearing  on  this  point 
is  stated  in  the  opinion. 

After  thejiote  in  litigation  was  discounted,  and  before  its  maturity, 
viz..  March  Te.  1864.  th"e"Dlaintiff  purchased  of  the  firm  of  I.  E.  &  T.  C. 
Spicer  &  Co.  a  note  made  by  S.  E.  Babcock  and  indorsed  Ev""E..  .Bab- 
cock^ which  was  pasTdue,  and  at  the  same  time  executed  tQ_the._^icers 
an, agreement  in  writing,  wfiereby,  after  reciting  the  purchase  of  the 
nol;e__of$300,  dated  December  23,  1863,  it  promised  to  pay  the  Spicers 
the  sum  oF$250"  and  interest  thereon,  provided  the  said  bank  collects 
tlie~wHoTe~arribunt  of  the  said  note,  and  if  only  a  portion  of  the  amount 
due  should  be  collected,  then  it  was  to  pay  Spicer  &  Co.  such  portion 
of  that  amount  as  $250  bears  to  $300,  the  costs  and  expenses  of  col- 
lection being  deducted  before  distribution. 


284  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2' 

The  court  held  that  a  balance  of  moneys  realized  from  a  sale  of 
the  collaterals,  amounting  to  $305.29,  besides  interest,  shoiildjbe  aj>- 
pHed  pro  rata  upon  the  Spicer  note  and  that  in  litigation,  and,  under 
exception,  directed  a  verdict  in  favor  of  the  plaintiffs  for  the  sum 
of  $256. 5G,  to  which  defendants'  counsel  duly  excepted. 

Other  exceptions  taken  in  this  case  are  sufficiently  referred  to  in  the 
opinion.* 

DwiGHT,  C.  The  leading  question  in  this  cause  concerns  the  right  of 
the  defendant  to  insist  that  the  proceeds  of  certain  collateral  securities 
held  by  the  plaintiff  shall  be  applied  in  their  favor,  in  pfefefHTce  tO  a 
note  which  the  plaintiff  had  purchased  after  maturity.  The  argument 
of  the  defendants  is  that  the  collaterals  were  deposited  as  a  security  for 
loans  and  discounts  made  to  the  Babcocks  by  the  bank,  and  cannot  be 
applied  (certainly  as  between  themselves  and  the  plaintiff)  to  the  pay- 
ment of  a  note  purchased  after  maturity  and  dishonor.  They  urge  that 
the  collateral  securities  were  given  solely  to  secure  loans  and  discounts 
made  to  the  Babcocks,  and  therefore  cannot  be  used  to  pay  notes  pur- 
f-f^i     f    v^ chased  after  they  were  due. 

r*  •  '  '^^^  evidence  bearing  upon  the  use  to  be  made  of  the  collaterals 
5^.xvi  *^^  is  quite  meager.  The  cashier  of  the  plaintiff  testified  that  he  re- 
ceived the  collaterals  before  any  loans  were  made,  and  that  they  came 
from  Armena  Babcock,  wife  of  the  maker  and  mother  of  the  first  in- 
dorser  of  the  note.  They  consisted  of  several  mortgages  upon  canal 
boats,  pumps  and  fixtures.  The  purpose  was  stated  in  the  mortgages, 
but  it  was  not  disclosed  in  the  evidence.  The  question  thus^ arises 
whether,  in  the  absence  of  evidence  bearing  "ijpoirTHe"  intent  of  the 
psfrties,  the  presumption  is  that  the  securities  were  given  to  cover 
all  clainTs  which  the  bank  might  in  any  manner  acqujre,  or  only  such 
as  were  in  some  way  beneficial  to  the  Babcocks?  It  seems  to  rne  tHat 
the  latter  view  is  the  correct  one.  The  collaterals  were  deposited  by 
the  wife  and  mother  of  the  persons  primarily  liable.  She  herself  held 
the  position  of  surety  towards  them.  It  is  reasonable  to  suppose  that 
by  placing  the  property  with  the  bank  she  intended  to  render  a  ser- 
vice to  her  relatives.  They  might  receive  substantial  aid  by  loans  and 
discounts.  Of  what  possible  benefit  could  it  be  to  the  Babcocks  to 
have  the  bank  buy  their  paper  after  maturity  ?  What  reason  can  be 
suggested  why  Mrs.  Babcock  should  sacrifice  her  property  to  protect 
the  bank?  The  Spicers,  holders  of  the  dishonored  note,  had  no  securi- 
ty, and  might,  of  course,  have  instantly  pressed  for  the  payment.  So 
could  the  bank  after  its  purchase.  The  plaintiff  asks  us  to  presume  that 
the  object  of  Mrs.  Babcock  was  to  devote  her  property  to  the  payment 
of  a  debt  in  its  hands,  under  a  transaction  from  which  her  relatives 
could,  apparently,  derive  no  benefit.  This  presumption  is  so  unnatural 
and  improbable  that  I  do  not  see  that  it  can  be  entertained. 
Bfc-WC/^   A       There  is,  however,  another  objection  to  the  plaintiff's  right  to  apply 

lltK*JU^itic,nn,j  •  The  arguments  of  counsel  are  omitted. 


Ch.  3)  THE  surety's  equity  of  subrogation.  285 

the  proceeds  of  the  coUateralsjto  the.  Spicer  claim.  The  defendants, 
as  indorsers,  according  to  general  principles  of  law,  being  sureties, 
were  at  once  entitled  to  be  subrogated  to  the  claim  of  the  plaintiff. 
Their  right  to  subrogation  accrued  as  soon  as  their  liability  attached, 
as  the  collaterals  became  a  trust  fund  for  the  payment  of  the  note  on 
which  they  were  indorsers.  Butler  v.  Birkey,  13  Ohio  St.  514;  Ohio 
Life  Ins.  Co.  v.  Ledyard,  8  Ala.  866 ;  Roberts  v.  Colvin,  3  Grat.  (Va.) 
358;  Agnew  v.  Bell,  4  Watts  (Pa.)  31;  Hays  v.  Ward,  4  Johns.  Ch. 
123,  8  Am.  Dec.  554.  The  rule  must  be  applied  in  favor  of  indorsers 
as  well  as  other  sureties.  Bennett  v.  Cook,  45  N.  Y.  268.  In  that 
case,  a  holder  of  a  promissory  note,  having  a  collateral  security  in  his 
possession,  was  held  legally  bound  to  apply  it  in  favor  of  the  indorser 
against  whom  he  enforced  his  claim.  See,  also,  Vail  v.  Foster,  4  N.  Y. 
312.  X  ^,yijitt{^^*'^ 

The  only  doubt  that  can  arise  in  the  case  at  bar  is  whether  the  de- ^ff^  vtJ^  vJy  ^ 
fendants  can  insisTlSn  a  priority  of  application  of  the  proceeds  of  the  l-W-'W 
cqllaterals7  or  whether  they  are  only  entitled  to  share  in  them,  pari 
passu,  with  the  plaintiff  as  holder  of  the  Spicer  note.  I  ihink  that  the 
presumption  is  that  the  equity  of  a  surety  attaches  to  the  trust  fund 
a<^  .snon7ag_.^hp"T"nic;f  rplatTorTT?  rrpated,  and  that  the  burden  of  proof  is 
on  any  one  who  asserts  the  contrary  to  establish  it.  Undoubtedly  an 
arrangement  might  be  made  whereby  the  right  of  subrogation  might 
be  qualified  or  modified  by  agreement,  so  that  subsequent  sureties, 
on  wholly  different  and  later  claims,  might  participate  in  the  benefit 
of  collateral  securities.  This  would  not  be  the  ordinary  rule,  and 
some  evidence  would  be  required  to  establish  its  existence  in.  a  par- 
ticular case.  The  same  rule  must  be  applied  to  a  creditor  making 
subsequent  advances ,  to  the  debtor  who  deposited  the  collaterals ; 
while  as  between  him  and  the  debtor,  they  might  be  applied  to  all  the 
claims  ratably,  yet  as  to  the  surety  they  could  not  be,  unless  he  knew, 
or  had  reason  to  know,  that  such  was  the  fair  intent  of  the  transaction. 
The  ordinary  interpretation  of  the  dealings  of  the  parties  would  be  that 
the  surety,  when  he  undertook  his  liability,  acquired,  in  equity,  a  lien 
upon  the  fund,  which  the  creditor  could  not  displace.  No  evidence 
was  offered  by  the  bank  that  the  defendants  knew  or  assented '  to  a 
transac"tion~so  entirely  different  from  a  loan  as  the  purchase  of  the 
overdue  Spicer  note,  and,  accordingly,  on  general  principles  of  law, 
they~must  be  deemed  to  have  a  superior  claim  in  equity  to  the  Babcock 
collaterals.  It  is  not  necessary  to  contend  that  these  rules  would  "be 
applicable  if  the  collaterals  were  deposited  as  security  for  one  trans- 
action consisting  of  several  parts  or  branches.  In  that  case  it  may  be 
that  there  are  no  superior  equities,  and  that  the  collaterals  must  be 
applied  to  the  entire  indebtedness.  This  was  so  held  in  Farebrother  v. 
Wodehouse,  23  Beavan,  18.  The  case  was  placed  distinctly  on  the 
ground  that,  at  the  very  time  that  the  surety  entered  into  his  obligation, 
there  was  a  loan  of  two  sums  by  the  same  creditor  to  the  same  debtor, 
of  which  the  suretv  was  made  aware.    The  case  at  bar  would  resemble 


286  THE   EQUITABLY   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

it  if  it  should  be  supposed  that  a  number  of  notes  were  discounted  at 
one  time,  and  on  one  of  them  there  was  an  indorser,  and  on  others 
none,  and  the  indorser  knew  all  the  facts;  even  then  the  doctrine  of 
tacking  would  need  to  be  invoked  to  shut  out  the  surety.  Whether  that 
could  be  applied  in  our  law  I  need  not  consider.  What  now  is  claimed 
is  that  tlie  rule  of  priority  must  prevail  where  the  transactions  are 
disHnct  and  unconnected,  and  that  where  they  are  apparently  separate. 
the  burden  of  proof  is  on  the  creditor  to  show  their  connection,  and 
thus  to  overcome  the  rule  of  priority. 
Ji/iinji^,^^  ^  The  principles  thus  stated  are  sustained  by  the  authorities.  In 
Bowker  v.  Bull,  1  Sim.  (N.  S.)  29,  it  appeared  that  A.  had  mortgaged 
his  estates  to  B.  to  secure  the  sum  of  i6,000.  His  daughters,  as 
sureties,  also  mortgaged  their  property  to  secure  the  same  loan.  There 
was  a  statement  in  the  deeds,  without  prejudice  to  any  of  the  rights 
of  the  mortgagee,  that,  as  between  A.  and  the  daughters,  A.  and  his 
estates  were  primarily  liable  for  the  debt.  Six  years  afterwards  A. 
mortgaged  the  property  embraced  in  the  first  mortgage  to  B.,  to  se- 
cure an  additional  loan  of  £700.  It  was  held  that  A.  was  not  entitled , 
•as  against  A.'s  daughters,  to  tack"  the  second  mortgage  to  the  ^rst, 
buVthat  the  daughters  were  entitled  to  redeem  the  first  mortgage  on 
payment  of  i6,000.  What  the  daughters  insisted  upon  waslTiafT^f 
fhey  paid  off  the  first  mortgage  debt,  they  should  be  subrogated  to 
B.'s  rights  without  reference  to  the  second  loan,  and  the  court  held 
that  they  were  right.  The  court  said :  "On  the  part  of  the  children  it 
was  contended  that  Bowker  (the  creditor)  must  be  postponed  to  them 
as  far  as  relates  to  the  latter  charge,  and  I  think  that  they  are  right. 
The  children  are,  according  to  what  appears  on  the  face  of  the  deed, 
mere  sureties  for  their  father.  Bowker,  when  he  took  his  further 
charge,  in  1849,  had  full  notice  of  this,  and  he  could,  therefore,  only 
take  subject  to  such  rights  as  the  daughters  had  acquired  by  reason  of 
their  having  concurred  in  the  former  deed.  Now,  it  is  quite  clear  that 
a  surety  paying  off  the  debt  of  his  principal  is  entitled  to  a  transfer  of 
all  the  securities  held  by  the  creditor,  in  order  that  he  may  make  them 
available  against  the  debtor,  as  the  original  creditor  might  have  done. 
On  these  grounds  the  daughters  were  certainly  entitled,  on  paying 
off  the  £6,000.  mortgage,  to  have  all  the  securities  comprised  in  the 
deed  of  the  3d  of  March,  1843,  made  over  to  them,  in  order  to  enable 
them  to  reimburse  themselves  out  of  their  father's  separate  property, 
comprised  in  that  deed,  whatever  portion  of  the  £6,000.  they  might 
have  been  obliged  to  pay ;  and  this  is  a  demand,  certainly,  prior  in 
point  of  date  to  the  last  mortgage.  It  was  urged  at  the  bar,  on  be- 
half of  Bowker,  that  this  right  of  a  surety  was  only  a  potential  equity, 
which,  though  it  may  be  asserted  by  the  party  himself,  yet  cannot 
bind  third  persons.  But  I  cannot  agree  to  this.  The  equity  gives  to  the 
surety  a  right  to  call  for  the  transfer  of  the  securities,  and  so  binds 
those  securities,  into  whatever  hands  they  may  come,  with  notice  of  the 
charge."    Page  34. 


Ch.  3)  THE  surety's  equity  of  subrogation.  28T 

It  wjll  be  observed  that  the  leading  points  in  this  argument  are 
thajjlie  two  transactions  are  distinct  and  that  the  creditor,  in  making 
his  jidvances  upon  the  second  mortgage,  was  aware  of  the  rights  of  the 
surety.  This  fact  also  exists  in  the  case  at  bar,  as  the  bank  knew  that 
the  defendants  were  indorsers  and  that  the  property  deposited  by  Mrs. 
Babcock  was  held  as  collateral.  This  conclusion  might  be  modified  in 
England  under  the  special  rules  applicable  to  the  tacking  of  mort- 
gages. It  may  plausibly  be  argued  there  that,  as  it  is  a  recognized  rule 
of  law  that  a  mortgagee  may  thus  tack  a  second  mortgage  to  the  first, 
a  surety  on  the  first  mortgage  tacitly  consented  to  such  an  act  of  tack- 
ing, and  therefore  could  not  insist  that  the  first  mortgage  should  be 
applied,  under  the  doctrines  of  subrogation,  to  his  relief.  Such  was, 
apparently,  the  view  in  Williams  v.  Owen,  13  Sim.  597.  Indepen- 
dent of  that  doctrine,  the  rule  is  now  well  settled  in  favor  of  the 
surety's  priority.  See  Pearl  v.  Deacon,  24  Beavan,  186,  s.  c.  on  appeal 
1  De  Gex  &  Jones,  461.  In  this  case  certain  landlords  advanced  money 
to  their  tenant  on  a  joint  note  of  himself  and  a  surety.  They  after- 
wards took  collateral  security  for  this  sum  by  an  assignment  of  the  fur- 
niture of  the  tenant  by  way  of  mortgage.  They  then  proceeded  to  dis- 
train upon  the  furniture  for  rent  due.  It  was  held  that  this  act  dis- 
charged the  surety.  This  was  no  more  than  holding  that,  if  the  securi- 
ty had  been  appropriated  to  a  particular  debt,  it  could  not  be  diverted 
by  the  creditor  to  pay  any  other  claim  which  he  might  have. 

This  case,  steering  entirely  clear  of  any  doctrine  of  tacking,  as  ap- 
plicable to  mortgages — an  anomaly  in  the  law,  and  recently  abolished 
(see  37  &  38  Vict.  c.  78,  §  7,  A.  D.  1874)— shows  the  rule  upon  its 
merits  as  enforced  in  favor  of  sureties.  Reference  should  also  be 
made  to  Drew  v.  Lockett,  32  Beav.  499,  9  Jur.  (N.  S.)  786,  and  Smith 
v.  Bloxam,  2  H.  &  M.  457.  The  first  of  these  cases  involved  the 
question  of  the  priority  of  the  surety  to  a  creditor  who  had  made  subse- 
quent advances  with  knowledge  of  the  relations  of  the  parties.  The 
court  laid  down  the  general  rule  that  the  surety  is  entitled  to  be  sub- 
rogated at  once  to  any  security  held  by  the  creditor,  and  only  admitted 
an  exception  when  the  special  facts  of  the  case  showed  that  the  surety 
knew  that  if  the  mortgagee,  the  payment  of  whose  debt  he  guaranteed, 
advanced  any  further  money  to  the  mortgagor  on  the  security  of  the 
same  property  he  would  be  entitled  to  tack  the  further  advances  to  his 
original  claim.  I  have  found  no  case  defeating  or  qualifying  the 
surety's  right  of  subrogation,  unless  it  proceeded  on  the  theory  of  tack- 
ing and  the  knowledge  by  the  surety,  either  expressly  or  by  implication, 
that  the  right  to  tack  existed.  In  Smith  v.  Bloxam,  the  right  of  the 
surety  to  subrogation  was  fully  recognized,  though  the  court  declined 
to  extend  it  so  far  as  to  include  as  against  a  subsequent  mortgagee 
the  costs  of  a  personal  action  against  the  surety  unsuccessfully  de- 
fended  by  him.  rife'" 

The  result  of  the  whole  discussion  is  that,  as  far  as  appears  in  the  <^'  "     '^"'^ 
case  at  bar,  the  plamtifif  warBourid  to  hold  the  collateral  security  sup- 


288  THE  EQUITABLE   AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

plied  by  the  Cabcocks  in  trust  for  the  defendants,  who  had  a  legal 
priority  over  the  plaintiff's  claim  under  the  Spicer  note.  lL_Btas_in- 
cumbent  on  the  plaintiff,  to  avoid  this  result,  to  show  that  it  was  within 
the  contemplation  of  the  parties  that  the  security  should  be  appiied 
ratably  to  the  payment  of  that  note.  Assume  that  the  bank  had  not 
bought  the  Spicer  note;  it  is  then  entirely  clear  that  the  defendants 
would  have  been  entitled  to  enough  of  the  Babcock  collaterals  to  have 
paid  off  the  entire  claim  against  themselves.  Then  suppose,  while 
matters  are  in  this  condition,  the  Spicer  note  is  purchased ;  must  not 
the  bank  show  affirmatively  its  right  thus  to  cut  down  and  reduce  the 
claim  of  the  defendants  to  subrogation  which  had  already  apparently 
attached  to  the  entire  amount  of  their  debt?  The  cashier  of  the  bank 
testified  that  the  Babcocks  gave  him  no  direction  in  what  way  to  apply 
the  money  received  from  the  collaterals,  and  that  there  was  no  direc- 
tion given  as  to  their  application  in  any  form. 

Under  this  state  of  facts  the  presumption  must  be,  in  the  absence  of 
proof,  that  the  ordinary  right  to  subrogation  attached  to  the  defend- 
ants' note  as  it  was  discounted.  The  plaintiff  having  made  no  such 
proof,  the  court  below  erred  in  the  result  to  which  it  arrived,  and  its 
judgment  should  be  reversed.  All  concur  on  the  ground  first  dis- 
cussed, without  expressing  any  opinion  upon  the  second  ground. 

Judgment  reversed.^ 


CROFT  V.  MOORE. 

(Supreme  Court  of  Pennsylvania,  1S40.    9  Watts,  451.) 

Error  to  the  Common  Pleas  of  Cumberland  County. 
Tohn  Moore  against  GfPnrg'^  C^-^^t      This  was  a  questionof  sub- 
stitution, arisingout  of  the  following  facts : 

t5*  un  the  14th  of  May,  1830,  John  D.  Mahan  executed  a  promissory 

note  to  George  Croft,  Samuel  Galbraith  and  John  Moore,  for  the 
payment  of  $900  in  four  months,  who  indorsed  it  to  the  Harrisburg 
Bank,  by  whom  it  was  discounted.  A  suit  was  brought  upon  this  note 
against  them,  and  judgment  obtained  in  1831.  An  execution  was 
issued  and  the  money  was  paid  to  the  sheriff  by  John  Moore  and 
Samuel  Galbraith.  Afterjhg_i2a>;ment  of  it,  John  Moore  obtained  a 
rule  upon  George  Croft,  to  show  cause  w^hy  he  should  not  be  subsH^ 
tuted  as  plaintiff  to  the  amount  of  the  one-sixt^  part  of  the  jjjd^ment 
which  he  paid  for  him. 

,.x>K^  This  waj  resisted  by  George  Croft  on  two  grounds:    Fjiat,  that 

substitution  was  not  a  proper  remedy  as  between  sureties,  but  only  as 
between  principal  and  surety ;  and,  secondly,  that  in  consequence  of  the 
relation  which  existed  between  John  Moore  and  John  D.  Mahan,  the 

^  9  On  constructive  notice  to  purchaser,  arising  from  the  statute  giving  the 

", -'^^\.KfT  h         right  of  subroga<^lon  under  a  judgment,  see  Downey  v.  Washburn,  79  Ind. '242 
'         '  (1S81). 


Ch.  3)  THE  surety's  equity  of  subrogation.  289 

principal,  as  partners,  the  former  had  not  such  an  equity  as  entitled  him 
to  substitution.  The  facts  appeared  to  be  that  after  the  note  was  dis- 
counted by  the  bank  the  proceeds  were  paid  to  John  Moore  upon  the 
check  of  Croft,  Galbraith  and  Moore,  the  indorsers;  that  John  D. 
Mahan,  Jacob  M.  Haldeman  and  John  Moore  were  partners  in  the 
iron  business  at  the  time,  and  that  the  proceeds  of  the  note  were  placed 
to  the  credit  of  John  D.  Mahan,  upon  his  stock  account,  he  being  de- 
ficient in  the  amount  which  he  had  agreed  to  bring  into  the  partner- 
ship, y       .^^    y^ 

Hepburn,  President  [of  the  Common  Pleas]  :  "The  facts,  so  far  as  ^<^^'*"^^ 
we  are  capable  of  understanding  them  in  the  present  application,  make 
it  the  ordinary  one  of  a  joint  surety,  having  paid  the  debt  to  their 
common  creditor,  askmgTo'  be  subrogated  to  the  rights  of  that  creditor 
intlTe  judgment  paid  by  him  against  his  co-surety,  who  paid  nothing. 
That  he  has  such  right  is,  I  think,  clearly  settled  in  the  case  of  Cay- 
ler  V.  Ensworth,  6  Page,  32,  Amer.  Jur.  No.  41,  p.  192.  "Joint  sureties 
are  bound,  as  between  themselves,  to  contribute  equally  to  discharge  the 
debt  for  which  they  are  jointly  holden;  and  if  one  of  them  pays  the 
whole,  he  is  in  equity  subrogated  to  all  the  rights  and  remedies  of  the 
original  creditor  for  the  payment  of  his  debt,  not  only  as  against  the 
principal  debtor,  but  also  as  against  the  co-sureties,  to  the  extent  they 
are  equitably  bound  to  contribute."  Nothing  more  is  asked  for  here, 
and  we  think  the  rule  should  be  made  absolute.^"  Y 

Gibson,  C.  J.     As  a  remedy  between  surety  and  principal,  or  be-  j^/'/<yy.W.-»/-»^ 
tween  sureties  themsely,e?^  subrogation  to  the  ownership  of  the  security  ^,.^-,,;fvr. ^--^  ''^ 
has  advantages  which  must  always  incline  courts  of  equity  to  fayor  it.  ^fy^X^^'^^^*' 
As  each  co-surety  is  separately  liable  at  law  for  no  more  than  an  ali-  -^^  *<" 
quot  part  to  one  who  has  paid  the  whole,  an  action  for  contribution  has 
this  disadvantage,  that  it  leaves  him  who  has  paid  more  than  his  part 
exposed  to  a  possibility  of  loss  from  insolvency  of  any  one  of  the  con- 
tributors, which  a  bill  in  equity  does  not.    1  Bos.  &  Pul.  268 ;   Peter  v. 
Rich,  1  Ch.  R.  45 ;   1  Ch.  R.  19.    Besides,  as  was  said  in  Craythorne  v. 
Swinburne,  14  Ves.  164,  separate  actions,  where  the  contributors  are 
numerous,  must  be  attended  with  many  difficulties.     All  this  may  be 
avoided  by  substituting  the  surety  for  the  creditor,  and  enabling  him, 
by  means  of  the  control  which  the  ownership  of  the  security  gives    -     .  , 

him,  to  apply  it  so  as  to  divide  the  burden  equably  among  all.     The  r  ^^^>^^***'^  7 
doctrine  of  assignment,  however,  is   rejected  by   Mr.   Justice   Story  r**  *  ^^."^.^ 
(Eq.  Juris.  472,  note  2),  who,  on  the  authority  of  Gammon  v.  Stone, ^"■^'^'^■*^^ 
1  Ves.  339,  and  Wolfley  v.  Sparks,  2  Ves.  529,  contest  the  position  of 
Chancellor  Kent  in  Cheesebrough  v.  Millard,  1  Johns.  Ch.  (N.  Y.) 
413,  7  Am.  Dec.  494,  and  Avery  v.  Petten,  7  Johns.  Ch.  (N.  Y.)  211, 
that  a  surety  who  has  paid  the  debt  is  entitled  to  an  assignment  of  the 
security  against  his  principal  or  co-surety.     The  Chancellor  relied  on 

10  The  argument  of  counsel  is  omitted, 
Hen.Sur,— 19 


290  THE   EQUITABLE   AND   LEGAL   raGHTS   OF  THE   SURETY.       (Part    2 

^Morgan  v.  Seymour,  1  Ch.  R.  150,  3  Ch.  R.  64,  and  Ex  parte  Crisp, 
1  Atk.  35,  in  which  the  point  was  directly  adjudged,  to  which  he  would 
doubtless  have  added  Glossop  v.  Harrison,  Cooper,  61,  had  it  been 
known  in  this  country  at  the  time,  but  it  was  made  only  a  few  months 
before.  In  that  case  the  surety  of  a  receiver  of  the  opera  house,  who 
had  advanced  money  to  his  principal,  which  the  principal  had  mis- 
applied by  paying  it  to  the  tradesmen  of  the  house,  instead  of  the 
bankers  of  the  trustees,  was  let  in  on  a  balance  due  to  the  receiver 
on  the  settlement  of  his  account.  Now,  though  there  was  no  actual 
assignment  to  him  of  the  tradesmen's  bills,  it  was  by  being  put  in 
their  place,  and  not  in  the  place  of  the  receiver,  who  had  assigned  away 
his  interest  in  the  fund,  that  the  surety  was  relieved.  To  have  put 
him  in  the  receiver's  place  after  he  had  parted  with  his  ownership 
would  have  been  to  do  nothing;  and  to  put  him  in  the  tradesmen's 
place  would  have  been  to  do  no  more,  if  the  previous  payment  of 
their  bills  had  been  considered  an  extinguishment  of  them  in  equity  as 
well  as  at  law. 
v?f.7^,vv^  A  Xow  the  entire  ground  of  the  decisions  in  the  elder  Vesey's  Re- 
■^"'^^wvt/'  ports,  on  which  Mr.  Justice  Story  relies,  is  the  technical  effect  of  pay- 
ik^^V*-^  ment  at  law,  from  which  it  was  inferred  that,  as  the  principal  or  co- 
''■>  surety  might  plead  it  in  bar,  the  assignment  of  an  exploded  security 

would  be  nugatory.  But  this  last  case  proves  that  what  is  very  pay- 
ment  at  law  may  not  be  payment  at  all  in  equity ;  and,  where  ttiat  is 
tlie  case,  Tt"ir shown  "by"  Parsons  v.  Briddock7^Vern.  COS,  that  an  as- 
signment of  the  security  will  be  enforced.  In  that  case,  sureties,  who 
had  paid  the  debt  when  separately  sued,  were  decreed  to  have  an 
assignment  of  a  judgment  obtained  against  special  bail  of  the  principal, 
who  had  also  been  separately  sued,  on  the  ground  that  bail  stand  in 
the  place  of  their  principal.  Now,  though  the  original  bond  was  joint 
and  several,  yet  payment  of  the  surety's  several  bond  would,  at  law, 
equally  discharge  the  several  bond  of  the  principal;  and,  had  it  been 
thought  that  the  surety's  payment  had  discharged  it  also  in  equity,  the 
same  objection  would  have  lain,  and  doubtless  would  have  been  made, 
to  an  assignment  of  the  judgment  against  the  principal's  bail,  as  was 
made  in  Wolfley  v.  Sparks,  that  the  law  court  would  be  bound  to  set 
aside  any  execution  which  the  sureties  might  issue  on  it.  If  payment 
by  one  extinguishes  the  debt  as  to  all,  it  necessarily  extinguishes  all  the 
securities  given  for  it,  whether  joint  or  several;  and  it  is,  therefore, 
no  answer  to  the  preceding  case  to  say  that,  as  the  bond  was  sued 
severally,  the  judgment  against  the  principal  debtor's  bail  was  col- 
lateral, and  that  it  is  not  disputed  that  a  surety  is  entitled  to  all 
the  creditor's  securities  of  that  stamp.  Either  the  point  was  errone- 
ously decided,  or  payment  has  not  the  extreme  effect  ascribed  to  it. 

It  is  indeed  asserted  by  Mr.  Theobald,  in  his  treatise  on  the  Law 
of  Principal  and  Surety  (page  259),  on  what  authority  I  know  not, 
that  "it  is  now  held  that  sureties  are  entitled  to  stand  in  the  place  of 
the  creditor,  and  to  have  the  same  remedies  as  he  would  have  had,  only 


Ch.  3)  THE  surety's  equity  of  subrogation.  291 

in  respect  of  collateral  securities,  and  that  the  payment  of  a  specialty 
debt  by  the  surety  makes  him  only  a  simple  contract  creditor" — an  as- 
sertion which  is  incompatible  with  what  he  had  said,  in  the  beginning 
of  the  same  chapter,  that  "a  surety  is  entitled  to  every  remedy  which 
the  creditor  has  against  the  principal  debtor."  That,  however,  was  an 
assertion  of  counsel,  which  he  erroneously  attributed  to  the  Lord  Chan- 
cellor, but  which  bears  so  directly  on  the  point  at  issue  as  to  have 
induced  Mr.  Justice  Story  to  strip  it  of  its  pseudo- judicial  character. 
But  the  question  may  still,  perhaps,  be  considered  as  an  open  one, 
wherever  there  is  a  formal  administration  of  equity,  though  it  must 
be  admitted  that  the  weight  of  authority  is  on  the  side  of  Chancellor 
Kent.  Nor  can  it  be  disputed  that  the  reason  given  for  the  two  de- 
cisions on  the  other  side  is  more  technical  than  solid.  If,  as  seems  to 
be  proved  by  Parsons  v.  Briddock  and  Glossop  v.  Harrison,  payment 
at  law  may  leave  the  demand  a  subsisting  one  in  equity,  it  is  incon- 
ceivable that  the  same  power  which  can  restrain  a  plaintiff  from  suing 
at  law  for  an  inequitable  demand  may  not  restrain  a  defendant  also 
from  setting  up  an  inequitable  defence.  A  much  more  plausible  rea- 
son is  that  suggested  by  Mr.  Justice  Story,  that,  where  the  parties  are 
all  already  before  the  court,  the  Chancellor  may  as  well  do  justice  to 
them  at  once  by  a  direct  decree.  >  P.uXr,-ri  f^'*J''^ 

But,  whatever  be  the  foundation  of  the  doctrine  of  assessment  else-  ^iC^.&i^-ri  '^^ 
where,  it  is  certain  that  we  are  indebted  to  it  exclusively  for  our  juris-  ,,^«v^*|*^^ 
diction  in  matters  of  subrogation.  An  assignment  may  be  unnecessary  ^(</<»w«rrJ*V« 
where  the  parties  are  before  a  court  with  chancery  powers ;  but  the  .-^  c%^ 
scantiness  of  our  equitable  apparatus  sometimes  drives  us  to  curious 
shifts.  The  necessity  we  are  under  of  administering  equity  through 
the  medium  of  common-law  forms  compels  us,  in  cases  like  the  pres- 
ent, to  arrive  at  justice  indirectly,  by  the  instrumentality  of  an  imag- 
inary assignment  of  the  security,  which  enables  the  surety  to  apply 
it,  by  direction  of  the  court,  in  a  way  to  cast  the  burden  on  those  who 
ought  to  bear  it.  Our  leading  case  is  Kuhn  v.  North,  10  Serg.  &  R. 
399,  in  which  it  was  held  that,  though  payment  by  a  surety  with  intent 
to  discharge  the  security  extinguishes  it  in  equity  as  well  as  at  law, 
yet  that,  where  the  amount  of  the  debt  is  advanced  to  procure  the 
control  of  it,  equity  keeps  it  afoot  to  answer  the  intent  of  the  ad- 
vancement— a  distinction  whose  value,  as  the  surety  can  have  no  mo- 
tive or  intent  in  a  case  of  involuntary  payment,  is  not  very  easily  ap- 
preciated. The  general  principle,  however,  has  been  reasserted  in 
Fleming  v.  Beaver,  2  Rawle,  132,  19  Am.  Dec.  629,  Burns  v.  Hunt- 
ingdon Bank,  1  Pen.  &  W.  395,  and  Mehaffy  v.  Share,  2  Pen.  &  W. 
378.  In  our  own  state,  therefore,  the  question  must  be  considered  as 
at  rest.  X  I^^^a^s^^.,^  a^^ 

Now  it  is  clear,  on  the  proofs  in  the  case  under  consideration,  that 
the  note  was  discounted  for  the  drawer  to  make  up  the  amount  of 
stock  he  had  agreed  to  bring  into  the  partnership,  and  that,  though  the 
proceeds  of  it  were,  in  the  first  instance,  received  by  the  surety  who 


292  THE   EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

claims  to  be  substituted,  yet  that  he  charged  himself,  at  the  drawer's 
request,  with  the  amount  to  which  the  drawer's  stock  account  had 
fallen  short.  We  have  then  tlie  ordinary  case  of  payment_byasurety, 
and  the  court  bePow  properly  directed  him  to  be  substituted  for  the 

creditor."  '  

Order  of  subrogation  affirmed. 


(% 


TOWNSEND  V.  WHITNEY. 

(Court  of  Appeals  of  New  York,  1S7S.    75  N.  T.  425.) 

Lppeal  frorti  an  order  of  the  General  Term  of  the  Supreme  Court, 
in  the  Third  Judicial  Department,  reversing  ^n  order  made  by  the 
surrogate  of  Ulster^couiity -denying-aii^appIicatipn.o.lL  the  part  of  p^^i"- 
tiff  for  an  attachment  against  defendant  for  failure  to  pay  over  moneys 
as"~Teqliired  "t^  a  decree  "of  said  surrogate.  Reported  Delow,  15 
Hun,  93. 

The  facts  appear  sufficiently  in  the  opinion.^ ^ 

Earl,  J.  Thg  defendant  and  Solomon  A.  Ferris  were  appointed  by 
the  surrogate  of  Ulster  county  administrators  of  the  estate  of  Jo]}IL1- 
Ferris,  deceased;  and  upon  such  appointment  they  gave  the  bond  re- 
quired by  law,  signed  by  them  and  by  William  H.  To\vnsend  and  an- 
other, who  is  now  dead,  as  sureties.  Subsequently  the  administrators 
accounted  before  the  surrogate,  and  he  made_a  decree  by  which  he 
ordered  them  to  pay  certain  sums  to  Mrs.  Love^  Mrs.  Ferris,  ari4_  ^Jrs. 
EltmgTespectiveh^  as  their  distributive"  shares  of  the  estate.  These 
sums  not  having  been  paid,  subsequently  a  certificate  of 'tRe  decree  was 
obtained  from  the  surrogate,  and  the  decree  was  docketed  in  the  clerk's 
office  of  Ulster  county,  under  the  provisions  of  chapter  460  of  the 
Laws  of  1837,  as  amended  by  chapter  104  of  the  Laws  of  1844.  The 
decree  did  not  become  merged  by  docketing  the  same.  The  docket 
did  not  make  it  a  judgment,  but  simply  made  it  a  lien  upon  real  estate 
for  the  amounts  shown  in  the  certificate;  and  executions  could  there- 
after be  issued  to  enforce  the  same,  as  upon  judgments  recovered  in 
the  County  Court.  After  the  decree  w^as  thus  docketed,  the  persons 
in  whose  favor  it  was  docketed  had  two  remedies  to  enforce  payment 
of  the  money  due  theu^-^^ne  bv  attachment  against  the  admimstrators 
in  the  Surrogate's  Court,  ana -another  by  executions  based  upon  the 
docket.  The  two  remedies  are  not  inconsistent,  but  concurrent  or  cu- 
mulative; and  they  may  both  be  pursued  until  the  decree  has  been 
complied  with. 

Executions  were  issued  and  returned  unsatisfied,  and  then,  upon 
application,  the  .surrogate  assigned  the  bond  to  the  persons  in  whose 

11  The  arguments  of  counsel  are  omitted. 

The  full  title  of  the  ease  is  Theophelia  G.  Townsend,  Respondent,  v.  Oliver 
B.  Whitnej-,  Appellaut. 


Ch.  3)  THE  surety's  equity  of  subrogation.  293 

favor  the  decree  was  made,  for  the  purpose  of  prosecution  by  them. 
Section  65,  c.  4607of  the  Laws  of  1837. 

Mrs.  Love,  Mrs.  Ferris,  and  Mrs.  Elting  then  commenced  actions 
upon"  the  bond  against  the  administrators  and  Townsend,  the  surviving 
surety,  and  recovered  each  a  judgment  for  the  amount  due  her.  Theii 
Townsend,  the  stirety,  with  his  own  money  paid  the  amounts  of  the 
judgments  to  Mrs.  Love,  Mrs.  Ferris,  and  Mrs.  Elting,  and  jgrocured 
them  to  assign  the  judgments  and  also  the  decree  of  the  surrogatelio 
the  present  respondent,  his  wife.  This  he  did  for  the  purpose  of  en- 
abling  her  to  proceed  by  attachment  against  the  administrators  to 
compel  payment  by  them.  She  then  applied  to  the  surrogate  for  an" 
attachment  against  the  administrators  for  not  paying  the  money  as  l^^^j-.^  ^^ 
directed  by  the  decree,  and  he  denied  tlie  remedy,  on  the  ground  "that 
the  payment  of  the  judgments  by  the  surety,  in  the  manner  above 
mentioned,  discharged  both  the  decree  and  the  judgments.  But  his 
decision  was  upon  appeal  reversed  by  the  Supreme  Court,  and  the 
administrator,  Whitney,  has  appealed  to  this  court.  ^    '^'^'  ^^  j^ 

Tlie_ appellant  now_  claims  that  the  decree  was  merged  in  the  judg-  ,  ,  ,  (^  j, 
ments  subsequently  obtained  upon  the  bond,  and  hence  that  an  attach-  "^  'fv g^^'Jy^iru 
ment  to  enforce  it  is  unauthorized.  This  claim  is  not  well  founded. 
The^'decree  was  the  principal  debt,  and  the  bond  was  a  collateral  se- 
curity for  such  debt.  The  judgments  were  not  recovered  upon  the  de- 
cree, but  upon  the  bond.  It  is  too  clear  to  need  argument  that  a  judg- 
ment upon  a  collateral  security  does  not  merge  the  principal  debt,  and 
does  not  suspend,  so  long  as  it  remains  unpaid,  any  remedy  upon  the 
principal  debt.  Day  v.  Leal,  14  Johns.  405 ;  Baker  v.  Martin,  3  Barb. 
634 ;  Supervisors  of  Livingston  Co.  v.  White,  30  Barb.  72.  The  par- 
ties entitled  to  payment  under  the  decree  had  the  right  to  pursue  their 
remedies  upon  the  decree,  and  also  upon  the  bond,  until  they  obtained 
satisfaction.  /<Cc>'^''~'^^''^  ^ 

It  is  also  contended,  on  behalf  of  the  appellant,  that  the  payment  k|^;'^')(w5» 
of  the  judgments  by  'Townsend,  in  the  manner  above  mentioned,  satis-  i^,;^"'^. .  ,<>Ju7v 
fied  both  the  decree  and  the  judgments.  It  is  probably  true  that  the  ^^  ^  t^  /^^ 
case  is  not  altered  by  the  assignment  to  Mrs.  Townsend.     She  had  ^ 

no  separate  estate,  and  no  means.  Her  husband  furnished  the  money 
to  pay  the  judgments,  and  the  assignments  to  her  were  merely  formal,, 
to  enable  him,  in  her  name,  to  enforce  the  decree.  This_case_may  there- 
fore be  treated  as  if  the  surety  had  paid  the  judgments,  and  then 
taken  an  assignment  of  them,  and  also  of  the  decree,  for  the  purpose 
of"enforcingThem  against  tHe  principal  debtors.  1  Story's  Eq.  Jur. 
§499,b.  _  ^^,.U>^ 

Where  one  of  two  joint_debtors,  both  of  whom  are  principals, "pays  L>wx^t<(JLi* 
a  joint  judgment,  the  judgment  becomes  extinguished,  whatever  may  <j  r-    ,    >  \. 
have  been  the  intention  of  the  parties  to  the  transaction;   and  it_is  not     ^    pl)T 
in  their  power,  by  any  arrangement  between  them,  to  keep  the  judgr 
ment  on  foot  for  the  benefit  of  the  party  making  the  payment.     Har- 


294  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

"*^lK     ^^'^^  ^'  Vanderbilt,  20  N.  Y.  395.     The  remedy  of  the  party  thus 
k>vj:-^  r     paying  is  by  an  action  against  his  codebtor  for  contribution. 

^      But  a  different  rule  prevails  where  one  of  the  joint  judgment  debtgrs 
I"        is  a  surety  upon  the  obhgation  put  into  judgment.     Under  the  civil 
^^       law,  a  surety  paying  the  joint  obhgation  is  entitled  not  only  to  be  sub- 
rogated to  all  the  securities  which  the  creditor  holds  for  the  payment 
of  the  debt,  but  he  is  entitled  to  be  substituted,  as  to  the  very  dcbF  it- 
self, to  the  creditor,  by  way  of  cession  or  assignment.     It  treats  the 
transaction  between  the  surety  and  the  creditor,  according  to  the  pre- 
sumed intention  of  the  parties,  to  be  not  so  much  a  payment,  as  a  sale^ 
of  the  debt.     1  Story's  Eq.  Jur.  §  oOOTl  T)omat,  W:  ^,  tit.  1,  §  of 
art.  1.     But^this  broad  rule  of  equity  has  not  been  fully  adopted  in 
'"  r»v  England.    There  it  seems  to  be  the  general  rule  that  a  jgaympnt  nf  a 

joint  obligation  by  a  surety  extinguishes  the  obligation  both  at  law 
and  in  equity,  and  that  it  cannot  be  kept  on  foot  for  his  berreftt:  5?^  ^ 
surety  thus  paying  is  entitled  to  all  the  collateral  securities  held  by 
the"  creditor  for  the  payment  of  the  debt.  Copis  v.  ]\Iiddleton~t-THlrn. 
&  Russ.  22-i ;  Reed  v.  Norris,  2  Alylne  &  Craig,  361 ;  Hodgson  v. 
Shaw,  3  Mylne  &  Keene,  183.  It  is  there  held  that  the  surety  cannot 
be  subrogated  to  the  very  obligation  paid,  because  it  does  not  survive 
payment,  and  there  is  nothing  left  to  which  he  can  be  subrogated, 
and  that  he  can  be  subrogated  only  as  to  such  securities  and  remedies 
as  survive  the  payment  of  the  principal  obligation.  But  it  has  not  al- 
ways been  easy  to  define  the  cases  in  which  subrogation  could  be  had, 
and  the  English  authorities  are  not  at  all  consistent.  It  would  be  use- 
less to  criticise  and  attempt  to  reconcile  or  distinguish  them. 

The  general  American  doctrine  in  favor  of  sureties  is  more  liberal 
than  that  of  "the  English  courts,  and  I  will  refer  to  only  a  few  cases 
decided  in  this  state.  In  Cuyler  v.  Ensworth,  6  Paige,  32,  four  per- 
sons became  jointly  liable  in  the  official  bond  of  a  county  treasurer, 
who  afterwards  misapplied  the  funds  of  the  county  and  died  insolvent, 
and  a  judgment  was  thereupon  recovered  against  the  four  sureties 
in  the  bond,  and  three  of  them  afterwards  paid  the  whole  amount  of 
the  debt  and  costs,  and  an  execution  was  issued  upon  the  judgment 
for  their  benefit,  on  which  the  sheriff  was  directed  to  levy  one-fourth 
of  the  amount  of  the  judgment  of  the  property  of  their  co-surety, 
which  execution  was  subsequently  returned  unsatisfied ;  and  it  was 
held  that  the  three  sureties,  who  had  paid  the  whole  debt  and  costs, 
could  file  a  creditors'  bill  in  their  own  names  against  their  co-surety 
to  obtain  satisfaction  of  his  ratable  proportion  of  the  judgment  out  of 
his  equitable  interests  and  choses  in  action  which  could  not  be  reached 
by  the  execution  at  law.  The  broad  doctrine  is  laid  down  that  "the 
surety,  by  the  mere  payment  of  the  debt,  and  without  any  actual  as- 
signment from  the  creditor,  is,  in  equity,  subrogated  to  all  the  rights 
and  remedies  of  the  creditor,  for  the  recovery  of  his  debt  against  the 
principal  debtor  or  his  property,  or  against  the  co-sureties  or  their 


Ch.  3)  THE  surety's  equity  of  subrogation.  295 

property,  to  the  extent  of  what  they  are  equitably  bound  to  contribute." 
Although  the  judgment  was  paid,  it  was  held  that  the  sureties  who 
paid  it  were  subrogated  to  all  the  remedies  which  the  creditor  had  to 
enforce  payment;  and  yet,  under  most  of  the  English  authorities,  the 
judgment  by  such  payment  would  have  been  held  to  be  extinguished, 
so  that  there  could  have  been  no  subrogation  in  reference  thereto. 
In  Speiglemyer  v.  Crawford,  6  Paige,  254,  there  was  a  creditors' 
bill  prosecuted  on  behalf  of  a  surety  against  the  principal,  founded 
upon  a  decree  against  the  principal  and  surety  for  the  payment  of  mon- 
ey; and  the  Chancellor  said:  "If  the  surety  had  paid  the  decree,  he 
would,  in  equity,  have  been  entitled  to  an  assignment  of  all  the  rights 
and  remedies  of  the  complainant  to  compel  payment  and  satisfaction 
of  the  debt  and  costs  by  the  principal  debtor.  He  would  also,  in  that 
case,  have  been  permitted  to  file  a  creditors'  bill  against  the  defend- 
ant in  his  own  name,  founded  on  such  original  decree,  to  obtain  sat- 
isfaction out  of  her  property  which  could  not  be  reached  by  the  execu- 
tion on  such  decree." 

If  A.  executes  to  B.  a  bond  for  the  payment  of  money  which  is 
guaranteed  by  C,  and  at  the  same  time  executes  a  mortgage  upon  real 
estate  to  secure  the  payment  of  the  same  sum,  and  C.  is  compelled  to 
pay  the  bond,  he  is  entitled  to  be  subrogated  to  the  mortgage  and  en- 
force it  for  his  indemnity  (Mathews  v.  Aikin,  1  N.  Y.  595)  ;  and  yet 
the  payment  of  the  bond  also  pays  the  mortgage,  and  the  mortgage  in 
the  hands  of  the  mortgagee  is  absolutely  as  much  extinguished  as  the 
bond.  In  equity,  however,  the  mortgage  is  kept  in  life,  just  as  it  was 
before  payment,  for  the  benefit  of  the  surety.  In  England,  the  surety, 
in  such  a  case,  is  allowed  to  be  subrogated  to  the  mortgage,  on  the 
theory  that  the  mortgagee's  estate  was  not  divested  by  payment,  and 
could  only  be  divested  by  a  reconveyance  to  the  mortgagor,  and  hence 
that  the  estate  survived  payment,  and  was  not  extinguished  thereby. 
Copis  v.  Middleton,  supra.  Here  subrogation  is  not  upon  that  theory, 
as  the  mortgagee  takes  no  estate  in  the  land,  and  the  lien  of  the  mort- 
gage becomes  extinguished  by  payment.  But  the  subrogation  is  based 
upon  the  broad  doctrine  of  equity,  that  the  surety  upOn  payment  is 
entitled  to  all  the  remedies  and  securities  which  the  creditor  held  be- 
fore payment.  In  Lewis  v.  Palmer,  28  N.  Y.  271,  Wright,  J.,  laid 
down  the  rule  thus  broadly:  "It  is  a  well-settled  principle  that  a 
surety  who  pays  a  debt  for  his  principal  is  entitled  to  be  put  in  the 
place  of  the  creditor,  and  to  all  the  means  which  the  creditor  possessed 
to  enforce  payment  against  the  principal  debtor."  In  Clason  v.  Morris, 
10  Johns.  525,  Spencer,  J.,  said:  "That  a  surety,  who  pays  a  debt 
for  his  principal,  has  a  right  to  be  put  in  the  place  of  the  creditor, 
and  to  avail  himself  of  every  means  the  creditor  had  to  enforce  pay- 
ment against  the  principal  debtor,  is  a  principle  which  I  had  supposed 
incontestable."  In  Goodyear  v.  Watson,  14  Barb.  481,  the  rule  of  the 
civil  law  was  adopted,  and  a  very  learned  court  held  that  where  a 


^ 


296  THE  EQUITABLE  AND  LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

surety  paid  a  judgment  recovered  against  himself  and  the  principal 
debtor,  and  took  an  assignment  thereof  for  his  own  benefit,  such  pay- 
ment did  not  extinguish  the  judgment,  but  that,  after  the  death  of  the 
principal,  payment  of  it,  according  to  its  priority  of  date,  out  of  the 
assets  of  the  principal  debtor,  might  be  decreed  by  the  surrogate ;  and 
a  similar  decision  was  made  in  the  case  of  Alden  v.  Clark,  11  How. 
Prac.  209. 

These  citations  are  sufficient  to  show  what  the  rule  is  in  this  state,, 
and  I  will  now  proceed  to  apply  it  to  this  case. 

Itjs  not  necessary  to  hold,  in  this  case,  as  many  authorities  in  this 
country,  as  well  as  the  civil  law,  would  warrant,  that  the  judgments 
paid  by  Townsend  survived,  so  as  to  be  the  subject  of  subro^ation. 
If  the  judgments  were  completely  extinguished  by  the  payment;'^  is 
because  they  were  joint  judgments  against  the  principals  and  the  sure- 
ty. But  the  creditors  had  two  remedies — one  upon  the  judgments,  and 
another  upon  the  decree  which  could  be  enforced  by  attachmeTrts'|~and 
these  two  may  be  treated  as  securities  for  the  payment  of  the  same 
debt.  The  surety  was  not  a  party  to  the  decree,  and  that  could  not 
be""enforced  against  him.  The  creditors  had  independent  remedies 
upon  the  decree;  and,  when  the  surety  paid  the  judgments,  he  took 
the  place  of  the  creditors  as  to  such  decree,  and  was  subrogated^there- 
to]^  It  matters  not  that  payment  of  the  judgments  also  paid  the  decree. 
Payment  of  a  bond  also  discharges  the  mortgage  collateral  thereto, 
and  yet,  as  shown  above,  the  mortgage,  for  the  purpose  of  subroga- 
tion, survives. 

I  am,  tberefnre,  of  opinion  that  upon  the  payment  made  by  the  sure- 
ty he  became  subrogated  to  this  decree,  and  he  had  the  riglit'To^have 
the  same  assigned  to  himself  or  to  some  other  person  designated  by 
him. 
^  It  is  also  said  that  the  assignee,  Mrs.  Townsend,  cannot  enforce  this 
decreTTnTie'r  own  name  by  attachment.  This  is  a  mere  technieai  ob- 
jection, and  not  one  of  substance.  The  surety  could,  if  necessary, 
have  used  the  names  of  the  original  creditors  in  the  enforcement  of 
the  decree.  Such  is  always  the  right  of  a  surety  in  such  cases,  if  his 
interests  require  it.  But  by  this  assignment  the  whole  legal  title  to 
the  decree  was  vested  in  the  assignee.  She  is  entitled  to  the  moneys 
due  thereon.  The  duty,  which  was  before  due  from  the  administra- 
tors to  the  original  creditors,  is  now  due  to  her,  to  the  same  extent. 
She  has  become  a  party  to  the  decree,  and  can  invoke  every  remedy  for 
its  enforcement.  Every  sale  of  a  judgment,  decree,  or  other  obligation 
carries  with  it  every  remedy  which  the  law  gives  the  seller  to  enforce 
payment.  The  remedy  attaches  to  and  inheres  in  the  obligation,  and 
does  not  pertain  to  the  person  of  the  owner. 
•^^V,")^  Some  objection  is  made  to  the  regularity  of  the  proceeding  before 
che  surrogate.  It  is  sufficient  to  say  that  no  such  objection  was  made 
before  the  surrogate,  and  that  by  the  order  of  the  Suprerne  Court 
the  proceeding  is  remitted  to  the  surrogate;   and  if  he  did  not  before^. 


Ch.  3)  THE  surety's  equity  of  subrogation.  29T 

he  can,  upon  the  further  hearing  of  the  matter,  conform  to  the  statute. 
It  is  therefore  not  necessary  to  examine  this  objection. 

The  ordei^  of  the  Supreme  Court  must,  be  affirmed,  with  costs.  All 
concur. 

Order  affirmed.^  ^ 

12  If  the  surety  pays  a  judgment  rendered  against  the  principal  alone,  the 
right  of  tiie  surety  to  he  subrogated  to  the  creditor  in  the  judgment  has  never 
bften  denied.  Cottrell's  Appeal.  23  Pa.  294  (1854) ;  Enders  v.  Brune,  4  Rand. 
(Va.)  438  (1826) ;    Hill  v.  Manser,  11  Grat.  (Va.)  522  (1854). 

At-£ommon  law,  suretyship  frequently  assumed  the  form  of  a  joint  obli- 
gation^ executed  by  the  principal  and  surety,  and  for  many  years  in  the  law 
of  England  the  legal  incidents  of  that  species  of  contract  were  paramount  to 
the  equity  of  subrogation.  Thus  payment  by  one  of  two  judgment  debtors  who 
were  bound  jointly  (or  jointly  and  severally)  extinguished  the  judgment  and 
technically  left  nothing  of  the  judgment  to  be  assigned  to  the  surety  for  sub- 
rogation. In  England  until  recent  times  equity  thus  followed  the  law  (Dow- 
biggeu  V.  Boui-ne,"^2  Y.  &"  C:  402  [1837],  s.  c.  A.  376;  Preslar  v.  Stallworth,  37 
Ala.  402  [1861]),  untlL-a^ provision  of  the  Mercantile  Law  Amendment. Act  (19 
&  20  Vict.  c.  97,  §  5)  provided  as  follows:  "V.  Every  person  who,  being  surety 
for  the  debt  or  duty^bf  another,  or  being  liable  with  another  for  any  debt  or 
duty,  shall  pay  such  debt  or  perform  such  duty,  shall  be  entitled  to  have  as- 
signed to  him,  or  to  a  trustee  for  him,  every  judgment,  specialty,  or  other  secu- 
rity which  shall  be  held  by  the  creditor  in  respect  of  such  debt  or  duty,  wheth- 
er such  judgment,  specialty,  or  other  security  shall  or  shall  not  be  deemed 
at  law  to  have  been  satisfied  by  the  payment  of  the  debt  or  performance  of  the 
duty,  and  such  person  shall  be  entitled  to  stand  in  the  place  of  the  creditor, 
and  to  use  all  the  remedies,  and,  if  need  be,  and  upon  a  proper  indemnity,  to 
use  the  name  of  the  creditor  in  any  action,  or  other  proceeding,  at  law  or  in 
equity,  in  order  to  obtain  from  the  principal  debtor,  or  any  co-surety,  co-con- 
tractor or  co-debtor,  as  the  case  may  be,  indemnification  for  the  advances 
made  and  loss  sustained  by  the  person  who  shall  have  so  paid  such  debt  or 
performed  such  duty,  and  such  payment  or  performance  so  made  by  such  sure- 
ty shall  not  be  pleadable  in  bar  of  any  such  action  or  other  proceeding  by 
him :  provided  always,  that  no  co-surety,  co-contractor,  or  co-debtor  shall  be 
entitled  to  recover  from  any  other  co-surety,  co-contractor,  or  co-debtor,  by  the 
means  aforesaid,  more  than  the  just  proportion  to  which,  as  between  those 
parties  themselves,  such  last-mentioned  person  shall  be  justly  liable." 

In_a£Cord_with  the  principal  case:  Smith  v.  National  Surety  Co.,  28  Misc. 
Rep.  628.  59  N.  Y.'  Supp.  789  (1899) ;  Ferguson's  Adm'r  v.  Carson's  Adm'r.  86 
Mo.  673  (1885);  Jennings  v.  Hare,  104  Pa.  489  (1883),  obiter;  Dodd  v.  AA'ilson. 
4  Del.  Ch.  399  (1872),  the  surety  in  a  bond  taken  in  satisfaction  of  a  joint 
judgment  against  the  surety  and  others  being  subrogated  to  the  creditor's 
rights  under  the  original  judgment  after  payment  of  the  second  bond ;  Van- 
derveer  v.  Ware,  65  Ala.  606  (1880). 

Many  other  cases  are  collected  in  Sheldon  on  Subrogation  (2d  Ed.  1893)  pp. 
206-219;   alsoTir2¥"A.  &  E.  Eury.  of  Law  (1st  Ed.)  p.  234,  title  "Subrogation." 

Statutory  provisions,  giving  the  surety  the  benefit  of  joint  judgments  paid 
by,  him,  have  been  enacted  to  cure  the  hardship  of  the  common  law.  Harris 
v.  Wynne,  4  Ga.  521  (1848) ;  Johnson  v.  Amana  Lodge,  92  Ind.  IBO  (1883)  ; 
McClure  v.  Lucas,  2  Ind.  App.  32.  28  N.  E.  153  (1891) ;  Dibrell  v.  Dandridge, 
51  Miss.  55  (1875) :    Duffield  v.  Cooper,  87  Pa.  443  (1879). 

lA_Biaaiy-S,tates_of_±he  Union  statutory  provisions  keep  the  judgment  alive 
after  payment  and  give  the  paying  surety  the  benefit  of  it  forsmTrogaCibn. 
See  Stimsoh's  American  Statute  Law,  p.  014,  §  5121  (1880),  for  references"^o 
local  legislation. 

Sqme_ American  states  have  abolished  by  statute  the  priority  of  judgments 
on  specialties  over  judgments  on  simple  contracts.  See  8  A.  &  E.  Ency.  of 
Law  (2d  Ed.)  pp.  1034,  1041,  1049.  /< 

"A^triking  difference  has  existed  between  the  course  of  legislation. .au.J;'ue 
diffejeut  sides  of  the  Atlantic,  with  respect  to  the  liability  of  estates  of  de- 


29S  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

PETRCE  et  al.  v.  GARRETT  et  al. 

(Appellate  Court  of  Illinois,  Second  District,  May  Term,  1S06.     Go  111,  App. 

GS2.) 

Mr.  Justice  Harker  delivered  the  opinion  of  the  court.^' 

This  is  an  appeal  from  an  order  of  the  circuit  court  sustaining  a 
demurrer  to  a  bill  in  equity  presented  by  appellants  and  dismissing  jt 
for  want  of  equity  at  their  costs. 

The  bill  shows  that  on  the  20th  of  July,  1893,  J^in  AT.  Royer,  be- 
ing indebted  to  the  Third  National  Bank  of  Bloomington.  Illinois,  with 
S7"SrTorter7~G.  A.  Griggs,  John  Niccolls  and  E.  A."  Vencill,  as  sure- 
ties  for  the  Home  Nursery  Company,  in  the  sum  of  $8,400,  as  evi- 
denced by  a  promissory  note  executed  by  them,  June  12,  1893,  ex- 
ecuted and  delivered  to  the  bank  a  mortgage  upon  185  acres  of  land  in 
Whiteside  county  for  the  purpose  of  securing  its  payment;  that  the 
mortgage  was  given  subject  to  a  prior  one  for  $2,000  to  the  Anthony 
•Loan  &  Trust  Company;  that  Griggs,  NiccpUs jLnd__iL£ii£iJJLare  in- 
solvent; that  on  January  22,' 1894,  judgment  was  entered  upon  the 
note  for  $9,110,66;  that^Porter  paid  the  judgment  in  full;  i+tat-Por- 
ter  assigned  his  right  to  subrog;ation  as  co-surety  to  complaijnants,  and 
procured  the  bank  to  assigrTThe  judgment  ar:d  ni' v.tgaue-  to  complain- 
ants for  a  consideration  of  $2,000  ;  andJJiat  I'.u}  er,  on  the  0th  of  June. 
1894,  and  long  after  the  mortgage  to  the  bank  was  [ilacecl  upon  rec- 
ord, conveyed  the  land  to  J.  S.  Garrett.  The  bill  asks  for  a  decree  in 
favor  of  complainants  to  the  extent  of  the  rights  of  Porter  and  the 
bank,  for  an  accounting  to  ascertain  what  is  due  complainants,  and 
for  an  order  of  sale  of  the  mortgaged  premises,  all  subject  to  the 
rights  of  the  Anthony  Loan  &  Trust  Company. 
^     The  demurrer  is  by  Garrett  and  wjfe. 

T^  We  enterfaln  no  doubt  upon  the  proposition  that  Porter  was  subro- 
^*--t»Y^  gated  to  ;i!l  the  security  of  the  bank  against  Boyer.  'i'h6  (l6ctrme  is 
\vell  established  that  a  surety  who  pays  the  debt  of  his  principal  will 
be  subrogated  to  all  the  securities  and  equities  held  by  the  creditors 
against  the  principal.  1  Story's  Equity  Jurisprudence,  §  499  ;  2  Brandt 
on  Suretyship,  479 ;  Phares  v.  Barbour,  49  111.  370 ;  Rice  et  al.  v.  Rice 
et  al.,  108  111.  199 ;  Lochenmeyer  v.  Fogarty,  112  111.  572. 

So  firmly  committed  is  our  Supreme  Court  to  that  doctrine  that  it 
has  been  held  the  creditor  cannot  release  the  security  which  it  holds, 

cedents  for  the  payment  of  their  debts,  and  although  the  rules  in  the  different 
states  must  necessarily  be  local  in  their  application,  yet  it  may,  in  general, 
be  said  that  in  this  countrj-  lands  are  liable  for  the  debts  of  a  decedent, 
whether  due  by  matter  of  record,  specialty,  or  simple  contract,  and  that  in 
the  two  latter  cases,  although  they  create  no  lien  during  the  debtor's  life,  yet 
by  his  death  their  quality  is  changed,  and  they  become  liens  on  the  real  estate, 
which  descends  to  the  heir,  or  passes  to  the  devisee,  subject  to  the  payment  of 
the  debts  of  the  ancestor,  according  to  the  local  laws  of  the  state."  Smith  on 
Contracts  (7th  Am.  Ed.)  p.  3.3,  note  1,  by  Rawle. 
^^  The  arguments  of  counsel  are  omitted. 


<v 


Ch.  3)  THE  surety's  equity  of  subrogation.  299 

to  the  prejudice  of  the  surety.    City  National  Bank  of  Ottawa  et  al. 
V.  Dudgeon  et  al.,  65  111.  11. 

Upon  the  same  principle  a  surety  who  pays  the  debt  for  which  he 
and  a  co-surety  are  liable  will  be  subrogated  to  the  rights  of  the  cred- 
itor against  the  co-surety  upon  securities  given  by  him  to  the  extent  of       ^  •       .   ^ 
his  right  to  compel  contribution  from  the  co-surety.  ^  ■       sjr'^' 

The  fact  that  the  debt  was  changed  to  a  judgment  before  i^jvas   VP'^    y       -.- 
pajd  Hoes  not  "affect  Porter's.,  right  o£  subrogation.  ^"  ^  ■'^'^ 

Where  a  mortgage  is  given  to  secure  a  debt,  and  a  debt  becomes 
merged  in  a  judgment,  the  mortgage  stands  as  security  for  the  judg- 
ment. Wayman  et  ux.  v.  Cochrane,  35  111.  152;  Darst  v.  Bates  et 
al.,  95  111.  493.  Satisfaction  of  the  judgment  by  a  surety  paying  it 
would  undoubtedly  entitle  such  surety  to  an  action  on  the  mortgage. 

The  most  serious  question  in  the  case  is  whether  Porter's  right  of  y  f'ityT'^ 
subrogation  is  assignable.  Whether  the  collateral  security  to  which  ,aa^'^je#l'V 
a  surety  becomes  subrogated  by  reason  of  paymg  the  debts  can  be 
assigned,  so  as  to  enable  the  assignee  to  maintain  a  suit,  is  a  question 
which  has  never  been  presented  to  the  courts  of  last  resort  in  this  state, 
so  far  as  we  are  advised.  It  has  been  so  held  in  Indiana.  Manford  v. 
Firth,  68  Ind.  83;  Frank  v.  Traylor,  130  Ind.  145,  29  N.  E.  486,  16 
L.  R.  A.  115.  In  Harris  on  Subrogation,  §  199,  the  author,  after  stat- 
ing that  the  surety  is  entitled  to  subrogation  in  a  court  of  equity, 
whether  there  has  been  an  actual  assignment  of  the  collateral  to  him 
or  not,  says: 

"Not  only  is  this  true,  but  the  surety  so  paying  the  debt  of  his  prin- 
cipal, and  thus  acquiring  the  right  of  subrogation,  may  assign  over 
to  any  one  his  demand  and  equitable  claim  against  the  principal,  and 
his  assigns  will  be  subrogated  to  the  rights  of  the  creditor,  and  may 
take  his  place,  with  all  the  securities,  rights,  remedies,  privileges  and 
priorities." 

To  us  it  seems  consonant  with  reason  that  if  the  satisfaction  of  the 
judgment  by  Porter  left  the  mortgage  still  alive,  with  the  right  in  him 
to  foreclose  to  the  extent  of  his  right  to  compel  Boyer  to  then  con- 
tribute, Porter  could  assign  to  appellants  for  a  valuable  consideration, 
and  they  would  thereby  be  subrogated  to  all  the  rights  of  the  Third 
National  Bank  and  Porter  in  the  mortgage.  ^ 

Garrett  has  no  standing  in  a  court  of  equity  by  which  a  foreclosure 
can  be  defeated.  He  bought  the  land  for  one  dollar,  subject  to  in- 
cumbrances. 

The  court  erred  in  sustaining  the  demurrer  interposed  by  him  and 
his  yyife.       '  " 

The  decree  will  be  reversed,  and  the  cause  remanded,  with  directions 
to  the  circuit  court  to  overrule  the  demurrer. 

Crabtree,  J.,  took  no  part.^* 

1*  Accord,  on  the  question  of  after-acquired  collateral:  Hughes  v.  Ranken, 
7  rhrRTTTa.)  175  (1809),  Hare,  P.  J. 


•  300  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part   2 

FIRST  NAT.  BANK  v.  DAVIS  et  al. 

(Kansas  City  Court  of  Appeals,  Missouri,  1901.    87  Mo.  App.  242.) 

Smith,  P.  J.^'  Defendants,  John  Davis  as  principal  and  Patrick 
Davis  as  surety,  executed  their  promissory  note  to  the  plaintiff  bank 
for  $1,152,  due  12  months  after  date,  and  contemporaneously  with  the 
execution  of  said  note  the  defendant  John  Davis  executed  to  his  co- 
defendant  and  surety  Patrick  Davis  a  deed  of  trust  on  his  land  to  se- 
cure the  latter  "against  any  loss  he  may  sustain  by  reason  of  his  said 
suretyship."  The  value  of  the  security  so  given  was  in  excess  of  the 
amount  of  the  debt.  When  the  debt  fell  due,  neither  of  the  defend- 
ants were  in  condition  to  pay  it.  The  tjme  for  payment  was  extended, 
but  whether  or  not  with  the  consent  of  the  surety  the  evidence  is  sharp- 
ly in  conflict.  Both  of  the  defendants,  after  the  giving  of  the  note 
"<vtc^-  and  mortgage,  became  insolvent. 

The  object_of  this  5uiU:-^w;^«^  4-ry  recover  judgment  against  the  prin- 
cipal debtor  on_the  said  promissory  note,  and  to  have  s^Tr3^ed~Crftfust 
declared  a  lien  on  the  land  therein  described  as  of  the  .datellhereof, 
fo.r~t:He  jjjirpose  of  securing  to  the  said  creditor  the  payment  of  the 
amount  adjudged  in  said  promissory  note,  to  foreclose  the  equity  of 
i^edernption  of  the  surety  and  his  wife,  and  that  the  same  be  sold  clear 
of  the  right  of  the  said  surety  under  said  deed  of  trust  for  the  pur- 
pose of  satisfying  the  said  judgment,  etc.  The  question  here  for  de- 
cision is  whether  or  not  the  creditor  can  have  recourse  in  equity  to 
satisfy  his  debt  to  the  mortgage  security  taken  by  the  surety  from 
the  debtor  for  his  indemnity. 
I  ^f^J^y  p  The  property  of  the  principal  debtor  belongs  to  the  creditor,  which, 
f^^ ,  •■  under  certain  circumstances,  the  latter  may  subject  in  the  hands  of 

^  the  surety  to  the  satisfaction  of  his  debt.    The  holder  of  such  indem- 

nity is  a  trustee  for  the  creditor.  Hampton  v.  Phipps,  108  U.  S.  260, 
2  Sup.  Ct.  622,  27  L.  Ed.  719 ;  Leggett  v.  McClelland,  39  Ohio  St. 
624;  JklcDougall  v.  Walling,  21  Wash.  478,  58  Pac.  669,  75  Am.  St. 
Rep.  849.  If  the  debtor  gives  his  surety  indemnity,  the  creditor  may 
avail  himself  of  it  by  subrogation,  even  though  in  the  lirst  iiisfancj^'lt 
was  unknown  to  him.-  Leggett  v.  McClelland,  supra;  Hopewell  v. 
Bank,  10  Leigh  (Va.)  206;  McCollum  v.  Hinckley,  9  Vt.  143.  The 
rule  is  well  settled  that,  where  a  security  is  given  by  a  principal  to 
his  surety,  it  operates  eo  instanti  as  a  security  to  the  creditor  for  the 
payment  of  his  debt.  The  security  so  given  is  a  trust  fund,  and  is  re- 
garded in  equity  as  a  trust  fund,  for  the  payment  of  the  debt.  Taylor 
v.  Bank,  87  Ky.  398,  9  S.  W.  240.  The  security  is  for  the  debt,  as 
well  as  for  the  ultimate  protection  of  the  surety.  It  is,  as  has  been 
stated,  at  once  clothed  with  a  trust  character  and  the  creditor  immedi- 
ately acquires  a  right  and  interest  in  it  that  cannot  be  defeated  by  the 
surety ;  and,  as  said  in  substance  by  Judge  Napton  in  Logan  v.  Mitch- 

18  The  arguments  of  counsel  are  omitted. 


Ch.  3)  THE  surety's  equity  of  subrogation.  301 

ell,  67  Mo.  524 :  The  surety  cannot  alter  or  impair  the  creditor's  right, 
and  if  the  security  was  originally  taken,  not  only  to  indemnify  the 
surety,  but  to  secure  the  creditor,  any  action  of  the  former  would  be 
powerless  to  affect  the  latter.  And  in  Bank  v.  Rich  [106  Mich.  319, 
64  N.  W.  339],  it  is  said  that,  where  a  surety  for  the  payment  of 
a  debt  received  security  for  his  indemnity  and  to  discharge  such  in- 
debtedness, the  principal  creditor  is  in  equity  entitled  to  the  full  ben- 
efit of  that  security,  and  it  makes  no  difference  that  such  principal  did 
not  act  upon  the  credit  of  such  security  in  the  first  instance.  Y  /  ^^^   -  ^ 

Bul__suppose  it  to  be  true,  as  the  debtor  here  contends,  that  the  '  ^  . 
creditorHid  extend  or  enlarge~tHe  time  of  payment  of  the  debtidid    ''.rT*  ""^^ 
that  have  the  effect  to  discharge  the  surety  and  withdraw  the  security      2'/'% ^ 
from  the  operation  of  the  trust  in  which  it  had  been  placed?    AVHere   ■^j-  {i^'^*'°^> 
a  surety,  as  Here, "is  fully  indemnified  in  property,  Iie_Js_estopped  to  \.'-yf^>'f^Ti 
set_up  against  the  creditor  the  defense  that  the  time  of  payment  has 
_been  extended  inTTavor  of  the  principal  without  his  consent,  becatrse 
such  surety  is  the  virtual  principal,  an^  ought  to  be  bound  by  every 
enlargement  of  the  time  of  payment  quite  as  much,  or  perhaps  more 
than  the  principal  debtor.    A  surety  who  has  received  an  indemnity 
equal  to  the  debt  for  which  he  is  bound,  and  which  he  may,  as  here, 
convert  into  money,  stands  in  about  the  same  position  as  a  surety  who 
has  received  of  the  principal  an  amount  in  money.     In_sucli  case  the 
surety  is  a  principal,  and  cannot  be  permitted  to  claim  the  privilege 
of_a^  strict  surety  without  indemnity.     Brandt  on  Suretyship,  §  349 ; 
McDougall  V.  Walling,  supra;    Smith  v.  Steele,  25  Vt.  427,  60  Am. 
Dec.  376 ;   Chilton  v.  Robbins,  4  Ala.  223,  37  Am.  Dec.  741 ;    Moore 
V.  Paine,  12  Wend.  (N.  Y.)  123.    And  it  is  certainly  clear  that  he  can  . 
make  no  such  defense  while  he  holds  on  to  the  security.    This  is.  not  A^^'^'^/>^ 
a  case  where  a  stranger  has  chosen  to  bestow  upon  a  surety  a  benefit    ■•'^•^M^i^tl 
and  a  preference  from  considerations  personal,  in  order  to  make  good    ( d Ux-\ ■ '^'^') 
to  him  exclusively  any  loss  to  which  he  might  be  subjected  in  con- 
sequence of  his  suretyship  for  another.     Of  course,  in  such  case  the 
creditor  could  not,  upon  any  ground  of  priority  in  interest,  claim  any 
share  or  interest  in  the  benefit  of  such  benevolence.  -^p*     ItJi 

If  the  surety  is,  as  we  have  stated,  estopped  to  claim  a  release  on  ,{,go.  e^jlf.  / 
the  ground  that  there  has  been  an  extension  of  the  time  of  payment  of  .y^  ,  ,..  /. 
the  debt  because  in  equity  he  occupies  the  attitude  of  a  principal  him- 
self, it  inevitably  follows  that  his  co-principal,  the  original  debtor, 
cannot  be  heard  to  claim  any  such  release  of  his  own  property  from 
tlielopefaliorrof  the  trust  in  which  he  had  placed  it  to  secure  the. pay- 
ment of  his  own  debt.  He  stands  in  the  situation  of  one  who  has  giv- 
en a  mortgage  to  secure  his  own  debt,  and  cannot  by  any  act  of  his 
deprive  the  mortgagee  of  the  benefit  of  the  mortgage  security  until  the 
debt  is  paid.  The  status  of  the  parties  at  the  time  the  suit  was  com- 
menced was  the  same  that  it  was  when  the  mortgage,  or,  which  is  the 
same  thing,  the  deed  of  trust,  was  given.  The  extension  of  the  time  of 
payment  did  not  alter  or  change  the  rights  of  the  parties.     The  se- 


302  THE   EQUITABLE  AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

curity  was  afterwards,  as  before,  bound  in  equity  for  the  payment  of 
the  creditor's  debt.  The  surety,  by  neglecting  to  convert  the  security 
and  pay  tlie  debt,  cannot  thereby  defeat  the  right  of  the  creditor  to  have 
it  subjected  to  the  payment  of  his  debt,  for  it  was  a  security  provided 
as  well  for  him  as  for  the  surety.  It  seems  to  us  that  a  bare  state- 
ment of  the  facts  in  this  case  are  sufficient  to  show  that  upon  the 
principles  of  natural  justice  and  equity  the  property  of  the  debtor, 
which  he  placed  in  the  hands  of  the  trustee  surety  as  an  indemnity, 
ought  to  be  subject  in  the  hands  of  the  trustee  surety  to  the  satisfac- 
tion of  the  debt  of  the  creditor. 

Accordingly,  we  think  that  the  decree  which  was  for  the  plaintiffjn 
conformity  to  the  prayer  of  his  petition,  to  which  allusion  jias  been 
made,  should  be  affirmed;  and  it  is  accordingly  so  ordered.  Allcon- 
cur.^^ 


SHINN  v.  BUDD. 
(Court  of  Chancery  of  New  .Jersey,  1SG2.     14  N.  J.  Eq.  234.) 

The  Chancellor.  On  the  19th  of  July,  1852,  Charles  Cotton,  be- 
ing seised  in  fee  of  a  house  and  lotln^SoutTiampton,  mortgagg^^the 
sariK'to  secure  the  payment  of  $225  to  Isaac  Hilliard.  The  mort- 
gage was  subsequently  assigned  to  Andrew  Fort.  ' 

On  the  1st  of  March,  1856,  Cotton  died,  and  letters  of  administra- 
tion upon  his  estate  were  granted  to  Shinn,  the  complainant.     The 

i«  ULthe^urety..  by  reason  of  the  statute  of  frauds,  has  a  valid  personal  de- 
fense, he  may,  nevertheless,  be  charged  in  an  action  by  the  creditor  to  The  ex- 
tent  of  the  value  of  the  collateral  received  from  the  principal.  Jact'vr  Morri- 
son. 4S  Vii.  113  (1SG4).  "^ 

Ih  numerous  cases  it  is  held  that,  if  collateral  has  been  given  to  the  surety 
to  secure  the  debt,  the  creditor  may  be  subrogated  to  the  security.  Cut  Us  v. 
Tyler,  9  Paice  (N.  Y.)  432  (1842) ;  Harlan  County  v.  Whitney,  Go  >s>b.  105,  90 
N.  W.  993,  101  Am.  St.  Rep.  610  (1902) ;  Chambers  v.  Prewitt,  71  111.  App.  119 
(1896). 

BulLthis  rule  is  limited,  when  operative  at  all,  to  the  cases  where  the  se- 
curity is  given  by  the  debtor,  and  the  creditor's  subrogation  doesTiot  extend 'to 
cases  where  the  security  is  given  by  one  co-surety  to  another  or  by  a  fTflrd 
person  to  a  surety.  See  Hampton  v.  Phipps,  108  U.  S.  260,  2  Sup.  Ct.  6227117 
L.  Ed.  719  (1883).  And  see  Taylor  v.  Farmers'  Bank,  87  Ky.  398,  9  S.  W.  240 
(18SS) ;    iK)st.  p.  321. 

On  the  general  question  of  subrogation  in  favor  of  creditor  in  respect  to 
securities  held  by  the  surety,  see  note.  10  H.  L.  R.  64.  See,  generally,  on- this 
question,  the  paper  by  Mr.  William  Williams  in  1  H.  L.  R,  326.  On  subroga- 
tion  of  surety  of  corporation  to  right  of  creditor  to  enforce  indiyifiunl  1i;i)^'iHT 
oritockholders,  see  note,  15  H.  L.  R.  323. 

Conira:  Osborn  v.  Noblf.  46  Mi^;s.  440  (1872) ;  Pool  v.  Doster,  59  Miss.  25.S 
(ISSl) ;   Dyer  v.  Jacoway,  76  Ark.  171.  88  S.  W.  901  (190.5). 

The  early  English  case  Maure  v.  Harrison,  as  abridged  in  Equity  Cases 
Abridgment,  93,  pi.  5,  is  said  to  be  inadequately  reported,  and  it  is  repudiated 
as  an  authority  in  In  re  Walker,  L.  R.  1  Ch.  621  (1892).  Also,  in  accord.  Wild- 
ing V.  Richards,  1  Coll.  655  (1855). 


Ch.  3)  THE  surety's  equity  of  subrogation.  303 

personal  estate  proving  insufficient  to  pay  the  debts,  the  administrator 
obtained  an  order  of  the  orphans'  court  to  sell  the  real  estate  of  the 
decedent  for  the  payment  of  debts.  In  pursuance  of  this  order,_the 
miortgaged  premises  were  advertised  for  sale  by  the  administrator, 
and"~\vere  struck  ott  and  soM  fb^John  Johnson  for  9-">'-'0.v''--  So  far  as 
appears  by  tlie  evidence,  "heitKer  the  advertisement,  tlie  crm.lrLions  of 
sale,  the  report  of  sak  by  the  admmistrator,  nor  the  decree  of  con'_ 
firmation  contain  any  reference  whatever  to  the  encumbrance  uponjhe 
premises.  On  the  13th  of  November,  1856,  a  deed,  in  pursuance  of 
the  sale,  was  executed  by  the  administrator  to  the  purchaser.  On  the 
23d  of  ]\Iarch,  1857,  the  title  became  vested  in  Thomas  Kealy.  Kealy 
died  on  the  20th  of  June,  1858.  The  land  was  sold,  under  an  order  of 
the  orphans'  court,  by  his  administratrix,  for  the  payment  of  debts, 
and  on  the  21st  of  May,  1860,  the  title  became  vested  in  Budd,  the 
defendant. 

Onthe  30th  of  March,  1857,  the  complainant  paid  to  Andrew  Fort, 
the  assignee  of  the  mortgage,  $112,  the  balance  of  principal  and  in- 
terest  remaimng  due  and  unpaid  upon  the  mortgage  debt,  and  took 
his~receipt  therefor  upon  the  bond.  The  bill  is  filed  to  enf'oTce^he 
incumbrance  of  the  mortgage  against  the  land  in  the  hands  of  the 
defendant. — The  complainant  asks  to  be  substituted  in  the  place  of;  the 
assignee  of  the  mortgage,  and  to  be  subrogated  to  his  rights.  The 
ground  upoff  which  the  relief  is  asked  is  that  the  purchaser  at  the  ad- 
ministrator's sale  took  his  title  subject  to  the  mortgage,  that  the  sum 
due  upon  the  mortgage  was  deducted  from  the  amount  of  the  pur- 
chase money,  and  that  the  mortgage  debt  was  paid  by  the  complain- 
ant, not  as  administrator,  out  of  funds  belonging  to  the  estate  of  Cot- 
ton, but  out  of  his  own  funds. 

The  complainant's  case^ssuming  it  to  be  fully  sustained  by  evi- 
dence,  is  brleTly  this :  As  a^ninistrator  of  the  estate  of  Cotton,  he  sold 
the  real  estate  oTthe  intestate,  by  order  of  the  orphans'  court,  for  the 
payment  of  debts.  The  property  was  sold  for  $365.52,  the  considera- 
tion expressed  in  the  deed  of  conveyance,  this  constituting  the  entire 
value  of  the  land  clear  of  encumbrances.  The  amount  due  upon  the 
mortgage,  $112,  was  not  paid  by  the  purchaser.  After  the  sale,  the 
mortgage  debt  was  paid  by  the  complainant  to  the  holder  of  the  mort- 
gage, who  indorsed  upon  the  bond  a  receipt  in  full  of  the  debt.  There 
was  no  assignment  of  the  bond  and  mortgage.  The  estate  of  Cotton 
was  settled  as  if  the  purchase  money  had  been  paid  in  full  by  the  pur- 
chaser. It  was  in  fact  advanced  by  the  complainant  out  of  his  own 
funds.  The  mortgage  remains  in  his  hands  uncanceled  of  record. 
This  is  stating  the  case  most  favorably  for  the  complainant.  He^now 
comes  into  court  seeking  to_enforce  the  mortgage  against  those  claim- 
ing  under  hia_D:fflJx-ffga«tee.  He  does  not  claim  to  hold  the  mortgage 
bv  assi,gnment:  but  he  asks,  by  subrogation,  to  be  substituted  in  the 
place  of  the  mortgagee,  and  to  succeed  to  his  rights. 


304  THE   EQUITABLE  AND   LEGAL   RIGHTS  OF  THE   SURETY.       (Part    2 

Subrogation  as  a  matter  of  right,  as  it  exists  in  the  civil  law,  from 
whicli  the  term  has  been  borrowed  and  adopted  in  our  own,  is  never 
applied  in  aid  of  a  mere  volunteer.  Legal  substitution  into  the  rights 
of  a  creditor,  for  the  benefit  of  a  third  person,  takes  place  only  for 
his  benefit,  who  being  himself  a  creditor,  satisfies  the  lien  of  a  prior 
creditor,  or  for  the  benefit  of  a  purchaser  who  extinguishes  the  encum- 
brances upon  his  estate,  or  of  a  co-obligor  or  surety  who  discharges 
the  debt,  or  of  an  heir  who  pays  the  debts  of  the  succession.  Code  Na- 
poleon, book  3,  tit.  3,  art.  1251 ;  Civil  Code  of  Louisiana,  art.  2157 ; 
1  Pothier  on  Oblig.,  part  3,  c.  1,  art.  6,  §  2. 

"We  are  ignorant,"  say  the  Supreme  Court  of  Louisiana,  "of  any 
law  which  gives  to  the  party  who  furnishes  money  for  the  payment  of 
a  debt  the  rights  of  the  creditor  who  is  thus  paid.  The  legal  claim 
alone  belongs,  not  to  all  who  pay  a  debt,  but  only  to  him  who,  being 
bound  for  it,  discharges  it."  Nolte  &  Co.  v.  Their  Creditors,  8  Mart. 
(N.  S.)  366;  Curtis  v.  Kitchen,  8  Mart.  (O.  S.)  706;  Cox  v.  Bald- 
win, 1  La.  401. 

The  principle  of  legal  substitution,  as  adopted  and  applied  in  our 
system  of  equity,  has,  it  is  believed,  been  rigidly  restrained  within  these 
limits. 

In  Bank  of  the  United  States  v.  Winston's  Executors,  2  Brock.  254, 
Fed.  Cas.  No.  944,  Chief  Justice  Marshall  said:  "If  a  security  not  as- 
signable be  discharged  by  a  surety  whom  it  binds,  equity  keeps  it  in 
force  in  his  favor,  and  puts  such  surety  in  the  place  of  the  original 
creditor.  But  I  think  there  is  no  case  in  which  this  has  been  done  in 
favor  of  a  person,  not  bound  by  the  original  security,  who  discharges 
the  debt  as  a  volunteer." 

In  Gadsden  v.  Brown,  1  Speers,  Eq.  (S.  C.)  41,  Johnson,  Chancel- 
lor, says :  "The  doctrine  of  subrogation  is  a  pure  unmixed  equity,  and 
from  its  very  nature  could  not  have  been  intended  for  the  relief  of 
those  who  were  in  a  condition  and  at  liberty  to  elect  whether  they 
would  or  would  not  be  bound,  and  so  far  as  I  have  been  enabled  to 
learn  its  history  it  never  has  been  so  applied.  It  has  been  directed  ex- 
clusively to  the  relief  of  those  who  were  already  bound,  and  who 
could  not  but  choose  to  abide  the  penalty.  I  have  seen  no  case  in  which 
a  stranger,  who  was  in  a  condition  to  make  terms  for  himself,  and  de- 
mand any  security  he  might  require,  has  been  protected  by  the  prin- 
ciple." 

In  Sandford  v.  ^McLean,  3  Paige  (N.  Y.)  122,  23  Am.  Dec.  773, 
Chancellor  Walworth  states  the  principle  with  great  clearness :  "It  is 
only  in  cases  where  the  person  advancing  money  to  pay  the  debt  of  a 
third  party  stands  in  the  situation  of  a  surety,  or  is  compelled  to  pay 
it  to  protect  his  own  rights,  that  a  court  of  equity  substitutes  him  in 
the  place  of  the  creditor  as  a  matter  of  course  without  any  agreement 
to  that  effect.  In  other  cases,  the  demand  of  a  creditor,  which  is  paid 
with  the  money  of  a  third  person,  and  without  any  agreement  that  the 


Ch.  3)  THE  surety's  equity  of  subrogation.  305 

security  shall  be  assigned  or  kept  on  foot  for  the  benefit  of  such  third 
person,  is  absolutely  extinguished." 

The  same  doctrine  will  be  found  to  be  maintained  in  numerous  other 
cases  in  the  American  courts.  Hays  v.  Ward,  4  Johns.  Ch.  (N.  Y.) 
130,  8  Am.  Dec.  554;  Banta  v.  Garmo,  1  Sandf.  Ch.  (N.  Y.)  384; 
Wilkes  V.  Harper,  1  N.  Y.  586 ;  Swan  v.  Patterson,  7  Md.  164.  See, 
also,  Copis  V.  Middleton,  1  Turner  &  Rus.  224;  Hodgson  v.  Shaw,  3 
Mylne  &  K.  183;  WilHams  v.  Owen,  12  Simons,  597;  Bowker  v. 
Bull,  1  Simons  (N.  S.)  29. 

The  complainant  is  clearly  not  in  a  position  to  claim  the  benefit  of 
the  principle  which  he  invokes  for  his  relief.  He  had  no  interest  in 
the  land  subject  to_the^jnortgage  for  the  protection  of  which  it  was 
necessary  that  he  should  pay  the  mortgage  debt.  He  was  under  no 
obli_gation  to  pay  it,  as  surety  or  otherwise,  out  of  his^owiT  funds ; 
on  the  contrary,  it  wa'S~his  duty,  as  administrator  of  Cotton,  to  pay 
tliejJebt  out  of  that  estate.  He  so  understood  his  duty;  for  in_  the 
final  settlement  of  his  accounts  as  administrator,  he  charges  himself 
with  the  entire  proceeds  of  the  sale,  and  claims  credit  for  the  pay-  I 
ment  of  the  mortgage  debt  out  of  the  estate.^  If  he  chose  to  advance* 
the  mortgage  debt  out  of  his  own  funds  for  the  convenience  of  the 
purchaser,  he  was  in  a  situation  to  require  a  new  mortgage,  or  such 
other  security  as  he  saw  fit,  for  his  own  protection.  Having  neglected 
to  do  so,  he  has  no  claim  to  protection  in  equity  by  being  subrogated 
to  the  rights  of  the  mortgagee.  ^ 

The  fact  that  the  mortgage  has  not  been  satisfied  of  record  will  not 
alter  the  caseT'  The  evidence  shows  that  the  mortgage  debt  is  ex- 
Tinguished.  The_hQlder  of  the  mortgage  neither  assigned  nor  agreed 
to  assign  the  security.  Upon  the  receipt  of  the  money,  he  gave  the 
administrator  a  receipt  in  full  for  the  debt.  But  if  the  fact  we're  X 
otherwise,  if  the  administrator  held  the  bond  and  mortgage  in  his 
own  hands,  undischarged  and  unassigned,  after  the  settlement  of  the 
estate  of  the  intestate,  this  court  would  not  interfere  for  his  relief. 
It  3V0uld  be  eminently  dangerous  to  permit  an  administrator,  after  the 
settlement  of  an  estate,  to  set  up  an  uncanceled  mortgage  in  his  hands 
which  it  was  his  duty  to  have  discharged,  and  which  by  his  final  set- 
tlement he  alleges  was  discharged,  as  a  subsisting  incumbrance  upon 
the  title  of  the  purchaser  of  the  mortgaged  premises,  or  those  claim- 
ing under  him.  X 

Nor_is_Lhe_case  aided  by  the  fact  that  the  defendant  was  apprised 
atjtheJime  of  liis  purchase  of  the  claim  of  the  complainant.  Notice  of 
an  equitable  lien  will  operate  to  charge  the  estate  in  the  hands  of  the 
purchaser,  but  ncLnQtic£_wilL  serve  to  render  operative  as  an  incum- 
brance, axlaim  in.  itself  inequitable.  ^ 

With  this  view  of  the  principle  by  which  the  case  must  be  controlled 
and  decided,  it  is  unnecessary  to  determine  the  disputed  questions  of 
fact  in  the  case.    The  facts  have  been  assumed  to  be  in  accordance 
Hen.Sur. — 20 


306  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

with  the  allegations  of  the  complainant's  bill.  Whether  they  have 
been  established  in  evidence  is  in  no  wise  material  to  the  rights  of  the 
parties. 

The  bill  must  be  dismissed,  with  costs.^' 


JONES  V.  DAVIDS. 
(Court  of  Chancery,  1828.    4  Russ.  277.) 

The  plaintiff  filed  his  bill,  on  behalf  of  himself  and  all  other  the 
specialty  creditors  of  the  testator,  against  the  heir  and  the  executors. 

For^  the  defendants  it  was  objected  that  the  plaintiff  was  jiot  a 
specialty  creditor,  and  therefore  could  not  sustain  such  a  bill. 

The  plaintiff  had  joined  as  surety  with  the  testator  in  a  joint  and_sev- 
eral  bondj  andj  after  the  death  of  the  testator,  had  paid  the  amount 
of  the  bond  to  the  obHgee,  taking  an  assignment  of  the  bond. 
^  A^r.  GrifHth  Richards,  for_the^heix_af  the  testator,  relied  upon  Copis 
V.  ]\Iiddleton,  1  Turn.  &  Russ.  22-1,  and  cited  Gammon  v.  Stone,.  1  Ves. 
Sr.  339,  and  Woffington  v.  Sparks,  2  Ves.  Sr.  569.  The  bond,  he 
argued,  was  satisfied  by  payment,  and  the  assignment  of  it  to  one 
of  the  co-obligors  was  an  idle  formality ;  for  the  assignment  of  an 
instrument,  which  had  ceased  to  have  any  legal  force,  could  not  con- 
fer any  legal  rights. 
V     Mr.  Sugden  and  Mr.  Wilson,  for  the  plaintiff. 

Thi^_cas£_is.  distiffguished  from  Copis  V.  INIiddleton  by  the  circum- 
stance  tTiat  here  the  bond  has  been  assigned  to  the  surety,  and^y^vTrtue 
of  that  assignment  he  must  have  against  the  estate  of  the  principal 
obligor  all  the  remedies  which  the  obligee  might  have  had.  Suppose 
the  surety  had  employed  a  third  person  to  pay  the  amount  of  the  bond 
to  the  obligee,  and  to  take  an  assignment  of  it  as  trustee  for  him,  the 
bond  in  the  hands  of  that  trustee  would  have  been  a  valid  security; 
and  the  surety,  through  the  medium  of  his  trustee,  would  have  been  a 
specialty  creditor  on  the  estate  of  the  co-obligor.  Can  it,  in  equity, 
make  any  dift'erence  as  to  the  nature  or  degree  of  his  demand  whether 
the  bond  is  assigned  to  him  or  to  a  trustee  for  him  ? 
y^  The  Master  of  the  Rolls.  In  Copis  v.  ]\Iiddleton  the  surety,  Mar- 
tin, had  also  taken  an  assignment  of  the  bond ;  and  that  circumstance 
was  held  not  to  make  his  case  dift'erent_from  the  case  "of-the  other 
surety  who  had  taken  no  assignment.  After  the  assIgnmenT,'"the  ac- 
tion on  the  bond  must  be  brotiglU  in  the  name  of  the  obligee ;  and 
payment  by  the  surety  would  be  an  answer  to  the  demand. 

Tl^e  bill  must  be  dismissed ;   but  I  will  not,  in  this  case,  give  the 

17  4c cord:  JItna  Life  Insurance  Co.  v.  Middleport.  124  U.  S.  534.  8  Sup.  Ct 
625.  3lX.  Ed.  537  (1888) :   Webster  &  Goldsmith's  Appeal,  86  Pa.  409  (1878). 

On  the  question  whether  subrogation  exists  in  favor  of  a  surety  rmknoJ^•n 
to  the  debtor  against  the  debtor's  other  sureties,  see  note,  17  H.  L.  R.  577. 


Ch.  3)  THE  sukett's  equity  of  subrogation.  307 

defendants  the  costs  of  the  suit,  because  they  ought  to  have  demurred, 
and  thus  have  saved  to  both  parties  all  further  expense.  Hill  v.  Rear- 
don,  2  Sim.  &  Stu.  439.-8 


HILL  V.  KELLY. 

(Court  of  Chancery,  Ireland,  1794.    Ridg.  L.  &  S.  265.) 

The_plaintiffJiniiight Jbis.billJP  compel  the  defendant  to  assign  tc 
him  a  bond,  upon  which  judgment  had  been  entered.  He  stated  that 
William  Blanc,  having  borrowed  a  sum  of  money  from  the  defend- 
ant7  prevailed  upon  the  plaintiff  to  join  him  in  a  bond  to  the  defend- 
ant, which  bond  was  accordingly  executed,  and  separate  judgments 
\ver^  after-ivards  entered  by  virtue  of  a  warrant  of  attorney  for  that 
purpose.  The  defendant  afterwards  sued  out  execution  against  the 
plaintift"  alone,  and  refused  to  assign  the  bond  and  judgment,  upon^be- 
ingjendered  the  amount  of  the  debt  and  costs. 

Tke-defendant  in  her_.answer  insisted  that  the  money  was  lent  to 
the  plaintiff  himself,  and  not  to  Blanc,  who  joined  in  the  bond  at  the 
plaintiff's  request,  and  merely  as  surety ;  and  she  offered  to  enter  sat- 
isfaction upon  the  judgments  when  paid  her  demand. 

18-Rnt  now  hv  St.  32  &  33  Vict.  c.  46  (Hinde  Palmer's  Act,  1869),  after  re- 
citing that  "it  is  expedient  to  abolish  the  distinction  as  to  priority  of  payment 
between  specialty  and  simple  contract  debts  of  deceased  persons,"  it  is  enacted 
by  section  1  that  "in  the  administration  of  the  estate  of  every  person  who 
shall  die  on  or  after  the  1st  day  of  January,  1870,  no  debt  or  liability  of  such 
person  shall  be  entitled  to  any  priority  or  preference  by  reason  merely  that 
the  same  is  secured  by  or  arises  under  a  bond,  deed,  or  other  instrument  un- 
der seal,  or  is  otherwise  made  or  constituted  a  specialty  debt ;  but  all  the 
creditors  of  such  person,  as  well  specialty  as  simple  contract,  shall  be  treated 
as  standing  in  equal  degree,  and  be  paid  accordingly  out  of  the  assets  of  such 
deceased  person,  whether  such  assets  are  legal  or  equitable,  any  statute  or 
other  law  to  the  contrary  notwithstanding:  Provided,  always,  that  this  act 
shall  not  prejudice  or  affect  any  lien,  charge,  or  other  security  which  any 
creditor  may  hold  or  be  entitled  to  for  the  payment  of  his  debt."  Williams 
on  Executors   (10th  Ed.)  p.  771. 

St.  19  &  20  Victoria,  c.  97,  §  5:  "Every  person  who,  being  surety  for  the 
debt  or  duty  of  another  or  being  liable  with  another  for  any  debt  or  duty, 
shall  pay  such  debt  or  perform  such  duty,  shall  be  entitled  to  have  assigned 
to  him,  or  to  a  trustee  for  him,  every  judgment,  specialty,  or  other  security 
which  shall  be  held  by  the  creditor  in  respect  of  such  debt  or  duty,  whether 
such  judgment,  specialty,  or  other  security  shall  or  shall  not  be  deemed  at 
law  to  have  been  satisfied  by  the  payment  of  the  debt,  or  performance  of  the 
duty,  and  such  person  shall  be  entitled  to  stand  in  the  place  of  the  creditor, 
and  to  use  all  the  remedies,  and  if  need  be,  and  upon  a  proper  indenniity,  to 
use  the  name  of  the  creditor  in  any  action  or  other  proceeding  at  law  or  in 
equity,  in  order  to  obtain  from  the  principal  debtor,  or  any  co-surety,  co-con- 
tractor, or  co-delitor,  as  the  case  may  be,  indemnification  for  the  advances 
made,  and  loss  sustained  by  the  person  who  shall  have  so  paid  such  debt,  or 
performed  such  duty,  and  such  payment  or  performance  so  made  by  such 
surety  shall  not  be  pleadable  in  bar  of  any  such  action  or  other  proceeding  by 
him:  Provided,  always,  that  no  co-surety,  co-contractor,  or  co-debtor,  shall 
be  entitled  to  recover  from  any  other  co-surety,  co-contractor,  or  co-debtor,  by 
the  means  aforesaid,  more  than  the  just  proportion  to  which,  as  between  those 
parties  themselves,  such  last-mentioned  person  shall  be  justly  liable." 


308  THE  EQUITABLE  AND   LEGAL   raCHTS  OF  THE  SURETY.      (Pan    3 

Witnesses  were  examined,  and  there  was  contradictory  swearing  as 
to  the  person,  who  was  the  real  debtor.  The  cause  came  on  to  be  heard 
in  Trin.  1793,  when  j\I.  Smith,  and  Espinasse  contended  that  the  plain- 
tiff was  entitled  to  a  decree;  but,  if  the  court  had  any  doubt  upon  the 
evidence,  an  issue  might  be  directed  to  ascertain  the  fact.^^ 

Lord  Chancellor  thought  the  conduct  of  the  defendant  was  not 
entitled  to  favor  in  a  court  of  equity.  Her  object  in  preventing  the 
judgment  standing  out  in  the  hands  of  the  plaintiff  aganist  Blanc  was 
an  apprehension  that  it  might  defeat  securities  •whicH^ihe  had  taken 
from  Blanc,  subsequent  to  the  judgment,  the  consideration  for  which 
securities  appeared  from  the  evidence  to  be  composed  of  old  debts, 
with  arrears  of  interest  consolidated  together,  and  made  to  bear  in- 
terest. Those  securities,  therefore,  going  to  establish  a  claim  of  com- 
pound interest,  were  not  to  be  preferred,  and  the  circumstances  of 
Blanc  might  be  an  additional  reason  with  the  defendant  for  resort- 
ing to  the  plaintiff.  But,  as  there  was  contradictory  evidence  respect- 
ing the  fact  who  was  the  real  debtor,  it  was  necessary  to  have  that 
ascertained  by  a  jury.  The  cases  cited  related  merely  to  bonds,  and 
did  not  apply  to  the  case  of  judgments. 

An  issue  was  directed  to  try  to  which  of  the  two  persons,.  Hill  or 
Blanc,  the  money  was  really  lent  by  the  defendant.  It  .was  accord- 
ingly tried  at  the  last  assizes  for  Maryborough,  when  the  jury  found 
for  the  plaintiff. 

Upon  this  finding  the  cause  .came  now  upon  a  final  hearing,  when 
X  Espinasse  and  A.  Moore  prayed  a  decree  for  the  plaintiff'. 

Saakey,  for  the  defendant,  contended  that,  notwithstanding  the  ver- 
dict, the  plaintiff  was  not  entitled  to  a  decree.  He  went  over  the  cases 
formerly  cited,  and  added  that  there  was  an  evident  collusion  between 
the  plaintiff  and  Blanc  to  the  injury  of  the  defendant;  for  otherwise 
the  assignment  of  the  judgment  would  not  serve  the  plaintiff,  for, 
being  a  joint  security  with  Blanc,  a  payment  by  one  was  a  discharge 
of  both,  and  might  be  so  pleaded  by  Blanc.  Equity  therefore  ought 
not  to  assist  this  collusion,  nor  deprive  a  bona  fide  creditor  of  a  legal 
right. 

Lord  Chancellor.  The  cases  now  cited  were  mentioned  upon  the 
former  hearing;  they  go  to  bonds  merely.  Let  th^def endant  assign 
this  judgment,  and  let  the  plaintiff  have  his  costs  incurred. 

Decree  for  the  plaintiff. 

»»  The  arguments  of  counsel  are  In  part  omitted. 


Ch.  3)  THE  surety's  equity  of  subrogation,  5509 

KENT  V.  CANTER'S  EX'R. 

(Court  of  Exchequer,  Ireland,  1791.     Wall.  &  L.  364.) 

James  Canter,  the  defendant's  testator,  and  one  Kennelly,  whose  ad- 
ministrator the  plaintiff  was,  executed  a  joint  and  several  bond  and 
warrant  to  William  Crilly,  upon  'wHich  Crilly  obtained  judgment 
against  James  Canter  only.  Kennelly  afterwards  paid  off  this  debt  by 
giving  his  own  and  his  son's  security~fof""ttig~arnomrt---e-f--rtr-aiid  ob- 
tained an  assignment  of  the  judgment  against  Canter  to  TiTfnself. 
Both  Kennelly  and  Canter  afterwards  died ;  and  this  bill  was  filed  by 
the  plaintiff,  as  administrator  of  Kennelly,  against  the  defendant,  as 
heiPand  executor  of  Canter,  for  the  recovery  of  this  judgment,  as  hav- 
ing been  the  proper  debt  of  Canter  only,  for  whose  use  the  money  was 
originally  raised.  A  decree  was  pronounced  for  taking  an  account  of 
the  real  and  personal  estates  of  James  Canter,  and  of  the  debts  af- 
fecting the  real  estate.  The^officer^eported  the  judgment  as  a  debt 
affecting  such  real  estate;  and  this  report  was  excepted  to  on  a  sup- 
position that  such  judgment  was  actually  satisfied  and  extinguished 
by  the  payment  of  one  of  the  co-obligors  in  the  original  bond,  whereon 
that  judgment  was  founded,  and  that  consequently  there  was  nothing 
to  assign  to  Kennelly,  who  therefore  must  come  in  merely  as  a  simple 
contract  creditor. 

But  The  Court  (Yelverton,  C.  B.,  and  Power  and  Hamilton, 
BB. ;  Baron  Metge  having  quitted  the  bench  before  judgment,  but 
after  argument,  when  he  seemed  inclined  against  the  exception)  held 
the  report  xight,  and  that  the.  payment  was  not  a  discharge  of  the 
judgment,  so  as  to  prevent  an  assignment  thereof  to  Kennelly, 


LUMPKIN  V.  MILLS. 

(Supreme  Court  of  Georgia,  1848.     4  Ga.  343.) 

In  Equity,  in  Floyd  Superior  Court,  before  Judge  Wright,  October 
Term,-  1847. 

The  facts  of  the  case  are  embodied  in  the  opinion  of  the  court.^" 

Judge  Lumpkin,  being  a  relative  to  the  plaintiff  in  error,  did  not 
preside  in  this  cause. 

NiSBET,  J.  This  was  a  bill  filed  bv  the  plaintiff  in  error,  as  admin-  ^'^<^ 
istj:ator,_to  marshal  the  assets  of  his  intestate.  The  defendanTTh  "Ris 
answer  set  forth  that  as  surety  for  the  plaintiff's  intestate  upon  a  note 
of  hand~uncler  seal  he  had  paid  the  debt  of  his  principal,  and  there- 
fore claimed  in  equity  to  be  subrogated  to  the  rights  of  the  creditor,, 
and  to  come  in,  in  the  marshaling  of  the  assets,  as  a  bond  creditor. 
The  plaintiff  in  error  claims  that  he  is  only  an  open  account  creditor.. 

2  0  The  argument  of  counsel  is  omitted. 


310  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

The  questLon,  Jherefore,  and  the  only  question  made  upon  this  rec- 
ord, is  this :  Can  a  surety,  in  equity,  upon  the  settlement  of  an  in- 
solvent estate,  who  has  paid  a  debt  of  his  principal  due  upoiTarT in- 
strument under  seal,  be  subrogated  to  the'rights  and  substituted  to  the 
position  of  the  creditor,  so  as  to  come  in  as  a  creditor  under  that  in^ 
stTlmient,  or  is  he  entitled  only  as  a  creditor  by  open  accbulrt"?  ' 

^  TlJs_conceded  in  the  outset  that  the  authorities  upon  this  subject  do 
not  run  a  uniform  course.  The  early  English  cases  are  with  "the  de- 
fendant, and  recognize  the  right  of  subrogation.  Cases  of_  the"  very 
highest  authority  in  Great  Britain,  decided  since  our  Revolution,  settle 
the  rule  differently,  and  deny  his  right  to  be  paid,  otherwiseTTTan  as 
a  creditor  by  open  account.  The  American  authorities  are  also  in 
conflict,  but  we  think  their  preponderance  is  in  favor  of  the  early 
British  rule.  The  civil  law  also  sustains  that  rule,  and  so  do  the  au- 
thorities in  those  countries  where  the  civil  law  is  recognized.  We 
think,  upon  principle,  the  rule  of  the  British  courts,  anterior  to  our 

n  Revolution,  right.  If  it  was  not,  it  is  obligatory  upon  us  as  law.  The 
civil  law  is  the  parent  of  that  rule — as  it  is,  in  truth,  of  many,  very 
many,  of  the  principles  of  equity  which  obtain  in  the  English  chan- 
hCery  courts.  That  code  is  not  of  binding  authority  upon  us,  but  I  rec- 
lognize  in  it,  in  reference  to  many  titles  of  the  law,  and  among  them 
Ithat  of  principal  and  surety,  the  very  best  system  extant.  Its  broader, 
and  more  reasonable,  and  less  fettered  equity  is  gradually  being  trans- 
ferred into  the  American  jurisprudence.  And  where  authorities  are 
in  conflict,  and  principles  doubtful,  a  court  does  well  to  allow  the 
Roman  law  to  quiet  the  conflict  and  dispel  the  doubt.  We  have  no  dif- 
ficulty, either  upon  authority  or  principle,  in  settling  as  the  rule  of 
th^s^ court  that  a  surety,  who  has  paid  the  debt  of  his  principal,  is  in 
a  court  of  equity  entitled  in  all  respects  to  occupy  in  the  distribution  of 
his  estate  the  place  of  the  creditor. 

It  js_a_vveU-settled  doctrine  of  the  common  law  that  a  siirctv,  upon 
payment  of  the  debt  of  his  principal,  is  entitled  to  ar.  if  of 

all  the  independent  securities  in  the  hands  of  the  crediiui,  w  un  ajl  the 
remedies  which  he  had  to  enforce  them  against  the  principal.  The 
Roman  law  goes  farther.  By  that  law,  not  only  is  he  entitled  to  these 
securities,  but  he  is  also  entitled  to  be  substituted,  as  to  the  very  debt 
itself,  to  the  creditor,  by  way  of  cession  or  assignment.  The  debt  in 
favor  of  the  surety  is  treated,  not  as  a  paid,  extinguished  debt,  but  as 
sold  to  him ;  all  its  original  obligatory  force  continuing  against  the 
principal.  The  surety  is  viewed  in  the  light  of  a  purchaser.  The 
statement  and  reasoning  of  the  civil  law  is  as  follows:  "Fidejussori- 
bus  succurri  solet,  ut  stipulator  compellatur  ei,  qui,  solidum  solvere 
paratus  est,  vendere  cseterorum  nomina.  Cum  is,  qui  et  reum  et  fide- 
jussores  habens,  ab  uno  ex  fidejussoribus  accepta  pecunia  praestat  ac- 
tiones ;  poterit  quidem  dici,  nuUas  jam  esse;  cum  suum  perceperit, 
et  preceptione  omnes  liberati  sunt.  Sed  non  ita  est ;  non  enim  in  solu- 
tum    accepit,   sed  quodamniodo   nomen   debitoris  vendidit.      Et    ideo 


f 


Ch.  3)  THE  surety's  equity  of  subrogation.  311 

habet  actiones,  quia  tenetur  ad  id  ipsum,  ut  prsestet  actiones."  Of  the 
reasoning  upon  which  the  civil  law  goes  Mr.  Story  says:  "It  may 
seem  a  little  artificial,  but  it  has  a  deep  foundation  in  natural  jus- 
tice." Pothier  on  Oblig.  (by  Evans)  n.  275,  280,  281,  428,  429,  430, 
519,  520,  521,  522;  Dig.  lib.  46,  tit.  1,  1,  17,  1,  36;  Pothier  Pand. 
hb.  46,  tit.  1,  n.  46 ;    1  Domat,  B.  3,  tit.- 1,  §  3,  arts.  6,  7. 

This  rule,  I  stated,  is  adopted  in  countries  which  recognize  the  civil 
la^.  Code  Nap.  arts.  1251,  1252;  Bell's  Diet,  Art.  Beneficium  ceden- 
darum  actionum;  Civil  Code  of  Louisiana,  arts,  2157,  2158;  Voet, 
ad  Pand.  lib.  46,  tit.  1,  §§  27,  29,  30;  Huber,  Proelect.  Inst.  lib.  3, 
tit.  21,  note  8;  Ersk.  Inst.  B.  3,  tit.  3,  art.  68;  1  Kaine's  Eq.  122,  ,  .  r 
124.  The  courts  of  Great  Britain,  in  some  of  the  earlier  c_aseSj  en--'^  ^''"^  ^ 
larged  the  rule  that  I  stated  was  settled,  to  wit,  that  a  surety  is  en-  -'^**-^*^ »>!» 
tilled  to  the  independent  collateral  securities,  with  all  the  creditor's 
remedies^  to  enforce  them  against  the  principal,  and  held  that  the 
surety  should  be  also  entitled  to  an  assignment  of  the  very  debt  itself, 
thus  going  the  full  length  of  the  civil  law,  and  subrogating  him  fully 
to  the  rights  of  the  creditor.  The  rule,  thus  enlarged,  we  recognize 
as  the  common-law  rule,  at  the  time  we  adopted  it.  In  Ex  parte  Crisp, 
Lord  Hardwicke  said  that,  where  a  surety  paid  off  a  debt,  he  was  en- 
titled to  have  from  the  creditor  an  assignment  of  the  security,  to  en- 
able him  to  obtain  satisfaction  for  what  he  had  paid  beyond  his  pro- 
portion. 1  Atkins,  133.  In  Morgan  v.  Seymour,  the  court  decreed 
that  the  creditor  should  assign  over  his  bond  to  the  two  sureties,  to 
enable  them  to  help  themselves  against  the  principal  debtor.  1  Ch. 
R.  64,  The  principle  was  applied  in  a  very  strong  case  in  Vernon. 
The  principal  had  given  bail  in  an  action,  and  judgment  was  recov- 
ered against  the  bail.  Afterwards  the  surety  to  the  original  debt  was 
called  upon  and  paid  it,  and  it  was  held  that  he  was  entitled  to  an  as- 
signment of  the  judgment  against  the  bail.  So  that,  although  the  bail 
was  but  a  surety,  as  between  him  and  the  principal  debtor,  yet  coming 
in  the  room  of  the  principal,  as  to  the  creditor,  it  was  held  that  he 
likewise  came  in  the  room  of  the  principal  debtor,  as  to  the  surety. 
This  case  establishes  that  the  surety  has  precisely  the  same  rights  that 
the  creditor  had,  and  shall  stand  in  his  place — a  case  of  entire  subro- 
gation.   Parsons  v.  Briddock,  2  Vernon,  608. 

These  three  cases  are  anterior  to  the  era  of  the  Revolution,  and 
demonstrate  how  the  law  stood  at  that  time ;  and  considering  that 
we  are  not  at  liberty  to  depart  from  the  common  law,  as  it  then  stood, 
and  that  up  to  that  time  the  rule  was  not  seriously  questioned,  we 
might  stop  the  review  here.  It  may,  however,  be  more  satisfactory  to 
press  the  discussion  through  the  course  of  this  question  down  to  the 
present  moment,  and  to  look  into  the  reasonableness  of  the  modern 
English  rule.  Other  cases  since  that  era  recognize  the  doctrine  as  held 
in  the  three  cases  referred  to.  It  received  an  express  recognition  by 
the  Chancellor  in  Wright  v.  Morely,  11  Vesey,  12,  21,  22,  in  which 
case  the  case  of  Parsons  v.  Briddock,  in  Vernon,  is  commented  on  and 


312  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part   3 

sustained.  See,  also,  Dowbiggin  v.  Bourne,  1  Younge,  111,  s.  c.  2 
Younge  &  Coll.  464;  Butcher  v.  Churchill,  14  Vesey,  567,  575,  576; 
Ex  parte  Rushworth,  10  Vesey,  409,  414;  Robinson  v.  Wilson,  2 
Aladd.  464;  Craythorn  v.  Swynborne,  14  Vesey,  160,  162;  Hotham 
V.  Stone,  1  Turner  &  Russ.  226,  note. 

It.  is  nevertheless  true,  as  Mr.  Story  states,  that  the  rule  is  now 
different  in  England.  Without  following  the  authorities  minutely 
through,  it  may  be  stated  that  the  late  rule,  which  denies  the  right 
of  the  surety  to  a  cession  of  the  debt  itself,  and  to  a  perfect  substitu- 
tion for  the  creditor,  rests  chiefly  upon  two  comparatively  recent  cases, 
determined  by  two  of  the  ablest  Chancellors  of  England.  I  allude 
to  the  case  of  Copis  v.  Middleton,  1  Turner  &  Russ.  224,  determined 
by  Lord  Eldon,  and  Hodgson  v.  Shaw,  3  Mylne  &  Keene,  183,  deter- 
mined by  Lord  Brougham.  These  are  names  of  pre-eminent  author- 
ity, and  their  weight  settles  all  controversy  about  the  matter  at  this 
moment  in  England.  It  is  not  a  little  remarkable  that  names  of  au- 
thority equally  conclusive  on  this  side  of  the  water  are  arrayed  against 
these  potent  chiefs  of  the  English  Chancery,  to  wit,  Marshall  and  Kent. 

Neither  Lord  Eldon  nor  Lord  Brougham  questions  the  rule  that  a 
surety  is  entitled  to  an  assignment  of  the  collateral  securities.  The 
former  said :  "It  is  a  general  rule  in  equity  that  the  surety  is  entitled 
to  the  benefit  of  all  the  securities  which  the  creditor  has  against  the 
principal.  But  then  the  nature  of  those  securities  must  be  considered. 
When  there  is  a  bond  merely,  if  an  action  was  brought  upon  the  bond, 
it  would  appear  upon  oyer  of  the  bond  that  the  debt  was  extinguished. 
The  general  rule  must  be  qualified,  therefore,  by  considering  it  to 
apply  to  such  securities  as  continue  to  exist  and  do  not  get  back  upon 
payment  to  the  person  of  the  principal  debtor."  Lord  Brougham  says : 
"Thus  the  surety  paying  is  entitled  to  every  remedy  which  the  cred- 
itor has.  But  can  the  creditor  be  said  to  have  any  specialty,  or  any 
remedy  on  any  specialty,  after  the  bond  is  gone  by  payment?  The 
surety  may  enforce  any  security  which  the  creditor  has;  but  by  the 
supposition  there  is  no  security  to  enforce,  for  the  payment  has  ex- 
tinguished it." 

The  whole  of  this  reasoning  is  founded  upon  the  technical. -idea 
that  payment  by  the  surety  is  an  extinguishment  of  the  dejit;  and, 
being  so  extinguished,  if  the  evidence  of  it  were  assigned  to  the  surety, 
it  will  avail  him  nothing.  It  may  be  true  that,  in  a  suit  on  the  bond 
in  the  case  at  this  bar  by  the  surety,  he  might  be  met  and  defeated 
by  plea  of  payment.  Be  it  so.  We  are  not  in  a  court  of  law.  And 
really  it  would  seem  that  the  reasoning  of  these  great  Chancellors 
would  rather  fall  appropriately  from  the  lips  of  Lord  Kenyon  or 
Mansfield  in  a  court  of  law  than  from  theirs  in  a  court  of  equity. 
For  it  will  be  seen  that  tlie  nghts  of  the  surety  in  this  matter  depend 
upon  no  such  subtle  technicalit3^'But^Ipon  ah  equity  which  springs 
out  of  the  fact  of  payment,  and  Out~of  his  relation  to  the'prmcTpal 
debtor.     It  may  be  well  questioned  whether,  upon  principles  oi'^om- 


Ch.  3)  THE  surety's  equity  of  subrogation.  313 

men  sense  and  common  equity,  the  payment  by  a  surety  out  of  his  own 
funds  of  the  debt  of  another,  in  the  consideration  of  which  he  was  not 
at  all  interested,  ought  to  be  considered,  as  to  the  surety,  an  ex- 
tinguishment. Upon  a  question  as  to  the  right  of  subrogation  a 
Chancellor  ought  not  so  to  hold  it.  These  cases  go  upon  the  fact 
that  the  debt  is  in  law  extinguished.  The  civil  law,  addressing  itself 
to  the  equity  of  the  transaction,  will  not  admit  that  it  is  extinguished, 
but  bought  by  the  surety.  A  purchaser  of  a  negotiable  security  for 
value  would,  upon  the  instrument,  acquire  the  rights  of  the  original 
creditor.  How  can  he  occupy  a  position  in  a  court  of  equity  more 
favorable  than  a  surety?  The  equities  are  stronger  in  favor  of  the 
surety. 

Whilst  upon  this  phase  of  the  argument,  it  may  be  well  to  say  that 
it  is  quite  Immaterial  whether  there  is  in  point  of  fact  an  assignment 
of  the  debt  or  not;  for  if,  upon  equitable  principles  the  surety  is  en- 
titled to  it,  chancery  will  consider  that  as  done  which  ought  to  have 
been  don"e~  (lyidderdale's  Ex'rs  v.  Robinson's  Ex'r,  12  Wheat.  596, 
6  L.  led.  740),  and,  if  necessary,  would  decree  an  assignment  to 
be  made.  Equity  will  not  permit  the  creditor  to  prejudice  the  rights  of 
the  surety,  by  a  refusal  to  make  an  assignment.  Upon  what  prin- 
ciple is  it  that  the  surety  is  entitled  to  the  collateral  securities  in  the 
hands  of  the  creditor?  It  is  not  by  virtue  of  a  contract  between  him 
and  the  principal.  The  only  contract  between  them  is  the  impHed 
contract  which  results  from  the  relation  of  principal  and  surety;  and 
that  is  that,  if  the  surety  is  compelled  to  pay  the  debt,  the  principal 
will  reimburse  him.  It  is  upon  this  implied  contract  that  the  surety 
is  entitled  to  his  action  for  money  paid  to  the  use  of  his  principal. 
This  contract  does  not  give  him  the  right  to  the  collateral  securities. 
How,  then,  do  Lords  Eldon  and  Brougham  arrive  at  the  right  of  the 
surety  to  the  collateral  securities?  It  is  by  invoking  the  equity  which 
flows  necessarily  out  of  the  payment  and  relationship  of  the  parties. 
Hear  what  Lord  Brougham  says:  "The  rule  here  is  undoubted,  and 
it  is  founded  upon  the  plainest  principles  of  natural  reason  and  jus- 
tice, that  a  surety,  paying  off  a  debt,  shall  stand  in  the  place  of  the 
creditor,  and  have  all  the  rights  which  he  has,  for  the  purpose  of 
obtaining  reimbursement.  It  is  hardly  possible  to  put  this  right  of 
substitution  too  high,  and  the  right  results  more  from  equity  than 
contract  or  quasi  contract  unless  in  so  far  as  the  known  equity  may 
be  supposed  to  be  imputed  into  a  transaction,  and  so  to  raise  a  contract 
by  implication." 

Now,  M[hat_XJiai'^e-tQ  say  in  reference  to  this  reason,  is  this:  It 
applies  wijh  equal  force  in  favor  of  the  surety's  right  to  a  transfer  of— . 
the_debt  itself  as  in  favor  of  his  right  to  a  transfer  of  the  collateral 
securities.  He  is  entitled  to  the  latter,  not  by  contract,  but  according  to 
principles  of  natural  reason  and  justice.  By  these  principles  he  is 
made  to  stand  in  the  place  of  the  creditor.  And,  so  standing,  the  right 
to  the  collateral  securities  follows.     Here  is  the  doctrine  of  substi- 


314  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2 

tution  recognized,  and  the  powers  of  a  court  of  chancery  are  invoked 
to  give  it  effect.  The  doctrine  once  admitted,  and  it  seems  to  me  im- 
possible to  escape  from  the  conclusion  that,  whatever  are  the  rights 
of  the  creditor  anterior  to  the  payment  and  subsisting  at  the  time,  they 
devolve  upon  the  surety.  The  principles  of  natural  reason  and  justice 
pass  them  to  him.  And  one  of  these  rights,  in  the  case  before  us,  is 
to  be  let  in,  in  the  distribution  of  the  estate  of  the  debtor,  as  a 
specialty  creditor,  if  the  debt  had  not  been  paid  by  the  surety.  He, 
paying  it,  is  subrogated  to  that  right.  He  is  clearly  as  much  subro- 
gated to  that  right  as  he  can  be  to  the  right  of  enforcing  a  mortgage 
or  any  other  collateral  security.  I  cannot,  I  do  not,  recognize  the 
conclusiveness  of  the  reason  that  the  bond  is  paid,  and  therefore,  as 
to  that,  the  substitution  cannot  take  place.  The  substitution  ol  the 
surety  is  not  for  the  creditor  as  he  stands  related  to  the  principal"after 
the  payment,  but  as  he  stood  related  to  him  before  the  payment.^  He 
is  "subrogated  to  such  rights  as  the  creditor  then  had  against  the 
principal,  one  of  which  unquestionably  was  to  enforce  his  bond  against 
the  principal,  and,  if  he  was  insolvent,  to  be  let  in  as  a  bond  creditor. 
What  difference  is  there  between  permitting  a  surety  to  reimjjiirse 
himself  out  of  a  mortgage  lien  held  by  the  creditor,  and  permitting 
him  to  take  out  of  the  estate  generally  of  the  principal,  the  amount  he 
has  paid?  If  he  realizes  upon  the  mortgage,  he  abstracts  the  amount 
which  he  has  paid  from  the  estate  of  the  principal ;  if  he  realizes 
on  the  bond,  the  mortgaged  property  goes  back  into  the  common  fund, 
and  the  result  to  him  and  to  other  creditors  is  the  same.  The  very  fact 
that  the  surety  could  not  enforce  the  bond  at  law  is  a  reason  in  equity 
why  he  should  be  allowed  to  come  into  the  distribution  as  a  bond 
creditor.  So  determined,  as  I  shall  show,  in  New  York.  With  pro- 
found reverence  for  these  profound  jurists,  I  may  be  permitted  to  say 
that  the  reasoning  upon  which  their  judginent  is  founded  is  not,  to 
say  the  least  of  it,  conclusive. 

InQonsistcnt,  too,  with  their  reasoning,  is  the  rule  as  to  the  rights  of 
sureties,  which  has  been  adopted  in  the  English  courts  oFbank- 
riiptcy.  If  the  creditor,  in  case  of  the  bankruptcy  of  the  principal 
debtor,  has  proved  his  debt  before  the  commissioners,  and  then  the 
surety  pays  the  debt,  the  latter  will  be  entitled  to  the  dividends  de- 
clared on  his  estate,  and  the  creditor  will  be  held  his  trustee  for  that 
purpose.  Ex  parte  Rushworth,  10  Vesey,  409 ;  Wright  v.  Morely,  11 
Vesey,  12,  22 ;  Watkins  v.  Flannagan,  3  Russel,  421 ;  Ex  parte  Hous- 
ton, 2  G.  &  Jamieson,  36 ;  Ex  parte  Gee,  1  G.  &  Jamieson,  330.  So, 
also,  the  surety  may  compel  the  creditor  to  go  in  and  prove  his  debt 
before  the  commissioners,  and  then,  if  he  pays  the  whole  debt,  the 
creditor  will  in  like  manner  become  a  trustee  of  the  dividends  for 
liim.  10  Vesey,  409,  414;  Wright  v.  Simpson,  6  Vesey,  734.  In 
these  cases  the  surety  is  subrogated  to  the  rights  of  the  creditor  upon 
the  specific  debt  which  is  due  him  by  the  bankrupt. 


Ch.  3)  THE  surety's  equity  of  subrogation.  315 

The  fact  of  proving  his  debt  before  the  commissioners  can  create 
no  stronger  equity  in  favor  of  the  surety  than  that  which  results  to 
him,  in  case  of  the  insolvency  of  the  estate  of  the  debtor,  after  his 
decease.  In  marshaling  the  assets  of  a  decedent,  a  court  of  chancery 
would  allow  a  bond  creditor  his  dividend,  according  to  the  dignity  of 
his  debt,  only  upon  the  debt  being  proven.  Upon  the  principles  of 
the  rule  in  bankruptcy,  if  a  decree  marshaling  assets  should  allow  a 
creditor  his  dividend,  it  would  be  considered  that  his  debt  had  been 
proven;  and  if  the  surety  should  then  step  forward  and  pay  it,  he 
would  be  entitled  to  all  the  creditor's  rights  under  that  decree.  In 
equity,  without  such  decree,  it  would  seem  that  his  rights  ought  to 
be  the  same.  The  equity  which  substitutes  him  at  all  ought  to  sub- 
stitute him  always  upon  the  payment  of  the  debt.  \  />'«  ■  ■  <■  -^ 

Thg  authoritv.j3.f  Mr.  -Story  is  claimed  in  support  of  the  doctrine  .  .  >'"' 
as  taugbi.  in  Copis  v.  Middleton  and  Hodgson  v.  Shaw.  The  claim  is 
questionable.  It  is  even  doubtful  whether  the  opinion,  from  all  that 
appears,  of  that  learned  jurist  be  not  against  that  doctrine.  As  a 
faithful  commentator,  it  was  his  duty  to  state  the  rule,  as  it  was 
settled  at  the  time  he  wrote.  He  does  state  it  to  be  settled  according 
to  the  decisions  of  Lords  Eldon  awd  Brougham.  It  is  very  strange, 
however,  that  in  his  review  of  this  question  Judge  Story  has  failed 
to  refer  to  numerous  leading  American  cases.  For  example,  I  do 
not  find  that  he  notices  at  all  the  Virginia  decisions— that  of  Chi^ef 
Justice  Marshall  in  Brockenbrough  among  them.  Nor  has  he  quoted 
even  the  solemn  judgment  of  the  Supreme  Court  of  the  United  States 
against  what  he  states  to  be  the  settled  rule.  It  is  passing  strange  that, 
in  commenting  on  a  doctrine  differently  decided  in  England  and  in 
our  own  courts,  such  authority  as  Marshall  on  the  circuit  and  the 
Supreme  Court  should  either  escape  him  or  be  considered  unworthy 
of  comment.  To  return,  however,  to  his  opinion  upon  this  subject.  It 
is  very  apparent  that  he  does  not  fully  give  in  to  the  rule  as  settled. 
In  speaking  of  the  contrary  doctrine,  he  speaks  doubtingly  of  its 
being  an  erroneous  opinion.  "The  error  of  the  contrary  opinion,"  says 
he,  "if,  indeed,  upon  the  principles  of  enlarged  equity  <any  there  be, 
seems  to  have  arisen,"  etc.,  clearly  expressing  a  doubt  in  his  own 
mind  whether  the  contrary  opinion  be  erroneous.  1  Story's  Com. 
on  Eq.  §  499.  In  commenting  on  the  rule  of  the  civil  law,  as  opposed 
to  the  cases  of  Copis  v.  Middleton  and  Hodgson  v.  Shaw,  he  re- 
marks :  "It  is  not  wonderful  that  courts  of  equity,  with  this  enlarged 
doctrine  in  their  view,  which  is  in  entire  conformity  to  the  intention 
of  the  parties,  as  well  as  to  the  demands  of  justice,  should  have 
struggled  to  adopt  it  into  the  equity  jurisprudence  of  England.  The 
opposing  doctrine  [that  of  Copis  v.  Middleton  and  Plodgson  v.  Shaw] 
is  founded  more  on  technical  rules  than  on  any  solid  reasoning, 
founded  on  general  equity."  Again,  he  says:  "Whether  it  might  not 
have  been  as  wise  for  courts  of  equity  to  have  followed  out  the 
Roman  law  to  its   full  extent,  instead  of   adopting  a  modified  rule. 


'■k 


316  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2' 

which  stops  or  may  stop  short  of  some  of  the  purposes  of  reciprocal 
justice,  it  is  now  too  late  to  inquire,  and  therefore  the  discussion 
would  be  useless."  1  Story's  Com.  on  Eq.  §  499,  c.  note  3.  Now  this 
is  not  the  language  of  approval.  It  is  rather  that  of  regretful  dis- 
approval. 

The^weight,  I  have  stated,  of  the  American  cases,  is  with  the  old 
common-law  rule,  very  respectable  authorities  being  against  it.  In 
Tennessee,  a  surety  who  has  paid  the  judgment  "agamst  his  principal 
is  substituted  in  equity  to  all  the  rights  of  the  judgment  creditor; 
nor  need  the  creditor  be  made  a  party  where  a  bill  is  filed  by  the 
surety  to  enforce  it.  McNairy  v.  Eastland,  10  Yerg.  310.  In  Per- 
kins and  Others  v.  Kershaw  and  Others,  Judge  O'Neal,  although 
no  judgment  was  rendered  to  the  extent  that  a  surety  is  substituted  for 
the  creditor  as  to  the  identical  debt  paid,  yet  uses  language  so  gen- 
eral and  sweeping  as  to  imply  that  position.  He  says :  "The  surety, 
who  pays  the  debt  of  his  principal,  has  a  right  to  be  remitted  to  all  the 
rights  and  securities  of  the  creditor.  He  is,  in  equity,  substituted  for 
the  creditor."  1  Hill,  Eq.  (S.  C.)  351.  In  Burrows  v.  McWhann,  the 
court  goes  the  length  of  adjudging  that  a  judgment  in  favor  of  the 
creditor  against  the  principal  debtor,  although  actually  discharged  on 
the  record,  when  the  debt  is  paid  by  the  surety,  shall  be  revived  for 
the  purpose  of  giving  effect  to  his  right  of  subrogation.  No  case 
could  be  stronger  than  this.  The  debt  is  in  judgment,  and  a  lien  is 
thereby  created  in  favor  of  the  creditor  against  the  estate  of  the  princi- 
pal, yet  the  surety  who  pays  that  judgment,  even  after  an  entry  of 
satisfaction,  is  substituted  for  the  creditor  on  that  judgment,  and  the 
lien  enures  to  his  benefit.  1  Desaus.  (S.  C.)  409,  1  Am.  Dec.  677. 
To  the  same  extent  is  the  case  of  Sprigg  v.  Beaman,  6  La.  59.  In  that 
state,  however,  as  is  well  known,  the  civil  law  to  a  great  extent  pre- 
vails. The  rule  of  the  civil  law  as  to  substitution  is  embodied  in  the 
Civil  Code  of  Louisiana.     Civ.  Code  La.,  arts.  2157,  2158. 

In  the  New  York  chancery  it  may  be  assumed  as  an  incontrovertible 
fact  that  the  rule  of  the  civil  law  prevails.  There  a  surety  who^has 
paid  the  debt  is  considered  as  a  purchaser  of  the  security  upon  which 
it  is  founded.  Chancellor  Kent,  in  Cheesebrough  v.  Millard,  ?ays : 
"If  a  creditor  to  a  bond  exacts  his  whole  demand  of  one  of  the  sure- 
ties, that  surety  is  entitled  to  be  substituted  in  his  place,  and  to  a  ces- 
sion of  his  rights  and  securities,  as  if  he  was  a  purchaser,  either 
against  the  principal  debtor  or  the  co-sureties."  1  Johns.  Ch.  413,  7 
Am.  Dec.  494.  Now  this  dictum  asserts  more  than  that  the  surety  is 
entitled  to  a  cession  of  the  collateral  securities  and  to  the  rights  of  the 
creditor  thereon.  It  declares  the  principle  of  the  civil  law,  that  he 
is  to  be  considered  as  a  purchaser  from  the  creditor  of  the  debt.  It 
therefore  denies  the  position  of  Lord  Eldon,  that  the  payment  by  the 
surety  is  an  extinguishment  of  the  debt,  and  of  course  all  the  con- 
clusions drawn  from  that  position.  To  show  that  Chancellor  Kent 
is  to  be  understood  as  going  that  far,  I  advert  to  the  fact  that  he,  in 


Ch.  3)  THE  surety's  equity  of  subrogation.  317 

this  case,  quotes  and  comments  on,  approvingly,  both  the  Roman 
law  and  the  old  English  cases  of  Ex  parte  Crisp,  in  Atkins,  and  of 
Morgan  v,  Seymour,  in  2  Ch.  Rep.  64.  See,  also,  King  v.  Baldwin,  2 
John.  Ch.  (N.  Y.)  560,  and  Hays  v.  Ward,  4  Johns.  Ch.  (N.  Y.) 
129,  8  Am.  Dec.  554. 

In  1836,  Chancellor  Walworth  speaks  yet  more  explicitly,  if  possible, 
as  follows:  "The  equitable  principles  of  the  civil  law  as  to  surety- 
ship have  long  since  been  established  as  the  law  of  this  court  upon 
that  subject.  One  of  the  fundamental  principles  of  that  law  is  that 
co-sureties  or  joint  cautioners  are  bound  to  contribute  equally  as  be- 
tween themselves  to  the  discharge  of  the  common  burden.  And 
another  is,  if  one  surety  pays  the  whole  debt  for  which  they  were 
jointly  bound,  he  is  entitled  to  the  cession  of  the  rights  and  remedies  of 
the  creditor,  not  only  as  against  the  principal  debtor,  but  also  as 
against  his  co-sureties.  Or  more  properly,  according  to  the  modern 
doctrine  upon  this  subject,  the  surety,  by  the  mere  payment  of  the  debt, 
and  without  any  actual  assignment  from  the  creditor,  is  in  equity  sub- 
rogated to  all  the  rights  and  remedies  of  the  creditor,  for  the  recovery 
of  his  debt  against  the  principal  debtor  or  his  property,  or  against 
the  co-sureties  and  their  property,  to  the  extent  of  what  they  are 
equitably  bound  to  contribute."  Cuyler  v.  Ensworth,  6  Paige  (N.  Y.) 
32,  33.  See,  also,  Eddy  v.  Traver,  6  Paige  (N.  Y.)  525,  31  Am.  Dec. 
261.  I  quote  this  extract  because  of  its  declaration  that  the  equitable 
principles  of  the  civil  law  had  long  been  established  as  the  law  of 
the  Chancery  Court  of  New  York.  Now  the  principle  of  the  civil  law 
is  absolute  and  unrestricted  substitution.  In  Ontario  Bank  v.  Walker 
and  Others,  the  creditor  had  obtained  a  judgment  jointly  against  the 
principal  debtor  and  three  sureties.  One  of  the  sureties  paid  it,  and 
moved  the  court  for  an  order  giving  him  the  control  of  the  judgment. 
Held,  that  he  could  not  get  the  control  at  law,  because  it  was  ex- 
tinguished, but,  if  he  was  in  fact  surety,  upon  a  proper  case  made, 
equity  would,  in  that  particular,  subrogate  him  to  the  rights  of  the 
creditor,  because  it  could  not  be  done  at  law.  1  Hill  (N.  Y.)  652,  653. 
See,  also,  the  dictum  of  Marcy,  J.,  in  New  York  State  Bank  v. 
Fletcher,  5  Wend.  (N.  Y.)  85,  89. 

In  Virginia  it  is  settled  that  the  surety  of  a  bond  debtor  who  has 
paid  the  debt,  in  the  settlement  of  the  estate  of  his  principal,  is 
subrogated  to  the  rights  of  the  creditor,  and  is  let  in  to  a  dividend 
as  a  specialty  creditor,  and  not  as  a  creditor  by  open  account.  In 
Eppes  et  al..  Executors  of  Wayles,  v.  Randolph,  the  surety  of  a 
bond  debtor  paid  off  the  debt,  but  took  no  assignment  of  the  bond,  and 
filed  his  bill  to  charge  the  real  estate  of  his  principal,  upon  the  ground 
that  he  succeeded  to  all  the  rights  of  the  creditor  by  the  mere  fact  of 
payment.  The  right  was  resisted  upon  the  ground  that  he  had  taken 
no  assignment  of  the  bond.  The  court  decided  that  he  was  entitled, 
and  decreed  accordingly.  2  Call,  125.  See,  also,  Tinsley  v.  Anderson, 
-3  Call,  329. 


318  THE   EQUITABLE   AND   LEGAL   RIGHTS   OP  THE   SURETY.       (Part    2 

The  leading  case  in  Virginia  is  Lidderdale  v.  Robinson,  determined 
by  Chief  Justice  Marshall  on  the  circuit,  and  taken  up  to  the  Supreme 
Court.  The  case  was  this:  Robinson  and  Smith  were  joint  indorsers 
for  one  Roots  on  a  bill  of  exchange  drawn  by  him.  Robinson  and 
Smith  had  to  take  up  the  bill,  and  Smith  paid  more  than  his  moiety. 
His  administrators  filed  a  bill  to  compel  Robinson  to  reimburse  him, 
in  the  excess  of  his  payment  over  and  above  his  moiety.  Robinson 
being  largely  in  debt,  and  his  assets  being  likely  to  prove  insuffi- 
cient to  pay  the  whole,  the  right  of  priority  became  a  question  among 
the  creditors. 

Under  a  statute  of  Virginia,  protested  bills,  after  the  death  of  the 
drawer  or  indorser,  are  made  of  equal  dignity  with  judgments.  Under 
this  statute,  and  also  upon  equitable  principles,  the  executors  of  Smith 
claimed  to  be,  by  substitution  for  the  creditor,  let  in  to  a  dividend,  as 
a  judgment  creditor  of  Robinson,  to  the  extent  of  his  payment  above 
one  moiety  of  the  debt.  It  was  contended  that  he  was  entitled  only 
as  a  creditor  by  open  account.  It  will  be  perceived  that  the  statute  of 
Virginia  did  not  affect  this  question.  That  only  gave  the  bill  the  dig- 
nity of  a  judgment.  It  does  not  affect  the  question  of  substitution. 
Judge  Marshall  held,  in  an  opinion  which  surveys  the  whole  field  of 
this  argument,  and  which  is  characterized  by  his  transcendent  ability, 
that  the  surety  was  subrogated  to  the  rights  of  the  creditor  on  the  bill 
of  exchange,  and  that  he  was  entitled  to  share  in  the  distribution 
of  Robinson's  assets  as  a  judgment  creditor.  He  placed  his  opinion 
upon  the  broad  ground  of  equity,  springing  out  of  the  relationship 
of  the  parties  to  the  bill  of  exchange,  and  the  fact  of  payment  by  the 
surety,  irrespective  of  any  assignment,  or  of  any  idea  about  the  ex- 
tinguishment of  the  debt.  There,  I  think,  the  question  ought  to  be 
placed.  The  province,  to  my  mind,  of  a  Court  of  Chancery  is,  in 
cases  of  manifest  equity,  to  give  relief,  although  it  may  be  at  the  ex- 
pense of  reasoning  which  is  purely  technical.  "The  claim  of  the 
surety,"  says  Chief  Justice  Marshall,  "is  clothed  in  equity,  with  the 
legal  garb  with  which  the  original  contract  is  invested."  2  Brock.  159, 
163,  Fed.  Cas.  No.  8,337.  Upon  a  division  of  the  district  bench,  this 
case  went  up  to  the  Supreme  Court.  That  court  unanimously  sustained 
the  decision  of  Chief  Justice  Marshall,  and  their  judgment  is  sup- 
ported in  an  able  argument  by  Mr.  Justice  Johnson.     12  Wheat.  594. 

It  is  a  rule  of  the  Supreme  Court,  if  the  law  of  a  state  is  well  settled, 
to  determine  questions  originating  altogether  in  that  state  accord- 
ing to  that  law.  A  uniform  course  of  decisions  in  Virginia  might 
have  been  considered  by  the  Supreme  Court  as  settling  a  local  rule 
upon  this  subject.  Doubtless  they  did  consider  the  law  as  established 
there.  But,  lest  it  might  be  believed  that  the  decision  was  founded 
upon  the  local  law  alone,  the  court  says :  "That  this,  then,  is  the  settled 
law  of  the  state,  in  which  this  contract  and  this  cause  originated,  can- 
not be  doubted.  But  we  feel  no  inclination  to  place  our  decision  upon 
that  restricted  ground,   since  we  are  well   satisfied  with  its  correct- 


Ch.  3)  THE  surety's  equity  of  subrogation.  319 

ness  on  a  general  principle,  and  on  authorities  of  great  respectability 

in  other  states."    12  Wheat.  594,  598,  6  L.  Ed.  740.  ^  /.■.'.^';.t^ 

We  are  the  better  satisfied  with  our  judgment  in  this  case,  for  the  ,,  ,,... '  ....-^ 
reason  that  the  substitution  does  injustice  to  no  one.  The  creditor, 
of  course,  has  nothing  to  do  with  it.  He  is  satisfied,  and  if  the  repre- 
sentatives of  the  principal,  if  he  be  dead,  or  if  the  principal  debtor 
himself,  being  in  life,  can  be  presumed  to  be  unaffected  by  the  para- 
mount equity  of  his  sureties'  claim,  he  and  they  must  be  presumed  to 
be  indifferent  whether  it  is  allowed  to  him,  or  is  reserved  for  creditors 
of  a  lower  grade.  Let  the  amount  of  the  claim  go  either  way,  no 
injustice  can  be  done  to  him.  In  any  event,  it  goes  in  payment  of  his 
debts.  If  anyJDody  is  entitled  to  complain,  it  is  the  creditor  who, 
holdiug_ii  lower  grade  of  claim,  is  excluded  by  the  substitution  of  the 
surgly.  ..But,  really,  no  injustice  is  done  to  him.  The  surety,  by  pay- 
ing Jhe  debt  to  the  creditor,  abstracts  from  the  assets  of  the  principal 
debtor  just  that  amount  which  the  creditor  himself  would  have  ab- 
stracted, if  he  had  not  paid  it.  The^  surety  could  compel  the  creditor,  | 
indeed,  to  go  upon  that  fund  before  resorting  to  him.  Story's  Com.  ' 
voiri7592 ;  1  Vern.  1,89;  6  Ves.  734 ;  King  v.  Baldwin,  2  John.  Ch. 
(N.  Y.)  561,  562.  So  the  creditor  by  claim  of  lower  grade  is  in  no 
worse  condition  than  he  would  be  if  the  security  had  not  paid  the  debt. 

Our  judgment,  too,  derives  support  from  the  obvious  policy  of  all  -^-^i-jAtX-*^  y. 
our  own  legislation  relative  to  the  substitution  of  sureties.  That  policy  ./i,^^  ti^  )cm/C^ 
is  to  place  tTie  surety  in  the  place  of  the  creditor.  Witness  the  several 
acts  of  the" Legislature  giving  to  sureties  the  control  of  executions 
against  their  principals,  when  paid  by  them.  Counsel  for  the  plain- 
tiff in  error  have  sought  to  draw  frojn  these  acts  the  contrary  inference. 
The  right  of  substitution  being  given  by  express  act  of  the  Legisla- 
ture, the  inference,  say  they,  is  that,  in  the  judgment  of  the  Legisla- 
ture, it  did  not  before  exist.  But  we  think  the  legislation  of  Georgia 
upon  this  subject  is  in  affirmance  of  the  right  as  it  existed  upon  gen- 
eral equitable  principles  before,  and  is  only  intended  to  cumulate  and 
simphfy  the  remedy  by  which  it  is  enforced. 

Let  the  judgment  of  the  court  below  be  afiirmed.^^ 

21  Nearly  all  American  states  have  abolished  by  statute  the  priority  of  spe- 
cialtX- debts  over  simple  contract  debts:  See  S  A.  &  E.  Ency.  of  Law  (2a  Ed.) 
pp.  lOil,  1042. 

Tli,ere  are,  however,  in  many  states  preferred  claims  a.crainst  the  estates  of 
decedents.     See  8  Am.  &  Ed.^.  Ency.  of  Law  (2d  Ed.)  pp.  1041-1054. 

Snmp  Ameyican  jurisdictions  are  contra  to  tjie  priiK:ii)al  case,  and  follow 
thp  ^nptrinfi^f  Copis  V.  Middleton,^  1  Turn.  &  Russ.  224  (1S23).  holding  tliaTa 
surety,  on  paying  a  joint  specialty  or  other  joint  instrument  on  which  he  is  a 
snrpty,  ran  not  by  payment  avail  himself  of  the  Instrument  for  the  pin*po<«e  of 
snbrngfltinn.  Bledsoe  V.  NlxoD  et  ah,  68  N.  C  521  (1873).  Soe  Kermedj— V. 
Pickens,  38  N.  C.  147  (1843).  That  in  North  Carolina  all  contracts  are  sev- 
eral, see  State  ex  rel.  v.  Brodnax.  8S  N.  C.  401  (1880).  See.  also,  Bradhurst  v. 
Pearson,  32  N.  C.  55  (1840) ;  Uzzell  v.  Mack,  4  Humph.  (Tenn.)  319,  40  Am. 
Dec.  648  (1843) ;   Greenlaw  v.  Pettit,  87  Tenn.  467,  11  S.  W.  357  (1889).     Buck- 


320  THE   EQUITABLE  AND   LEGAL   RIGHTS   OF  THE  SURETY.       (Part    3 

Ex  parte  WARE. 

(Court  of  Appeals  of  South  Carolina,  1853.    5  Rich.  Eq.  473.) 

This  was  an  appeal  from  the  judo^ment  of  the  ordinary. 
N.  M.  Ware,  deceased,  the  intestate,  and  WiUiam  Ware,  were,  at 
the  death  of  the  former,  indebted  to  the  representatives  of  Thos.  Kirk- 
patrick,  by  two  joint  and  several  sealed  notes.     N.  M.  Ware  was  the 
principal,  and  William  Ware  his  surety.     The  notes  were  paid  by 
William  Ware  after  the  death  of  his  principal.'    He  presenle3"  them 
before  the  ordinary,  and  claimed  to  be  entitled  to  rank  as  a  specialty 
creditor  of  the  estate  of  the  intestate.    The  ordinary  tliouglit  Ji£  was 
A    ^^f        jonly  entitled   as   for   so  much   money   paid,   and   rejerteA   his   ^aim 
( as  a  specialty  creditor.    He  appealed. 
)^     DuNKiN,  Ch.     The  statement  of  facts  appears  from  the  brief  of 
^.  '^<.ri       the  solicitors,  together  with  the  judgment  of  the  ordinary. 

It  will  be  remarked  that  the  sealed  note  is  joint  and  several.  At 
the  decease  of  the  intestate,  N.  M.  Ware,  the  representatives  of  Thomas 
Kirkpatrick,  the  payees,  were  specialty  creditors  of  the  estate  of  N.  M. 
Ware,  deceased.  In  IMorton  &  Courtney  v.  Caldwell,  3  Strob.  Eq.  161, 
it  was  ruled  by  the  court  that  "the  proper  mode  of  determining  the 

ner  v.  Morris,  2  J.  J.  Marsh.  (Ky.)  121  (1S29) ;  Moore  v.  Campbell,  36  Vt.  3G1 
(1SG3). 

In  some  jurisdictions  the  rule  in  Copis  v.  Middleton  has  been  -abrogated  by 
statute:  Alabama:  Code  1ST6.  §  3418,  applied  in  Knighton  v.  Curry,  62  Ala. 
404  flS7S),  and  Turner  v.  Teague.  73  Ala.  554  (1883),  and  nullifying  the  prior 
holding  in  Foster  v.  Trustees,  3  Ala.  302  (1842). 

In  accord  with  the  principal  case,  and  holding  that  the  surety's  right  to 
subrogation  extends  to  all  securities  held  by  the  creditor  prior  to  the  payment 
bv  the  surety  including  joint  specialties  to  which  the  surety  and  the  principal 
are  parties,  are  Powell's  Ex'rs  v.  \Miite.  11  Leigh  (Va.)  309  (1S40) ;  Davis  v. 
Smith,  5  Ga.  274,  47  Am.  Dec,  279  (1848)  ;  Muldoon  v,  Crawford's  Adm'r,  14 
Bush  (Ky.)  125  (1878),  payment  made  by  surety  after  principal's  death  (Qujere, 
whether  this  does  not  overrule  Buckner  v.  Morris,  supra) ;  Orem  v.  Wright- 
son.  51  Md,  34,  34  Am.  Rep.  286  (1879).  payment  made  by  surety  after  princi- 
pal's death,  who  was  a  debtor  to  the  state ;  Crisfield  v.  State,  Use  of  Handy, 
55  Md.  192  (1880),  surety  of  bankrupt  fiduciary  subrogated  to  obligee's  rights 
against  bankrupt  after  his  discharge ;  Mott  v.  Maris.  2  Wash.  C.  C.  19G,  Fed, 
Cas.  No.  9880  (ISOS).  surety  on  bankrupt's  bond  to  United  States  for  duties ; 
Shultz  v.  Carter.  Speers.  Eq.  (S.  C.)  533  (1844),  payment  made  by  surety  after 
death  of  principal,  entitling  surety  to  rank  as  a  bond  creditor. 

The  same  principle  has  been  applied  to  joint  contracts  not  specialties: 
Brauglit  v.  Griffith,  IC  Iowa.  20  (1SG4).  payment  of  a  joint  note  after  princi- 
pal's death  by  surety  who  was  subrogated  to  the  class  of  creditors  in  which 
payee  ranked;  Lidderdale's  Ex'rs  v.  Ex'r  of  Robinson,  12  Wheat.  594,  6  L, 
Ed.  740  (1827),  a  joint  indorsement. 

Some  courts  take  a  middle  position,  following  the  EJnglish  cases  when  the 
payment  of  a  joint  liability  is  made  by  the  surety  In  the  lifetime  of  his  prin- 
cipal, but  holding  that  a  surety  who  has  paid  the  debt  of  a  deceased  principal 
is  entitled  to  subrogation  to  specialties  on  which  he  was  jointly  bound.  Cro- 
mer v.  Cromer,  29  Grat.  (Va.)  2S0  (1877). 

On  the  non-application  of  the  doctrine  of  merger,  so  as  to  destroy  the  sure- 
ty's Equity  of  Subrogation,  see  note,  13  H,  L,  K.  609, 


Ch.  3)  THE  surety's  equity  of  subrogation.  321 

proportion  of  assets  liable  to  the  respective  creditors  of  a  deceased 
debtor  is  to  assign  them  according  to  the  amount  of  the  debts  as  they 
existed  at  his  death."  It  is  there  said  that  "if,  upon  any  of  the  de- 
mands thus  taken  into  consideration,  any  payments  have  subsequently 
been  made  by  a  third  party,  that  does  not  release  the  proportion  of  the 
deceased's  assets  originally  liable  to  the  creditor,  if  there  still  re- 
mains due  on  the  demand  a  balance  requiring  that  proportion  to  satis- 
fy it."  The  Chancellor  also  clearly  intimates  the  opinion  that  if  the 
party  who  made  the  payment  was  only  surety  for  the  debt  he  would 
become  entitled  (if  he  had  paid  the  whole  debt),  by  way  of  reim- 
bursement, to  the  proportion  to  which  the  original  creditor  was  en- 
titled. And  in  King  v.  Aughtry,  3  Strob.  Eq.  149,  the  right  of  the 
surety  who  pays  the  debt  of  the  principal  was  considered,  and  the 
doctrine  of  our  own  courts,  in  affording  protection  to  sureties,  recog- 
nized and  enforced.  See,  also,  Thomson  v.  Palmer,  3  Rich.  Eq.  139. 
My  opinion  is  that  the  appellant  was  entitled  to  rank  as  a  specialty 
creditor  of  the  estate  of  N.  M.  Ware,  deceased ;  and,  in  conformity 
wrElTthe^ thirteenth  section  of  the  act  of  1839,  regulating  appeals  from 
the  court  of  ordinary,  it  is  ordered  and  decreed  that  it  be  referred  to 
the  commissioner  of  this  court  to  restate  the  account  according  to  the 
principles  herein  declared.  ^ 

The  administrator  of  N.  M.  Ware  appealed,  on  the  grounds : 

(1)  Because,  it  is  respectfully  submitted,  his  honor  erred  in  de- 
ciding that  a  surety  who  paid  a  single  bill  to  the  obligee,  after  the 
death  of  the  intestate,  the  principal,  was  remitted  to  the  rights  of  the 
obhgee,  and  ranked  as  a  specialty  creditor. 

(2)  Because  the  ordinary,  in  de.ciding  questions  in  his  court,  must 
be  governed  by  the  law  and  practice  established  therein,  which  do  not 
recognize  the  right  of  subrogation,  and  that  to  require  the  court  of 
ordinary  to  conform  in  all  respects  to  the  court  of  equity  would  sub- 
verF  thTTndependence  of  the  former  court,  and  render  it,  in  substance, 

a  subordinate  branch  of  the  court  of  equity.  _ 

Per  Curiam.    This  court  is  of  opinion  that  there  is  no  error  in  the  '.f'^'^<(*ff>^ 

decree  of  the  Chancellor ;  and  it  is  ordered  that  it  be  affirmed,  and  the 

appeaPdismisS^.  '" 
Johnston,  Dunkin,  Dargan,  and  Wardi^w,  CC,  concurring. 
Decree  affirmed. 


TAYLOR  V.  FARMERS'  BANK. 

(Court  of  Appeals  of  Kentucky,  1888.     87  Ky.  398,  9  S.  W.  240.) 

Judge  Holt  delivered  the  opinion  of  the  court.  ^r     ♦- 

This  is  a  question  of  subrogation.    October  10,  1877,  William  Tim-  y^^^ 
berlake  drew  a  bill  of  exchange  for  $7,140.03  upon  Henry  C.  Tim-   ^-^^-^ 
berlake,  payable  to  the  order  of  John  W.  Menzies.    It  was  indorsed  by 
Hen. Sub.— 21 


322  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE  SURETY.      (Part    2 

the  latter,  after  having  been  accepted  by  Henry  C.  Timberlake,  and 
then  dehvered  to  the  latter  and  negotiated  by  him  for  his  benefit. 

]\Iar_ch  18,  1878,  the  Farmers'  Bank  of  Kentucky  sued  the  three 
parties  above-named  upon  the  bill,  and  subsequently  recovered  a  judg- 
ment. Execution  upon  it  was  returned  nulla  bona,  save  about  $1,000, 
made  out  of  the  estate  of  William  Timberlake;  the  Timberlakes  and 
]\lenzics  bciiiL;  insolvent.  The  latter  was  an  accommodation  iudarser, 
and  has  never  paid  anything  upon  the  judgment.  March  21,  lSj_8^  the 
appellee,  Susan  A.  Timberlake,  her  husband,  Henry  C.  Timberlake, 
joining  with  her  as  a  legal  necessity  to  the  step,  mortgaged  to  John^Wr— 
jMenzies  a  tract  of  land  belonging  to  her. 

The  condition  of  the  mortgage  is  as  follows:  "This  conveyance  is 
made  to  secure,  indemnify  and  save  harmless  the  said  Menzies  against 
any  loss  he  may  sustain  by  reason  of  his  indorsement  of  a  draft, 
dated  October  10,  1877,  drawn  by  William  Timberlake  on  the  said 
Henry  C.  Timberlake  for  his  accommodation,  at  four  months,  for 
$7,140.03,  and  indorsed  by  said  Menzies,  and  negotiated  by  said  Henry 
C.  Timberlake  for  his  own  benefit,  and  upon  which  the  Farmers' 
Bank  of  Kentucky  has  brought  suit  in  the  Kenton  circuit  court;  and 
if  said  INIenzies  is  not  required  to  pay  any  part  of  said  claim,  this 
conveyance  wtlTTfand  for  naught,  otherwise  it  will  remain  in  full 
force.  *  *  *  The  said  Menzies  is  not  to  permit  any  loss  to  fall 
tfpbn  him  which  he  can  lawfully  prevent,  a_s^  this  conveyance  is  for  his 
benefit,  and  not  made  for  the  purpose  of  securing  any  part  Of^I^id 
claim,  which  he  may  avoid  by  any  and  all  lawful  eft'orts." 

December  -7,  1882,  the  bank,  by  a  written  transfer,  assigned  the 
judgment  to  the  appellants,  together  with  "all  the  rights  and  equities 
of  every  kind  or  nature"  connected  with  it. 

Henr}'  C.  Timberlake  died  insolvent  in  1880 ;  and  on  December 
12,  1882,  the  appellants  brought  this  action,  asking  to  be  substituted,  to 
all  the  rights  of  Menzies  under  the  mortgage  of  indenuiity  to  him, 
and^iat  the  land  of  Mrs.  Timberlake  be  subjected  to  the  payment  of 
their  judgment. 

f     The  matters  above  recited  are  to  be  taken  as  true,  as  they  are  set 
•tout  in  the  petition,  and  it  was  dismissed  upon  demurrer^^     *     *     * 

Had  the  bank  a  right  to  be  substituted  to  Menzies'  place  under  the 
mortgage?  If  so,  then  the  appellants,  as  its  assignees,  have  the  same 
right. 

The  doctrine  of  subrogation  comes  to  us  from  the  civil  law.  It  is 
not  the  creature  of  contract,  but  of  natural  equity,  although  it  has  been 
said  that  it  may  be  modified  by  contract.  It  is  applied  between  parties, 
where  the  circumstances  require  it,  that  essential  justice  may  be  af- 
forded, but  not  where  it  will  work  injustice  to  others. 
'^  V.  The  rule  is  well  settled  that,  wliere_a  securit3^is  given  by  s^iiinjcipal 
to  his  surety,  it  operates  eo  instanti  as  a  security  tojhe  creditor  jot  the 

»2  A  portion  of  the  opinion  has  been  omitted- 


Ch.  3)  THE  surety's  equity  of  subrogation.  323 

pa^anent_ofhisdebt.  This  right  of  the  latter  cannot  be  defeated,  even 
by  the  release  or  "conveyance  of  the  surety  or  mortgagee,  unless  the 
liabiHty  be  contingent,  save  to  a  bona  fide  purchaser  without  notice; 
and,  if  contingent,  the  surety  cannot  defeat  it  after  his  liability  becomes 
fixed.  The  reason  of  this  rule  is  that  the  security  given  by  the  princi- 
pal debtor  to  his  surety  is  regarded  in  equity  as  a  trust  fund  for  the 
payment  of  the  debt.  All  the  property  of  the  principal  debtor  is  liable 
for  his  debt;  and  it  does  not  lie  in  his  mouth,  therefore,  to  say  that 
it  is  not  in  trust  for  the  creditor  when  pledged  to  the  surety  as  in- 
demnity. The  creditor  may,  through  the  medium  of  the  surety,  re- 
sort to  the  property  thus  placed  in  trust  for  the  payment  of  the  debt, 
and  is  invested  by  equity  with  all  the  rights  of  the  surety. 

In  such  a  case  the  security  is  for  the  debt,  as  well  as  the  ultimate 
protection  of  the  surety.  It  is  at  once  clothed  with  a  trust  character; 
and  the  creditor  immediately  acquires  a  right  and  interest  in  it  that 
cannot  be  defeated  by  the  act  of  the  surety.  He  becomes  a  trustee  for 
the  creditor.  So,  too,  upon  like  principles  of  justice  or  natural  equity, 
where  a  principal  indemnifies  one  of  several  sureties,  he  becomes  a 
trustee  for  the  others,  and  each  is  entitled  to  share  the  indemnity.  The 
e'ffate  of  the  principal  is  liable  for  the  debt,  and  his  obligations  to  them 
are  equal.  /X  ^^^i^fiuw 

A  different  state  of  case  is  presented,  however,  where  the  contract   -p ..r-^jutf^rJ^ 
of_[ndemnity  is  by  a  stranger  to  the  debt,  and  for  the  personal  benefit   ^.(^T 
of_^the  sujety  merely,  in  opposition  to  the  idea  of  a  trust  for  the  pay- 
ment of  the  debt.    In  such  a  case  the  indemnity  is  not  out  of  the  estate 
of  the  principal. 

It  was  said  in  the  case  of  Osborn  v.  Noble,  46  Miss.  449  :  "We  think 
the  principle  has  been  stated,  and  enforced,  that  if  the  security  be 
purely  personal,  as  to  indemnify  and  save  harmless  the  surety,  and 
not  for  the  better  protection  of  the  debt,  or  intended  as  a  fund  for  its 
payment,  a  trust  does  not  attach  to  it  for  the  creditor." 

liere  Mrs.  Timberlake  was  in  no  way  Hable  for  the  debt.  The  fact 
that  she  was  the  wife  of  Henry  C.  Timberlake  makes  no  difference. 
The  indemnity  was  not  out  of  his  estate.  The  wife  was  under  no  ob- 
ligation to  pay  the  debt,  and  must  be  regarded,  as  indeed  she  was,  as 
a  stranger  to  it.  It  was  no  fraud  upon  the  creditor  to  merely  in- 
demnify the  surety.  As  the  property  belonged  to  her,  if  the  mortgage 
created  no  lien  to  secure  the  payment  of  the  debt,  then  no  trust  was 
created  in  favor  of  the  creditor,  since  it  is  certain  that  the  bill  of 
exchange  was  not  accepted  upon  the  faith  of  the  indemnity.  It  was  not 
furnished  to  the  surety  until  long  after  the  creation  of  the  debt,  and, 
indeed,  not  until  suit  was  brought  upon  it. 

Her  contract  must  be  regarded  as  one  merely  to  save  the  surety 
harmless,  as  undertaking  merely  to  indemnify  him  against  the  pay- 
ment of  the  debt,  and  pledging  the  mortgaged  property  to  him  for 
whatever  he  might  be  compelled  to  pay,  and  not  as  security  for  the 
payment  of  the  debt.     It  is  true  the  mortgage  recites :    "The  s.-id 


324  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part   2 

Menzies  is  not  to  permit  any  loss  to  fall  upon  him  which  he  can  law- 
fully prevent,  as  this  conveyance  is  for  his  benefit,  and  not  made 
for  the  purpose  of  securing  any  part  of  said  claim,  which  he  may 
avoid  by  any  and  all  lawful  efforts."  But,  when  the  entire  instru- 
ment is  considered,  it  is  evident  the  purpose  was  merely  to  indemnify 
Menzies. 

Tliis_being  so,  no  right  of  subrogation  exists  in  behalf  of  the.app£l- 
lants.  Their  claim  is  not  supported  by  that  equity  which  would  attach 
to  it  if  the  debt  had  been  accepted  upon  the  faith  of  an  indemnity 
created  by  the  mortgage  for  its  payment. 

These  views  are  supported  and  ably  enforced  by  the  opinions  in  the 
cases  of  Leggett  v.  McClelland,  39  Ohio  St.  624,  and  Macklin  v. 
Northern  Bank  of  Kentucky,  83  Ky.  314;  and  the  judgment  below  is 
affirmed.^' 

2  8  The  right  of  a  mortgagee  In  equity  to  recover  a  deficiency  against  the 
purchaser,  who  has  assumed  the  mortgage  debt,  is  worked  out  by  the  theory 
that  (inter  se)  the  purchaser  has  become  the  debtor  and  his  vendor  has  be- 
cohie  a  surety.  The  mortgagee,  being  the  creditor  of  the  surety  (a-^^nmiiig 
him  to  be  personally  liable),  becomes  entitled  to  enforce  all  collateral  liclil  by 
the-  surety,  including  the  contract  between  vendor  and  purchaser.  Mount  V. 
Van  Ness.  33  N.  J.  Eq.  262  (1880). 

See  note  in  15  H.  L.  R.  398,  "A  Mortgagor  as  Surety  for  His  Assignee." 


Ch.  4)  THE  surety's  equity  op  contribution.  325 

CHAPTER  IV 
THE  SURETY'S  EQUITY  OF  CONTRIBUTION 


HOLE  V.  HARRISON. 
(High  Court  of  Chancery,  1675.     Sel.  Cas.  Ch.  246.) 

(See  1  Vern.  70,  297,  404,  440.) 

Hole.  Harrison  and  S.  were  bound  in  a  recognizance  to  the  cham- 
berlain of  London.  The  plaintiff  Harrison  was  sued  thereon,  and 
paid  the  whole  money,  and  now  sued  Hole,  who  was  bound  with 
hiiTiTfor  contribution.  Hole,  Harrison  and  S.  being  all  bound,  and 
JIHT.  was  dead  insolvent,  and  S.  was  run  away.  The  question  was 
in  what  proportion  the  contribution  could  be,  viz.,  oT'arthn'd  or 
moiety?    Decreed  a  moiety,  for  S.  is  insolvent.  ~    ~^~  ~ 


HOLE  V.  HARRISON. 

(High  Court  of  Chancery,  1673.    Finch,  15.) 

Robert  Jones,  one  of  the  executors  of  Thomas  Diamond  (who  left 
George  Diamond,  his  son,  an  orphan  in  London),  having  a  considerable 
sum  of  the  orphan's  money  in  his  hands,  wasadmitted  to  keep  the 
same  upon,  security,  who  prevailed  on  the  plaintiS^  John  Hole,  and 
the  defendant  Harrison,  and  one  Hutchins  (since  deceased),  to  enter 
into  a  recognizance  of  £300.  to  Sir  Thomas  Player,  then  chamberlain 
of  London,  conditioned  to  pay  the  sum  of  £195.  and  interest  to  Dia- 
mond the  orphan,  and  the  said  Robert  Jones  gave  them  a  counterbond 
of  £600.  to  indemnify  them  against  the  said  recognizance,  he  being  then 
a  merchant  of  good  credit  in  London;  afterwards  the  defendant, 
Harrison,  alone  was  sued  upon  this  recognizance  (tho'  the  plaintiff 
Hole_was_then_a  £ubHc  tradesman),  and  judgment  was  obtained  against 
him,  and  he  and  his  bail  taken  into  execution.  Not  long  afterwards 
Jones  (who  was  then  beyond  sea)  returned  into  England,  and  was  ar- 
rested by  Harrison  on  his  counterbond,  and  judgment  was  obtained 
against  him,  and  he  was  taken  in  execution,  and  afterwards  swore 
himself  out  of  prison  upon  the  £10.  act,  and  Hutchins  being  since 
dead  insolvent,  the  now  defendant  Harrison  exhibited  a  bill  in  the 
Lord  Mayor's  Court  against  the  now  plaintiff  Hole,  for  a  moiety  oTIhe- 
money  which  he^  had  been  compelled  to  pay  to  the  chamberlain  of 
London,  together  with  damages  and  costs,  which  cause  v.'as  removed 
into  this  court  by  certiorari,  where  Hole  sought  to  be  discharged 


32G  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF   THE   SURETY.      (Part    3 

from  paying  any  part  of  the  said  money,  foiLlhal.IiarrisiiiiJia.ving 
tai<cn  a  C'  'imterbond  of  Jones,  had  relied  on  that  security,  which  hejiad 
conhniicJ  by  charging  him  in  execution;  ^and  tho'  Hutchins  died 
insolvent,  yet  his  executor  or  administrator  ought  to  have  been  made 
a  party  to  this  suit. 

The  Court  was  of  opinion  that  there  ought  to  be  a  contribution 
between  the  plaintiff  and  defendant, , and  that  both  parties  should  take 
their  remedy  against  the  executor  of  Hutchins,  but  that  such  executor 
ought  to  have  been  made  a  party  to  the  bill  which  was  now  ordered, 
and  to  bring  on  the  cause  again. 


COOKE  V. 


(Court  of  Chancery,  Trinity  Term,  IGSG.    Freem.  Ch.  f)".) 

Three  bound  in  a  bond,  one  being  principal  and  the  other  two  sure- 
ties; afterwards  a  fourth  man  becomes  bound  to  the  obligee,  fhat  if 
the  other  three  did  not  pay  according  to  the  condition  of  the  bonds, 
that  he  would  pay ;  a  month  after  one  of  the  two  sureties  pays  Jthe 
money,  and  prefers  his  bill  against  the  fourth  now  for  contribution; 
and  the  question  was,  whether  he  should  be  bound  to  contribute,  his 
bging:_bur7arsupplemental  security?  And  the  AIaster  OF  THE  Rolls 
seemed  to  think  that  he  should.  ' " • 


RAINEY  V.  YARBOROUGH. 
(Supreme  Court  of  North  Carolina,  1S42.    37  N.  C.  249.  38  Am.  Dec.  681.) 

This  cause,  after  being  set  for  hearing,  was  transmitted  on  the  af- 
fidavit  of  the  defendant  from  Caswell  Court  of  Equity,  at  Spring 
Term7~i838,  to  the  Supreme  Court.  The  questions  in  the^  case  are 
stated  in  the  opinion  delivered  in  the  Supreme  Court. 

RuFFiN,  C.  J.  In  1816,  Thomas  Boulden  was  appointed  by  a  court 
in  Virginia  the  guardian  of  several  infant  children  named  Glenn, 
and  entered  in^o^DoiicTs  in  large  penalties  with  the  usual  conditions  for 
faithfully  accounting  for  the  estate  of  the  wards,  seven  in  number,  in 
which  the  present  plaintiffs  and  Smith,  the  intestate  of  the  present 
derendantT'wTre  his  sureties.  Boulden  afterwards  died,  and  Eustace 
Hunt  admtnistered  on  his  estate.  In  1831,  Archibald  Glenn,  one  of 
the  wards,  having  come  of  age,  preferred  a  demand  against  Hunt,  as 
the  administrator  of  Boulden,  and  against  the  said  sureties  for  a  large 
sum,  as  a  balance  due  to  him  from  his  late  guardian.  x\nd  by  an 
agreement  between  Glenn,  Hunt,  and  all  the  sureties  of  Boulden,  ex- 
cept Smith,  the  matters  in  dispute,  in  relation  to  the  guardian  account 
of  Boulden,  and  also  in  relation  to  the  administration  account  of  Hunt 
as  administrator  of  Boulden,  were  referred  to  the  arbitrament  and 


&;c4. 


Ch.  4)  THE  surety's  equity  of  contribution.  327 

award  of  two  persons.  The  arbitrators  proceeded  to  hear  the  par- 
ties, and  "awarded  that  there  was  a  balance  due  from  the  estate  of 
said  Boulden,  deceased,  to  the  said  Archibald  Glenn  of  $5,533.35,  with 
the  interest  thereon  from  the  25th  of  December,  1827."  Tojhis.  ar- 
bitration_Smitli.iefused  to  become  a  party;  and,  after  the  award,  he 
refused  also  to  pay  any  part  of  the  sum ;  but  died  intestate,  and  the 
defendant7^arbofb'ugli,  became  his  administrator. 

The_2resent  suit  is  brought  against  Smith's  administrator  by  the 
other  sureties  or  their  representatives,  and  charges  that  Boulden  was 
indebted  to  his  ward  in  the  sum  found,  and  that  he  died  insolvent,  and 
that  Hunt  had  no  assets  to  satisfy  that  sum  or  any  part  of  it,  and 
that  those  sureties  were  obliged  to  pay  the  whole  of  it,  and  had  done 
so;  and  the  object  of  the  bill  is  to  compel  contribution  from  thede- 
fendant  of  his  intestate's  aliquot  part.  ^  ^ 

The  answer  brings  forward  divers  points  of  defense,  but  particu-  .K^^*"^ 
larly  insists  that  Smith  was  not  bound  by  the  award,  and  refuses  to 
admit  that  any  sum  was  due  from  Boulden  to  his  ward,  A.  Glenn, 'ir 
that  Boulden's  estate  was  insolvent,  or  that  Hunt  had  not  assets  to 
pay  whatever,  if  anything,  was  due. 

Tljejcase-^wa«  submitted  on  the  hearing  a  year  ago,  and  was  allowed 
by  the  court  tn  stand  over,  that  the  parties  might  have  an  opporturrity 
of  sending  the  cause  back  for  the  purpose  of  framing  the  pleadings 
properly,  with  the  view  to  the  determination  of  the  real  controversy. 
The  necessity  for  the  insertion  of  additional  matter  in  the  bill,  and 
making  other  parties,  is  obvious.  In  the  first  place,  as  Smith  was  not 
a  party  to  the  arbitration,  the  award  has  no  operation  against  him, 
but  he  is  chargeable  only  upon  an  account  to  be  taken  in  this  cause 
of  Boulden's  guardianship.  Moreover,  the  insolvency  of  Boulden's 
estate,  and  the  full  administration  of  his  assets  by  Hunt,  are  not  a^- 
niitted,  nor  even  found  in  the  award ;  and,  consequently,  those  facts 
are  now  to^e~es'EaT5Trslied~in~tTre"'cause.  That,  also,  can  be  done  only  ^)\.(;zy^.*J^ 
by  taking  the  administration  account  in  this  cause.  To  the  taking  of  'tzJL^^^ 
each  of  those  accounts,  Hunt,  the  administrator,  is  an  indispensable  -^"V^ 
party;  tor  the  plaintiffs, have  no  equity  against  their  co-surety,  until 
if~5e  shown,  that  they  cannot  obtain  satisfaction  from  their  common 
principal.  It  may  be  that  Hunt  has  now  funds  for  that  purpose.  "  In- 
deed,  from  the  omission  for  a  year  on  the  part  of  the  plaintiffs  to 
take  the  steps  indicated  by  the  court,  we  are  led  to  suppose  that  be- 
tween Mr.  Hunt  and  themselves  some  unc^erstanding  may  have  taken 
place,  and  that  they  have,  in  consequence,  abandoned  this  suit.  But, 
however  that  may  be,  it  is  certain  they  cannot  get  a  decree  upon  their 
present^  bill,  and,  as_the  defendant  insists  on  the  judgment""or  the 
court  bein^  given,  we  do  not  feel  at  liberty  to  defer  it  longer,  but 
rriust^dismiss  the  bill,  for  the  foregoing  reasons,  and  with  costs.' 

Per  Curiam.    Bill  dismissed,  with  costs.'-  ~" 

1  Accord:  Boiling  v.  Doneghy,  1  Duv.  (Ky.)  220  (1864). 


^T-^/vj^ 


M' 


328  THE  EQUITABLE  AND   LEGAL  EIGHTS  OF  THE  SURETY.      (Part   2 

KEMP  V.  FINDEN. 

(C5ourt  of  Exchequer,  1844.    8  Jur.  65,  12  Mees.  &  W,  421.) 

Assmnpsit  for  money  paid.  Plea,  non-assumpsit.  At  the_  trial  be- 
fore Alderson,  B.,  it  appeared  that  the  action  was  broughtundec.  the 
following  circumstances:  A  warrant  of  attorney  had  been  given  by 
two  persons  of  the  name  of  Carter  as  principals,  and  the  plainTiS  and 
defendant  as  their  sureties.  Default  having  been  made  by  the  prin- 
cipals,  judgment  was  entered  up  on  the  warrant  of  atlorney,  and  ex- 
ecution issued  against  the  plaintiff,  who  now  brought  this  action 
against  the  defendant  as  his  co-surety,  for  contribution,  to  recover  ^ne- 
third  of  the  whole  amount. 

On  this  state  of  facts,  it  was  objected  by  the  defendant's  coun§,el 
at  the  trial.  firs.t.  that  the  action  was  not  sustainable  in  this  form,  as 
the  money  was  paid  to  the  use  of  the  principals  in  the  warrant  of  at- 
torney, and  not  to  that  of  the  co-surety,  and,  consequently,  that  the 
plaintiff  should  have  declared  specially  on  the  implied  contract  on  the 
part  of  the  defendant  to  indemnify;  secondly,  that,  even  supposing 
the  plaintiff  entitled  to  recover  in  this  form  of  action,  the  defendant 
was  only  liable  for  one-fourth  instead  of  one-third  of  the  whole,  there 
being  four  names  on  the  warrant  of  attorney ;  thirdly,  that,  at  all 
events,  he  was  not  liable  for  the  costs  of  the  execution  on  the  war- 
rant of  attorney. 
/  The  learned  judge,  however,  overruled  these  objections,  and  left 
,  {  the  case  to  the  jury,  reserving  leave  to  the  defendant  to  move  tlie 

"^         \  court,  either  for  a  non-suit  on  the  first  point,  or  to  reduce  the  damages 
V  '  on  the  two  last.'^ 
'^yv>-,.i,^  Lord  Abinger,  C.  B.     No  rule  ought  to  be  granted  in  this  case. 

With  respect  to  the  chief  point  which  has  been  raised,  relative  to  the 
right  of  the  co-surety  to  sue  his  companion,  the  general  principle  of 
law  is  that,  if  a  man__pay  money  which  another  is  liable  to  pay,  he 
may  bring  an  action  for  money  paid  to  the  use  of  that  person,  although 
the  money  was  paid  without  any  special  authority  from  that  persoa 
That  is  the  case  here,  and,  consequently,  the  present  action  is  main- 
^  tainable. 

r   ^       r      As  to  the  second  point,  we  must  consider  the  two  Carters  as  one 
person,  so  that  the  sureties  are,  inter  se,  liable  for  half,  while  the 
principal  is  liable  for  the  whole,  and  each  surety  is  liable  for  half  of 
the  costs  incurred  in  putting  into  execution  the  warrant  of  attorney ^ 
on  which  they  are  all  liable. 
trJ.  tt/       /^     As  to  the  point  made  relative  to  the  attestation  of  the  warrant  of 
^    attorney,  it  was  competent  for  any  of  the  parties  to  have  moved  the 
-    court  to  set  it  aside ;  and,  as  they  have  not  done  so  hitherto,  we  ought 
not  to  entertain  such  an  objection  now. 

«  The  arguments  of  counsel  are  omitted. 


^ 


Ch.  4)  THE  surety's  equity  of  contribution.  329 

Parke.  B.  I  am  of  the  same  opinion.  If  I,  at  your  request,  put 
myself  in  such  a  situation  as  will  save  you  from  an  action,  and  do  so 
by  paying  a  sum  of  money,  I  may  maintain  an  action  for  money  paid 
to  your  use.  Now,  that  is  the  case  of  a  co-surety ;  he  puts  himself  in 
this  position,  that  he  is  to  pay  a  debt  for  his  companion ;  he  does  pay 
that  debt  when  he  pays  the  whole  amount  of  the  obligation,  for  half 
of  which  he  and  the  defendant  were  liable,  and  is,  consequently,  en- 
titled to  maintain  this  action.  The  case  of  a  guarantee  is  different,  for 
therejs^thjere jiqjm^lied  request  of ItHe  defendafrtr~ta~aTivaTn:e  the  mon- 
ey;  in  the  case  of  a  co-surety  there  is,  his  promise  being  that,  if  his  com- 
panionwTn~payThF^!TroTTn1rfor"whicti  they  are  jointly  liable,  he  will 
repay  him  a  ratable  proportion  of  it.  Indeed,  in  the  case  of  Cray- 
thorne  v.  Swinburne,  14  Ves.  Jr.  165,  Lord  Eldon  appears  to  think 
that  the  right  of  a  surety  to  call  on  his  co-surety  for  contribution  de- 
pends rather  on  a  principle  of  equity  than  of  contract. 

Then  it  is  said  that  there  is  no  authority  for  this  form  of  action 
by  a  co-surety ;  but  I  find  there  are  at  least  three  cases  in  which  it 
has  been  maintained.  The  first  is  that  of  Cowell  v.  Edwards,  2  B.  & 
P.  268,  in  which  the  Court  of  Common  Pleas  admitted  that  the  ac- 
tion would  lie  in  this  form,  and  said  that  it  was,  perhaps,  too  late  to 
dispute  the  point.  Then  there  is  the  case  of  Browne  v.  Lee,  6  B.  & 
C.  689,  which  was  an  action  in  the  present  form  against  a  co-surety,  in 
which  the  Court  of  Queen's  Bench  said  that,  at  law,  one  of  three  sure- 
ties could  recover  against  any  one  of  the  others  an  aliquot  propor- 
tion of  the  money  paid,  regard  being  had  to  the  number  of  the  sure- 
ties. And,  lastly,  there  is  the  case  in  this  court  of  Davies  v.  Hum- 
phreys, in  which  the  court  took  a  great  deal  of  pains  to  look  into  the 
authorities  on  the  subject,  and  understood,  all  throughout  the  case, 
that  an  action  for  money  paid  would  lie  against  a  co-surety  by  his 
companion.  Then,  if  the  plaintiff  is  entitled  to  recover  at  all,  the  case  ' 
of  Browne  v.  Lee  is  an  authority  to  show  that  he  is  entitled  to  recover 
one-third  of  the  principal ;  and  I  do  not  see  why  he  should  not  also  ^ 
pay  his  proportion  of  the  costs  of  enforcing  the  warrant  of  attor- 
ney, for  they  were  incurred  in  a  proceeding  against  both  the  sureties, 
in  respect  of  a  debt  for  which  they  were  jointly  liable  on  the  default 
of  the  principal,  X 

With  respect  to  the  last  objection,  I  do  not  think  it  ought  to  be 
allowed  to  prevail.  The  plaintiff  has  a  very  honest  case  against  the 
defendant,  for  he  has  advanced  money  on  his  account,  and  it  would 
be  most  unjust  to  allow  the  defendant  to  set  aside  the  warrant  of  at- 
torney at  this  stage  of  the  proceedings,  after  a  trial  has  taken  place. 
The  defendant  should  have  come  with  this  objection  long  ago.  V 

Y     Alderson..  B.     The  judgment  of  the  Court  of  Queen's  Bench  inf  ^ 
Spencer  v.  Parry,  3  Ad.  &  Ell.  331,  seems  an  authority  against  the  de- 
fendant.   Look  at  the  principle  which  is  there  laid  down  by  Lord  Den- 
man,  C.  J. :   "In  the  case  which  has  been  cited,  of  Brown  v.  Hodgson, 
4  Taunt.  289,  the  plaintiff,  a  carrier,  having  by  mistake  delivered  A.'s 


330  TUB   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

goods  to  B.,  who  made  them  his  own,  paid  A.  the  price  and  was  after- 
wards allowed  to  recover  it  from  B.,  as  money  paid  to  his  use.  But 
this  was,  in  fact,  money  paid  to  his  use,  for  it  was  in  discharge  of  his 
debt  to  A. ;  and  it  may  be  fairly  said  to  have  been  paid  at  his  instance, 
because  he  knew  that  the  plaintiff's  mistake,  in  delivering  the  goods 
to  him,  made  the  plaintifT  liable  to  pay  the  price  to  the  true  owner." 
That  establishes  the  principle  that,  where  a  man  pays  to  a  third  person 
money  which  that  third  person  might  have  recovered  against  the  de- 
fendant, it  is  money  paid  to  the  use  of  the  defendant.  Try  the  present 
case  by  that  test.  Is  not  this  a  payment  of  money  which  the  defend- 
ant would  otherwise  have  been  liable  to  pay,  and  so,  in  discharge  of 
a  debt,  according  to  the  language  of  Lord  Denman?  This  reasoning 
does  not  apply  in  the  case  of  a  guarantee,  for  there  is  no  original  liabil- 
v.  ity  to  a  third  party. 

''  As  to  the  second  point,  this  case  is  exactly  the  same  as  if  these  par- 
ties had  been  sureties  for  a  firm  consisting  of  five  or  six  individuals ; 
the  principals  not  having  paid,  the  co-surety  is  liable  for  his  half.  As 
to  the  costs,  the  judgment  on  the  warrant  of  attorney  is  entered  up 
against  four;  i.  e.,  the  two  principals  and  the  two  sureties.  If  one 
of  the  latter  pays  the  whole  amount  of  those  costs,  his  companion  is 

y  bound  to  pay  his  share. 

As  to  the  last  objection,  relative  to  the  attestation  of  the  warrant  of 
attorney,  the  entertaining  it  now  would  not  be  "summl  juris,"  but 
"summissimi  juris." 
Rule  refused. 


SLOO,  Adm'r  of  Castles,  v.  POOU 

(Supreme  Court  of  Illinois,  1S53.     15  111.  47.) 

Error  to  Gallatin. 

This  cause  was  heard  at  October  Term,  1853,  of  the  Gallatin  Circuit 
Court,  before  Marshall,  Judge. 

Tre-AT,  C.  J.    In  July,  1841,  Robert  Castles,  as  principal,  and  WiUiam 
Castles  and  Orval  Pool,  as  sureties,  executed  a  joint  and  several  ^rom- 
issory  npte  to  the  Bank  of  Illinois.    In  August.  1852,  Pool  paid  the  note 
in  full.     William  Castles  was  dead,  and  his  administrator  had  been 
qualified  more  than  twp^years.     On  the  oth  of  October,  18527~P'ool 
filed  a  claim  in  the  county  .court  against  the  estate  of  WilliamCastles, 
for  contribution  on  account  of  the  payment  of  the  note.     The  admin- 
istrator did  not  file  an  inventory  of  the  real  estate  of  William  Castles 
until  the  1st  of  November,  1852.     The^county:  court  disallowed  the 
Icjaim,  and  thejcasejwas  removed  into  the  circuit  court.     TliaL-Cfiurt 
)^;>A^/ ^  rendered   judgment   against   the   administrator    for   one-half    of   the 
/amount  paid  by  Pool,  to  be  discharged  in  due  course- of  atimttHfltra- 
(  tion,  out  of  any  assets  discovered  subsequent  to  the  5th  of  October, 
1852.    It  did  not  appear  whether  Robert  Castles  was  solvent  or  not. 


Ch.  4)  THE  surety's  equity  of  contribution.  331 

It  is  insisted  that  a  surety  cannot  enforce  contribution  from  a  co-  c<^,.„jL,<_^ 
surety,  without  showing-  the  insolvency  of  the  principal.  This  may  ^^jji^f.^l^^.^ 
be  the  doctrine  of  courts  of  equity,  but  it  is  not  the  rule  at  law.  In  ^'^v. ,  M'^ 
Cowell  V.  Edwards,  2  Bos.  &  Pull.  268,  Lord  Eldon  expressed  the 
opinion  that  a  surety  might  maintain  an  action  for  contribution  ag-ainst 
a  co-surety,  without  proving  the  insolvency  of  the  principal  debtor; 
and  that  opinion  does  not  appear  to  have  been  questioned  in  the  ^Eng- 
lish courts.  It  has  been  followed  in  this  country  in  the  cases  of  Odlin 
V.  Greenleaf,  3  N.  H.  270,  Roberts  v.  Adams,  6  Port.  (Ala.)  361,  31 
Am.  Dec.  694,  and  Judah  v.  Mieure,  5  Blackf.  (Ind.)  171.  The  Ken- 
tucky courts  hold  that  a  surety  cannot  compel  contribution  unjess  the 
principal  is  insolvent.  But  the  rule  laid  down  by  Lord  Eldon  is  best 
supported  by  authority,  and  more  consistent  with  legal  principles. 
Sureties  are  individually  liable  to  the  creditor.  But  one  is  as  much 
bound  to  discharge  the  debt  as  another.  If  the  creditor  endeavors  to 
enforce  payment  from  them,  it  is,  as  between  themselves,  the  duty  of 
each  to  pay  an  aliquot  portion  of  the  debt.  If  that  is  not  done,  and  one 
is  compelled  to  pay  the  whole,  he  is  entitled  to  contribution  from  the 
others  in  the  same  proportion.  The  law  implies  an  agreement  between 
them,  when  they  become  responsible  to  the  creditor,  that  if  one  shall 
be  compelled  to  pay  the  debt  the  others  will  contribute  so  as  to  make 
the  burden  equal.  If  one  pays  the  whole  debt,  he  has  a  cause^of  action 
against  the  others,  to  recover  their  just  proportions,  as  so  much  money 
paid  to  their  use.  His  right  to  contribution  is  complete  as  soon  as  he 
pays  the  debt ;  and  he  may  at  once  call  upon  his  co-sureties  to  bear 
the  common  burden  with  him.  ^£yMf(rfr^'^ 

Aj_Jaw,  he  cannot  sue  two  or  more  sureties  jointly;    but  he  must      ^, m.>im'^'^ 
sue'eacli  separately"     And  he  can- only  recover  from  one  an  aliquot 
prrij' irti'jn  of  the  debt,  to  be  ascertained  by  the  number  of  sureties, 
witliout  regard   to  their  solvency.     But   in  equity,   relief   is   granted 
between  sureties  on  the  principle  of  equaltty  applicable  to  a  coirnnon 
risk;    and  if  one  of  them  is  insolvent  the  loss  is  apportioned  among 
the  others.    1  Story,  Eq.  4!J6  ;  Chitty  on  Cont.  471 ;  Theobald  on  Prin-      ^  ,^ 
cipal  and  Surety,  196.     In  the  present  case,  the  sureties  were  individ-  ^     'If  "  ^"^  f^ 
ually  liable  for  the  debt.     The  bank  might  have  sued  either  of  them 
separately,  and  compelled  him  to  pay  the  entire  debt ;   but,  as  between 
themselves,  each  was  bound  to  pay  one-half  of  the  note.     Pool  ad- 
vanced a  moiety  for  the  use  of  the  estate  of  his  co-surety;    and  he 
was  clearly  entitled  to  a  judgment  against  the  administrator  for  that 
amount,  without  any  reference  to  the  ability  of  the  principal.  X^wt^'/'-^'^^'" 

As  Pool  did  not  exhibit  his  claim  within  two  years  from  the  grant  ^>y^^  ih  ^r 
of  letters  of  administration,  he  is  precluded  by  the  statute  of  Hmita-  j:;^iu«/' 
tions  from  any  participation  in  that  portion  of  the  estate  of  William 
Castles  which  was  inventoried  or  accounted  for  by  the  administrator 
during  that  period.  His  judgment  can  only  be  satisfied  out  of  estate 
discovered  or  inventoried  after  the  expiration  of  the  two  years.  Thorn 
V.  Watson,  5  Oilman,  26;    Judy  v.  Kelley,  11  111.  211,'50  Am.  Dec. 


332  THE   EQUITABLE   AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2" 

455;  People  v.  White,  11  III.  341.  The  statute  makes  it  the  duty  of 
an  administrator,  within  three  months  after  his  appointment,  to  re- 
turn to  the  probate  court  a  full  and  perfect  inventory  of  the  real  and 
personal  property  of  the  intestate.  Rev.  St.  c.  109,  §  81.  The  admin- 
istrator of  William  Castles  did  not  return  an  inventory  of  the  real 
estate  within  two  years  from  the  grant  of  administration.  The  real 
estate  was  therefore  not  inventoried  or  accounted  for  during  that 
period  of  time ;  and  Pool  is  consequently  entitled  to  participate  equally 
with  the  other  creditors  in  the  proceeds  thereof.  He  is  also  entitled 
to  share  in  the  proceeds  of  any  personal  estate  discovered  or  inven- 
toried after  the  expiration  of  the  two  years. 

ThQ  court  erred  in  confining  Pool,  in  the  satisfaction  of  his  judg- 
ment, to  assets  discovered  or  inventoried  subsequent  to  the  filing  of 
the  claim.  But  this  error  cannot  operate  to  the  prejudice  of  the  ad- 
ministrator.   Pool  alone  has  reason  to  complain.    Judgment  affirmed.* 


ACERS  V.  CURTIS. 

(Supreme  Court  of  Texas,  1887.    68  Tex.  423,  4  S.  W.  551.) 

Willie,  Chief  Justice.  Curtis  brought  this  suit  against  the  firm  of 
Brannon  Bros.,  and  also  against  H.  Eddy,  A.  S.  Mercer  and  tjie  ap- 
pellant,  C.  F.  Acers.  He  alleged  that  he  and  the  three  last  named  de- 
fendants were  sureties  on  a  note  which  they  together  with  Brannon 

■  Bros,  executed  to  George  W.  West  for  $2,842.60,  which  note  bore  in- 
terest at  the  rate  of  12  per  cent,  per  annum,  and  in  case  of  legal  pro- 
ceedings 10  per  cent,  attorney's  fees  on  the  amount  of  the  note  was 
to  be  collected  from  the  makers.  The  note  matured  on  the  15th  of 
October,  1884,  and  payment  was  not  made,  though  demanded  of  the 
makers,  whereupon  Curtis  paid  the  note  and  had  it  indorsed  to  him- 
self. When  paid  the  note  amounted  to  $3,193.17,  principal  and  inter- 
est, and  this  sum  was  paid  to  the  payee  by  the  appellee  Curtis.  Bran- 
non Bros,  were  insolvent  at  the  maturity  of  the  note  and  at  the  com- 
mencement of  the  suit.  Curtis  claimed  that  his  co-sureties  were  bound 
to  pay  him  their  pro  rata  of  the  above  sum,  with  interest  and  10  per 
cent,  attorney's  fees,  viz.,  $319.31.  H_£_prayed  for  such  judgment  as 
he  was  entitled  to  under  the  allegations  of  his  petition.  ' 

Citation  issued  upon  this  petition,  and  was  served  upon  all  the 
defendants  except  A.  J.  Mercer,  as  to  whom  it  was  returned  "not 
found."  He  was  alleged  in  the  petition  to  be  a  resident  of  Cheyenne, 
Wyoming  Territory.  No  answer  was  filed,  and  judgment  was  ren- 
dered for  plaintiff,  reciting  that  all  the  defendants  had  been  duly 
served  with  citation  and  had  failed  to  appear.     This_jiidgment  was 

njagainst  Brannon  Bros,  for  the  sum  of  $3,691,  to  bear  interest  at  12  per 

•  caontxa:  Morrison  v.  Poyntz,  7  Dana  (Ky.)  307,  32  Am.  Dec.  92  (1838). 


Ch.  4)  THE  surety's  equity  of  contribution.  333 

cent,  per  annum,  and,  in  case  this  could  not  be  made  out  o^  the  other 

parties,  against  the  other  defendants  for  the  sum  of  $3,702.41,  which 

was  said  to  be  their  pro  rata  of  the  amount  paid  by  Curtis  upon  the 

note.    This,  too,  was  to  bear  interest  at  12  per  cent,  per  annum.    FromTCU>?^<' 

this  judgment  Acers  prosecutes  a. writ  of  error  to  this  court.  y  ^■^'t^-^  ^ 

It  is  apparent  that  the  recovery  given  to  Curtis  against  his  co-sure-    i'>^t»»»wW  !«< 
ties  w^three-fourtlis  of  the  amount  due  on  the  note  at  the  date  of    ^f^^/h 
the  judgment,  with  attorney's  fees  added.     The  appellee  was  not  en-    t«  ;h'*'-''"^ 
titled  to  such  a  judgment  under  the  allegations  of  his  petition.     He 
was  one  of  four  co-sureties  on  the  note.    When  he  paid  it  he  became 
entitled  to  contribution  from  each  of  his  co-sureties  in  aliquot  parts 
according  to  their  number;    that  is  to  say,  one-fourth  of  the  amount 
paid,  with  interest,  from  each  surety.     Morrison  v.  Poyntz,  7  Dana 
(Ky.)  307,  32  Am.  Dec.  92;   Stothoff  v.  Dunham,  19  N.  J.  Law,  182. 

He-wa_s_jiot  entitled  to  recover  the  whole  three-fourths  from  those 
sureties  in  a  joint  judgrfient  against  them.  The  injustice  of  such  a 
judgiiient^  is  apparent  from  the  fact  that  the  whole  of  it  could  be 
made  out  of  one  defendant,  and  in  case  of  the  insolvency  of  the  others 
this  defendant  would  be  forced  to  pay  three  times  the  amount  the 
plaintiff  was  entitled  to  recover  of  him.  The  rule  in  equity  in  case  of 
such  insolvency  is  that  the  solvent  sureties  bear  equally  the  burden  of 
payment.  This  rule,  as  well  as  that  which  requires  all  the  sureties, 
when  solvent,  to  share  equally  in  the  payment,  is  violated  by  the  pres- 
ent judgment.  Powell  v.  Matthis,  26  N.  C.  83,  40  Am.  Dec.  427; 
Henderson  v.  McDuffee,  5  N.  H.  38,  20  Am.  Dec.  557.  ^.O^o^yJ^ 

Nor  can  we  perceive  upon  what  principle  the  plaintiff  recovered  ^rttv^vJ  p:?' 
10^  per  cent,  attorney's  fees  of  the  defendant  sureties.     I^jiad  not  -rWfi»H'''^ 
paid__attorney's^  fees  to  the  owner"  of  the  note.     They  were  not  to  be  j.-^*^'-'  ^  '^^ 
paid  except  in  case  of  suit,  and  it  does  not  appear  that  any  suit  had   ^"" 
been  commenced  on  the  note  when  he  took  it  up.     He  says  that  he 
was  forced  to  pay  it,  but  the  inference  is  that  this  was  by  reason  of 
the  insolvency  of  the  makers.     At  all  events,  he  paid  no  attorney's 
fees,  and  was  entitled  to  recover  contribution  only  for  what  he  did 
pay.     A  surety  cannot  speculate  off  of  his  co-suretiest^)If  he  pur- 
chases the  note  for  less  than  its  face  value,  they  are  entitled  to  share 
in  the  benefits  of  the  bargain ;  much  less  can  he  get  from  them  a  pro- 

*  The  reason  against  speculation  is  thus  clearly  set  forth  in  Tarr  v.  Ravens- 
croft  et  al.,  12  Grat.  (Va.)  653,  654  (1855):  "In  Blow  v.  Maynard,  2  Leigh,  29, 
It  was  held  that,  where  a  surety  for  a  guardian  compromised  with  the  ward 
for  a  less  sum  than  was  actually  due  on  a  settlement  of  the  guardian's  ac- 
count, he  could  only  demand  indemnity  from  the  guardian's  estate  in  equity 
for  the  money  actually  paid  to  the  ward  in  satisfaction  of  her  claim.  A  for- 
tiori, it  should  seem  he  could  not  demand  contribution  of  a  co-surety  ex- 
cept for  the  amount  tbus  actually  paid.  If  the  principal  be  only  liable  for  the 
amount  actually  paid  by  a  surety  in  discharge  of  the  debt,  then  he  could  only 
be  liable  to  any  other  surety  for  his  quota  of  that  amount ;  and  if  the  latter 
could  be  called  on  for  contribution  according  to  the  nominal  amount  of  the 
debt,  he  would  thus  be  liable  to  his  co-surety  for  a  greater  amount  than  he 
■could  recover  of  the  common  principal." 


334  THE   EQUITABLE  AND   LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

V  portionate  share  of  the  face  vaUie,  if  he  pays  the  note  in  full.  From 
'  this  it  is  apparent  that  the  judgment  below  was  error.  It  was  not  au- 
thorized by  the  pleadings,  and  hence  could  not  be  rendered^  though 
no  appearance  was  made  for  the  defendants.  This  view  of  the  judg- 
ment relieves  us  of  the  necessity  of  passing  upon  the  question  as  to 
whether  or  not  it  could  be  sustained  against  Mercer,  who  was  not 
served  according  to  the  sheriff's  return,  but  was  according  to  the  re- 
citals of  the  judgment.  It  is  not  probable  that  a  recovery  will  be  at- 
tempted again  as  to  Mercer,  without  bringing  him  into  court  in  some 
manner  recognized  by  our  statutes. 

For  the  errors  pointed  out  the  judgment  is  reversed  and  the  cause 
remanded. 

Reversed  and  remanded." 


/ 


CHIPMAN  V.  MORRILL  &  WEBSTER. 
(Supreme  Court  of  California,  18G2.     20  Cal.  130.) 


Appeal  from  the  Fourth  Judicial  District. 

This  action  was  commenced  on  the  30th  day  of  July,  A.  D.  18G0. 
All  other  material  facts  are  stated  in  the  opinion  of  the  court.® 

Field,  C.  J.,  delivered  the  opinion  of  the  court;  Norton,  J.,  con- 
curring. 

The  property  of  the  plaintiff  was  sold  under  execution  to  satisfy 
a  judgment  Tecbvered  against  the  plaintiff  and  the  defett4aftte,— and 
this  action  is  brought  to  enforce  payment  from  the  defendants  -of 
their  proportionate  share.  The  questions  for  determination ^ise  updii 
iO^  ithe  pleadings.  The  papers  read  on  the  motion  for  new  trial  we  can- 
notlobk  into,  as  there  is  no  appeal  from  the  order  denying  the  mo- 
^-L.  tion.  The  complaint  sets  forth  that  in  December,  1853,  the  plaintiff" 
and  the  defendants  purchased  certain  real  estate  situated  in  Alameda 
coilnty,  and  gave  to  the  vendor  in  part  payment  for  the  same  meir 
joiiTE' promissory  note  for  $11,666,  secured  by  a  mortgage  ui>"ii  ilie 
property;  that  the  plaintiff  by  the  purchase  became  the  owner  of  one 
undivided  half  of  the  premises,  and  each  of  the  defendants  became 
the  owner  of  one  undivided  fourth ;  that  the  note  was  not  paTd,  aiTd 
that  suit  was  commenced  for  the  foreclosure  of  the  mortgage,  in  which 
judgment  was  recovered  against  the  plaintiff  and  the  defendants  for 

5  On  the  subject  of  joint  judgments,  cf.  Cummings  v.  Little,  45  5Ie.  183 
(ISoSj: — ■ 

As  the  surety  has  no  right  to  contribution  until  payment  of  more  than  his 
shaFe.  he  has  Tilfewise  no  riirht  of  contribution  or  subrogation  agnTnst  bis  co- 
siiretv  if  he  pars  the  debt  before  it  is  due.  Felton  v.  Bissel,  25  3linn.  15 
(187S).  

O^  subrogation  between  co-sureties,  applied  so  as  to  permit  the  paying 
surety  to  prove  note  against  co-sirrety's  insolvent  estate,  though  eutltltHUlo 
receive  dividends  to  only  half  its  amount,  see  12  H.  L.  R.  284. 

•  The  arguments  of  counsel  are  omitted. 


Ch.  4)  THE   surety's   EQUITY   OF   CONTRIBUTION.  335 

$11,666,  and  a  decree  entered  directing  the  sale  of  the  premises  for 
the  satisfaction  of  the  judgment;  that  under  the  decree  the  mortgaged 
premises  were  sold,  and  after  the  application  of  the  proceeds  to  the 
payment  of  the  amount  due  upon  the  judgment  there  remained  a  de- 
ficiency of  $8,040;  that  for  thi£  deficiency,  and  the  percgntage,  interest 
and  costSj_^n.e2S£cutiaa-wa*  isstred  on  the  1st  of  July,  1856,  and  under 
it,  on  the  SOtli  of  the  same  month,  property  of  the  plaintiff  was  sold 
for  Ihe  sum  of  $12,000,  and  the  amount  applied  to  the  satisfaction  of 
the  deficiency  and  interest,  percentage  and  costs ;  that  the  deficiency 
was  due  from  the  plaintiff  and  defendants  in  the  same  proportions  be- 
tween themselves,  as  they  were  the  purchasers  and  owners  Of  the 
premises — that  is,  one-half  from  the  plaintiff  and  one-fourth  from  each 
of  the  defendants ;  but,  as  the  whole  amount  was  paid  by  the  plaintiff, 
the  defendants  are  bound  to  make  contribution  to  him  in  proportion 
to  their  interests.  Then  follows  a  prayer  for  judgment  that  each  de- 
fendant be  required  to  pay  the  plaintiff  the  sum  of  $3,000,  with  in- 
terest from  July  30,  1856,  and  for  such  other  and  further  relief  as  to 
equity  shall  seem  meet.  fAX*  ^^ 

To  this__  complaint  the  defendant  Webster  demurred  on  various  j^ 
grounds,  aiid^among  others  on  the  ground  that  there  was  a  misjoinder 
of  parties,  because  the  cause  of  action  was  several  against  each  of  the 
defendants,  and  on  the  ground  that  it  appeared  that  more  than  two 
years  had  elapsed  from  the  time  the  cause  of  action  accrued  before 
the  suit  was  commenced.  The  court  sustained  the  demurrer,  and, 
the  plaintiff  declining  to  amend  his  complaint,  final  judgment  wa§  en- 
tered  thereon  / 1  /    " 

^ilip  dptpnrlant  Morrill  answered,  denying,  to  use  the  language  of  '  "'  "  ' 
his  answer,  "the  greater  part  of,  the  allegations  of  the  complaint," 
without  stating  what  those  allegations  were,  and  setting  up,  or  rather 
attempting  to  do  so,  the  statute  of  limitations  and  a  discharge  under 
the  insolvent  law  of  the  state.  The^plaintiff,  instead  of  demurring 
to  the_jjL£i£ctiy£  aias:y^jer.,_  filed  a  replication  to  it,  denying  the  bar  of 
the  statute  and  the  discharge  in  insolvency!  The  case  was  then  sub- 
mitted  upon  the  pleadings.  Upon  them  the  court  gave  judgment  for 
the  defendant.  It  is  from  these  two  judgments — one  in  favor  of  the 
defendant  Webster  on  the  demurrer,  and  the  other  in  favor  of  the 
defendant  Morrill  on  the  pleadings — that  the  appeal  is  taken.  "^ ''j(r^\J\Art~ 

The  appellant  in  his  argument  of  the  appeal  takes  two  positiojis : 
First,  that  the  action  is  one  in  equity  to  enforce  a  contribution  from 
two  of  three  obligors,  to  which  the  statute  does  not  create  a  bar  until 
after  the  lapse  of  four  years  (Act  April  22,  1850,  §  19,  defining  the 
time  for  commencing  civil  actions) ;  and,  second,  that  if  the  action 
be  regarded  as  depending  upon  contract,  that  such  contract  is  founded 
upon  an  instrument  of  writing,  and  to  the  action  the  statute  in  conse- 
quence fixes  a  like  limitation  of  four  years.  V 

1.  In  support  of  the  first  position,  the  appellant  cites  various  au- 
thorities upon  the  doctrine  of  contribution  as  between  co-sureties,  to 


i^ 


336  THE    EQUITABLE   AND    LEGAL   RIGHTS   OF  THE   SURETY.       (Part    2 

^^  ^  the  effect  that  such  doctrine  depends  more  upon  a  principle  of  equity 
^'"^  th|S  upon  contract.  Such  is  undoubtedly  the  case  as  between  co- 
sureties, and  the  principle  is  that,  where  there  is  a  common  HabiHty, 
equality  of  burden  is  equity.  Courts  of  equit}'^  therefore,  naturally 
took  jurisdiction  of  cases  of  contribution,  where  one  surety  had  paid 
more  th.an  his  just  proportion.  But  the  equitable  doctrine,  in  progress 
of  time,  became  so  well  established  that  parties  were  presumed  to  en- 
ter into  contracts  of  suretyship  upon  its  knowledge,  and  consequently 
upon  a  mutual  understanding  that,  if  the  principal  failed,  each  would 
be  bound  to  share  with  the  others  a  proportionate  loss.  ^Courts  of 
common  law  thereupon  assumed  jurisdiction  to  enforce  contribution 
between  the  sureties,  proceeding  on  the  principle  that  from  ttlEiEifoint 
undertaking  there  was  an  implied  promise  on  the  part  of  each  surety 
to  contribute  his  share,  if  necessary,  to  make  up  the  common  loss. 
Craythorne  v.  Swinburne,  1-4  Vesey,  164;  Lansdale's  Administrators 
and  Heirs  v.  Cox,  7  T.  B.  Mon.  (Ky.)  403;  Campbell  v.  Mesier,  -4 
Johns.  Ch.  (N.  Y.)  339,  8  Am.  Dec.  570;  1  Maddock's  Ch.  236; 
Fletcher  v.  Grover,  11  N.  H.  369,  35  Am.  Dec.  497.  This  jurisdiction 
of  the  common-law  courts  did  not,  however,  impair  the  concurrent 
jurisdiction  of  equity.  Indeed,  in  many  cases,  especially  where  the 
sureties  were  numerous,  and  some  of  them  were  insolvent,  or  where 
some  of  the  sureties  had  died,  courts  of  equity  were  alone  adequate 
to  afford  complete  remedy.  Wright  v.  Hunter,  5  Vesey,  194 ;  W^y- 
land  V.  Tucker,  4  Grat.  (Va.)  268,  50  Am.  Dec.  76;  Couch  v.  Terry's 
TllLl  V  Adm'rs,  12  Ala.  228. 

^^!lj*^^-j     '        It  is  also  true  that  the  doctrine  of  contribution  applies  equally  be- 
^^(f  tween  those  who  are  original  co-contractors  (that  is,~befweenmTC)se 

who  are  jointly  bound  on  their  own  account,  not  being  co-partners)  as 
it  does  between  those  who  are  co-sureties  (that  is,  jointly  bound  to 
answer  for  the  debt  or  default  of  another).  Thus,  if  a  note  were  given 
for  the  cost  of  a  partition  wall  by  the  owners  of  the  adjoining  prem- 
ises, between  which  the  wall  was  constructed,  and  one  of  the  parties 
should  pay  the  entire  amount  of  the  note,  or  more  than  his  propor- 
tionate part,  he  could  claim  a  contribution  from  the  other.  Campbell 
^  V.  Mesier,  4  Johns.  Ch.  (N.  Y.)  335,  8  Am.  Dec.  570. 
T^i^r  -^^t  t^^  present  case  is  not  one  for  contribution  betw^een  parties  who 
r.*rmrs  **»W«>^^  have  sustained  a  common  loss  upon  a  common  liability.  "TTie'liofe  "of 
the  plaintiff  and  defendants,  upon  which  the  judgment  was^xndered, 
was~given  upon  the  purchase  of  real  estate  in  which  the  parties-took 
separate  and  distinct  interests — the  plaintiff  one  undi\'ided  half, -and 
each  of  the  defendants  one  undivided  fourth ;  and  between  themselves 
the  obligation  of  each  was  to  pay  for  his  respective  interest.  "TrTgiv- 
inglheif  joint  note  for  the  whole  amount  of  the  purchase  money,  each 
party  was  principal  for  the  amount  of  his  own  interest,  and  co-siirety 
for  the  remaining  interests.  Thus  the  plaintiff  was  principal  for  one- 
half  of  the  purchase  money,  and  co-surety  with  Webster  for  one-fourth 
of  the  same  for  Morrill,  and  co-surety  with  Morrill  for  one-fourth 


ri*. 


Ch.  4:^  THE  surety's  equity  of  contribution.  337 

for  Webster.  Goodall  v.  Wentworth,  20  Me.  322.  When,  therefore, 
the  plaintiff  paid  the  entire  amount  of  the  judgment  recovered  upon 
the  note — or,  what  is  the  same  thing,  when  the  proceeds  of  the  prop- 
erty of  the  plaintiff  sold  under  execution  were  applied  to  such  pay- 
ment— he  became  entitled  to  maintain  an  action  against  the  defend- 
ants for  moneys  paid  on  their  account.  Thfi  demands  which  he  could 
then  assert  were  several  in  their  character.  They  were  demands,  not 
fofTohfribution^  but  for  reimbursement  of  monexS-paid.  The~action 
should^" therefore,  have  been  against  the  defendants  separately,  upon 
the  assumpsit  which  the  law  implies  where  a  surety  is  compelled  to  ad- 
vance money  for  his  principal.  Parker  v.  Elhs,  2  Sandf .  (N.  Y.)  223 ; 
Qdlin  V.  GreehTeaT,  3  N.  H.  270 ;  Mauri  v.  Heffernan,  13  Johns.  (N. 
Y.)  59  ;  Lapham  v.  Barnes,  2  Vt.  213  ;  Fraser  v.  Goode,  3  Rich.  Law 
(S.  C.)  199;  Babcock  v.  Hubbard,  2  Conn.  536;  Ward  v.  Henry,  ^ 
5  Conn.  596,  13  Am.  Dec.  119.  ^  U^^^-^j  v 

2.  The  action  being  upon  the  imphed  assumpsit,  the  question  is  f,/A—  y*^* 
whether  The' contract  is  to  be  regarded  as  "founded  upon  an  instrument  :^  Tf*'^  "^  ^^' 
oj_ writing."  The  statute  provides  that  "an  action  upon  any  contract,  "*  ^tr^"^^-' 
obligation  or  liability  founded  upon  an  instrument  of  writing,"  except 
in  certain  designated  cases,  shall  be  commenced  within  four  years,  and 
an  action  upon  a  contract,  obligation  or  liability  not  thus  founded, 
with  certain  exceptions,  shall  be  commenced  within  two  years.  The 
question  is  whether  the  present  action  is,  in  the  meaning  of  the  statute, 
"founded  upon  an  instrument  of  writing."  Our  conclusion  is  that  it 
is  not  thus  founded^;  that  the  statute  by  the  Tanguage^  in "quesHon 
refers  to  contracts,  obligations  or  liabilities  resting  in,  or  growing 
ouF  of  written  instruments,  not  remotely  or  ultimately,  but  immediately; 
that  is,  to  such  contracts,  obligations  or  liabilities  as  arise  from  instru- 
ments of  writing  executed  by  the  parties  who  are  sought  to  be  charged, 
in  favor  of  those  who  seek  to  enforce  the  contracts,  obligations  or 
liabilities.  The  construction  would  be  the  same  if  the  word  "founded" 
were  omitted,  and  the  statute  read  "upon  any  contract,  obligation  or 
liability  upon  an  instrument  of  writing."  Such_being  our  construction, 
we  are  of  opinion  that  the  statute  created  a  bar  to  the  present  action 
aitfii  .the  lapse  of  two  years  from  the  30th  of  July,  1856.  __The  de- 
murrer interposed  by  the  defendant  Webster  was,  therefore,  well  taken. 
One  of  the  questions  raised  by  the  defendant  Morrill,  by  his  defective 
answer,  also  related  to  the  bar  of  the  statute.  Although  informally 
taken,  the  objection,  supported  as  it  is  by  the  allegations  of  the  com- 
plaint, was  sufficient  to  uphold  the  judgment  rendered. 

Judgment  affirmed. 
Hen.Sub.— 22 


'ioo^ 


338  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part   2 

DURBIN  V.  KUXEY  &  SAYERS. 
(Supreme  Court  of  Oregon,  1890.    19  Or.  71,  23  Pac.  GGl.) 

Appeal  from  Marion  county :  R.  P.  Boise,  Judge. 

This  action  was  brought  against  the  defendants  for  contribution. 
The  lactVare  in  substance  these :  On  the  15th  day  of  August,  1879, 
the  plaintiff,  Durbin,  and  the  defendants  Kuney  &  Savers,  parties  to 
this  action,  gave  two  promissory  notes  of  that  date  to  R.  M.  Wade 
&  Co.,  each  for  $1G2.50,  due  in  3  and  15  months  after  date,  respectively, 
and  signed  by  all  the  parties,  in  payment  for  a  harvester  purchased  by 
them,  and  that  the  plaintiff,  Durbin,  paid  off  both  notes  as  Tollows : 
On  September  24,  1881,  he  paid  R.  M.  Wade  &  Co.  ^^OS.eS,  the 
arnount  then  due  on  the  three  months'  note;  on  Mav  20.  1883,  he^j)aid 
R.  M.  Wade  &  Co.  $80 ;  September  6,  IS'SG^  $59.15  ;_'NoYember_3^18S7, 
$116.10,  which  constitute  the  various  sums  paid  on  the  other  note 
and  judgment  which  was  rendered  against  the  parties. 

As  one  cause  of  defense,  the  defendant  Sayers  pleads  that  the  note 
paid  off  on  September  24,  1881,  by  the  plaintiff,  Durbin,  is  barred  by 
the  statute  of  limitations.  A  motion  was  made  to  strike  out  this  de- 
I  fense,  which  was  overruled  by  the  court,  and  on  the  trial  of  the  cause 
'the  court  gave  the  following  instructions,  to  which  exceptions  were 
taken:  "If  plaintiff  has  paid  off  and  taken  up  one  of  the  notes  iji  the 
complaint,  more  than  six  years  before  the  commencement__of  this 
action,  he  cannot  recover  in  this  action  any  of  the  money  so  paid  on 
that  note,  because  a  cause  of  action  accrued  at  the  time  of  sucE  payment 
and  expired  by  the  statute  of  limitations  before  commencement  of  this 
action ;  that  if  the  statute  of  limitations  has  run  against  one  note,  that 
note  is  out  of  this  case ;  and  that  the  utmost  that  the  plaintiff  can  re- 
cover in  that  event  would  be  one-half  of  the  money  paid  on  the  other 
note." 

Lord,  J.,  delivered  the  opinion  of  the  court.'^     *     *     * 

According  to  the  facts,  at  the  time  when  the  plaintiff  paid. the 
$203.63,  he  only  paid  one-half  of  the  whole  debt,  and  it  is  indisputable, 
irthe  defendants  had  paid  the  other  half,  that  the  plaintiff  would  have 
no  right  of  contribution,  and  therefore  he  had  not  paid  more  than  his 
proportion,  and  until  then  a  right  to  contribution  cannot  ari^e.  And 
as  the  statute  of  limitations  does  not  begin  to  run  until  the  plaintiff  has 
paid  more  than  his  proportion  of  that  debt,  it  did  not  begin  to  run 
when  he  paid  the  sum  of  $203.63.  His  riglit  of  contribution  is  not 
measured  by  nor  "founded  upon  the  notes,  but  on  the  pay'ment*oT  more 
than  his  proportion  of  the  debt  which  the  notes  represented-  He  is  not 
substituted  to  the  place  of  the  creditor,  and  seeking  relief  on  that  basis, 
for  in  that  case  the  instruction  might  be  correct,  but  his  equity  springs 

7  Only  that  part  of  the  opinion  of  the  court  dealing  with  the  statute  of  lim- 
itations is  printed. 


Ch.  4)  THE  surety's  equity  of  contbibution.  339 

out  of  the  debt  as  to  which  he  and  the  defendants  stand  equati  jure  and 
must  bear  the  burden  equally. 

We Jjiinkj_ therefore,  the  instructions  were  erroneous  statements  of 
the  law  as  applicable  to  the  facts,  and  the  judgment  must  be  reversed 
and  a  new  trial  ordered.* 


ROBINSON'S  EX'RS  v.  KENON'S  EX'RS. 

(Superior  Court  of  North  Carolina,  1802.    3  N.  C.  181.) 

Johnston,  Judge.  This  is  an  action  by  one  surety  against  another 
to  recover  a  proportion  of  the  monies  paid  for  the  principal.  There 
is  no~ca^e"to  support  such  an  action.  That  such  action  is  not  support- 
able was  lately  decided  at  Hillsborough.  The  plaintiff  must  resort  to 
equity  for  a  contribution  or  reimbursement. 

Quere  de  Hoc  ef  vFde'S  Bos.  &  P.  368  to  274.» 


y 


LABBE  V.  BERNARD  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1907.    196  Mass.  551,  82  N.  E.  688, 
14  L.  R.  A.  [N.  S.]  457.) 

Bill  in  equity  by  a  surety  against  his  co-sureties  for  contribution, 
filedlii"  the  superior  coliftf or  the  county  of  Bristol,  August  14,  1907. 

A  demurrer  to  the  bill  was  sustained  by  White,  J.,  and  the  plaintiff  I  %o^-, 
appealed.    The  material  allegations  in  the  bill  are  stated  in  the  opinion.  > 

Sheldon,  J.  The  plaintiff  and- the  defendants  were  co-sureties  upon  ^y&^^:^y-.-i  t 
a  bond  given  by  one  Rodgers,  for  the  performance  of  an  agreement 
made  by  him  to  grade  some  land  for  a  third  party  for  a  fixed  price. 
Rodgers  entered  upon  the  performance  of  the  contract  and  completed 
a  little  more  than  one-half  of  the  work,  received  a  part  of  the  agreed 
price,  and  then  abandoned  the  contract  and  absconded.  Thereupon  the 
plaintiff  _as^  one  of  the  sureties  of  Rodgers  finished  the  work,  at  an  ex- 
pense of  more  than  $800,  and  either  received  or  became  entitled  to^re- 
ceive  from  the  third  party  a  sum  slightly  above  this,  being  the  balance 
of  the  contract_price  over  what  had  been  paid  to  Rodgers.  TJ2e_£lain- 
tifF  now  seeks  _by_  his  bill  to  compel  the  defendants  to  contribute 
ratably_ia_the  amount  thus  paid  by  him  to  complete  the  work  called 

8  But  if  the  plaintiff  surety  made  payments  in  excess  of  his  moiety  more 
than  six  years  before-  th«  bringing  of  Ms  action,  the  statute  Tiegan  to  run  from 
the  time  he  had  so  paid  in  excess  of  his  share;  and  hence  his  action  for  con- 
tribution in  respect  to  payments  so  made  more  than  six  years  prior  to  suit 
would  be  barred.    Davies  v.  Humphreys,  6  M.  &  W.  152  (1S40). 

9  Accord:  Carrington  v.  Carson,  1  N.  C.  410  (1802).  But  now,  by  the  act  of 
1807  (1  Rev.  St  c.  113,  §  2),  one  surety  may  have  an  action  at  law  against  his 
co-surety. 


^"/f^- 


340  THE  EQUITABLE  AND  LEGAL  RIGHTS  OF  THE  SURETY.      (Part    3 

for  by  the  contjacj,.  without  giving  any  credit  for  the^  amount  which  he 
recm^edTor  doing  it.  _  "  ~ 

•V  h^  X^    If  these  were  all  the  facts,  it  is  sufficiently  manifest  that  the  bill  could 
^,  o-r»<  K-     "O^  b^  maintained.    When  the  sureties  should  be  called  upon  to  make 

i«vM  f  good  the  default  of  Rodgers  aad  should  complete  the  work  which  he 
w^-  ought  to  have  done,  they  would  become  subrogated  to  all  his  rights 
■4«>-^  under  the  contract  and  entitled  to  receive  whatever  part  of  the  contract 
price  had  not  been  paid  to  him.  And  the  plaintiff,  having  alone  com- 
pleted the  work  and  received  what  remained  due  of  the  contract  price, 
might  indeed  charge  against  his  co-sureties,  ratably  with  himself,  the 
cost  of  completing  the  work,  but  he  must  give  like  credit  for  the 
amount  which  he  received  therefor.  Whatever  he  received  b)[_reason 
of  his  suretyship,  whatever  security  or  advantage  he  derived  from  the 
work  done  in  consequence  of  his  suretyship  upon  this  obligation,  he 
must  apply  to  the  relief  of  his  co-sureties  as  well  as  to  his  own  relief. 
New  Bedford  Institution  for  Savings  v.  Hathaway,  134  Mass.  69,  75, 
45  Am.  Rep.  289 ;  Kelly  v.  Page,  7  Gray,  213,  214 ;  Bachelder  v. 
Fiske,  17  Mass.  464;  Owen  v.  McGehee,  61  Ala.  440;  Stanwood  v. 
Clampitt,  23  Miss.  372;  Arcedeckne,  In  re,  24  Ch.  D.  709;  Steel  v. 
Dixon,  17  Ch.  D.  825. 
,  Y     But  the  plaintiff's  bill  avers  also  that,  after  Rodgers  had  begun  the 

f  t^      work  and  before  he  abandoned  it,  he  borrowed  money  of" the  plaintiff 
'_'^'P*       to  enable  him  to  carry  it  on,  and  as  security  therefor  assigned  to  the 
r  \\  'i^v'^^t   P's'"tiff  all  his  claims  and  demands  under  the  contract.    Andlhc"pfein- 
■  '..tcI.,  /»r    tiff  claims  that  while  he  completed  the  work  as  a  surety  and  so  is  en- 
titled to  call  upon  his  co-sureties  to  share  the  expense  thus  incurred, 
he  was  entitled  to  the  price  received  therefor  as  assignee  of  Rodgers, 
and  so  need  not  bring  this  into  the  account  for  the  benefit  of  "the 
defendants.    In  our  opinion  this  contention  cannot  be  maintained. 

Wliile  it  is  true  that  the  rights  of  the  sureties  to  the  remedies  of  the 
principal  do  not  become  complete  and  are  incapable  "of  preseilL-ert- 
forcement  until  they  shall  have  discharged  their  principal's  obligation, 
yet  their  right  became  an  inchoate  one  as  soon  as  they  have  entered  in- 
to the  relation  of  suretyship;  and  their  equitable  assignment  of  their 
principal's  rights  and  remedies,  when  completed  by  their  performance 
of  his  obligation,  relates  back,  as  against  each  other  and  their  principal, 
to  that  earlier  time.  Rice  v.  Southgate,  16  Gray,  143;  Lewis  v.  Faber," 
65  Ala.  460;  Wood  v.  Lake,  62  Ala.  489 ;  Conner  v.  Howe,  35  Minn. 
518,  29  N.  W.  314;  McArthur  v.  ]Martin,  23  Minn.  74;  Forbes  v. 
Jackson,  19  Ch.  D.  615.  And  all  persons  who  have  in  the  meantime 
received  any  securities  or  payments  from  either  party  to  the  prin- 
cipal contract,  with  notice  of  the  facts  and  of  the  surety's  res^SiTsr- 
bilities  and  consequent  rights,  must  in  equity  hold  them  for  his  benefit. 
Norton  v.  Soule,  2  Greenl.  (Me.)  341 ;  Atwood  v.  Mncent,  17  Conn. 
575;  Green  v.  Ferrie,  1  Desaus.  (S.  C.)  164;  Drew  v.  Lockett,  32 
Beav.  499.  The  plaintiff  being  himself  one  of  the  sureties  and  having 
full  knowledge  of  all  the  facts  it  is  unnecessary  to  consider  what  would 


.J  .  n  ^y^ 


Ch.  4)  THE  surety's  equity  of  contribution.  341 

have  been  his  rights  if  he  had  taken  his  assignment  without  notice  of 
the  equitable  rights  of  his  co-sureties. 

Exactly  the  doctrine  here  stated  was  declared  under  a  very  similar 
state  of  facts  by  the  Supreme  Court  of  the  United  States  in  Prairie 
State  National  Bank  v.  United  States,  164  U.  S.  227,  17  Sup.  Ct.  142, 
41  Iv.  Ed.  412,  and  by  the  Circuit  Court  of  Appeals  in  First  National 
Bank  V.  City  Trust  Co.,  114  Fed.  529,  52  C.  C.  A.  313,  in  each  of 
which  cases  the  contest  was  between  the  original  sureties  upon  a  build- 
ing contract  and  a  subsequent  assignee  from  the  contractor.  It  was 
enforced  against  the  trustee  in  bankruptcy  of  the  contractor  in  favor  of 
his  sureties  on  the  original  contract  in  Reid  v.  Pauly,  121  Fed.  652,  58 
C.  C.  A.  152.  The  dissenting  opinion  of  McKenna,  Circuit  Judge, 
in  First  National  Bank  v.  City  Trust  Co.,  ubi  supra,  and  the  decision  in 
Dowling  v.  Seattle,  22  Wash.  592,  61  Pac.  709,  which  are  the  strongest 
utterances  we  find  against  the  full  extent  of  the  doctrine  stated,  recog- 
nize the  right  of  the  sureties  of  the  contractor,  as  against  his  assignee 
in  such  a  case,  to  hold  all  the  money  which  has  been  earned  after  they 
have  undertaken  the  work  which  the  contractor  has  abandoned,  and 
accordingly  do  not  help  the  plaintiff  here.  The  cases  which  the  plaintiff 
has  cited  in  support  of  the  well-recognized  doctrine  that  a  surety  who 
has  received  from  the  principal  debtor  security  originally  given  for 
another  debt  due  to  himself  alone,  as  well  as  to  protect  the  principal 
obligation,  may  apply  such  security  for  his  own  protection  wholly,  are 
not  applicable  and  need  not  be  considered. 

The  case  may  be  stated  more  succinctly,  but  with  sufficient  fullness 
in  another  way.  If  as  the  plaintiff  claims  in  his  bill  he  completed  the 
work  as  a  surety  of  the  original  contractor,  he  must  be  held  to  have.re- 
ceived  the  compensation  in  the  same  character;  if,  as  he  has  argued  to 
us,  he  received  the  compensation  as  assignee  of  the  contractor  then^he 
cannot  claim  against  the  defendants  to  have  done  the  work  as  a  surety. 
In  neither  event  has  he  sustained  any  loss  to  which  he  can  require  his 
co-sureties  to  contribute. 

The  decree  of  the  superior  court  sustai-iing  the  demurrer  and  dis- 
missing the  bill  with  costs  must  be  affirmed;  and  it  is 

So  ordered.^" 


LAWSON  V.  WRIGHT. 

(Court  of  Chancery,  17SG.    1  Cox,  Ch.  275.)  i 

The  tolls  of  a  turnpike  gate  having  been  put  up  to  sale,  George 
Watson  became  the  purchaser,  and  upon  that  occasion  agreed  with  the 
commissioners  to  pay  a  sum  of  £320.  by  installments  of  £20.  each, 
at  times  specified   in  the  cause;    and  Thomas   Wright  and   George 

10  Accord:  Malone  v.  Stewart,  66  Legal  Intelligencer,  611  (Nov.  12,  1909). 


342  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE   SURETY.      (Part   2 

Wright  became .  jointly  and  severally  bound  with  the  said  George 
Watson  for  such  payments  at  the  expiration  of  the  time  within  which 
tlie^  installments  were  to  be  paid.  George  Watson  was  a  defaulter  for 
ilOO.,  whereupon  the  bond  was  put  in  suit  against  Thomas  Wright, 
and  he  actually  paid  the  money,  after  which,  the  said  Thomas^Vright 
being  dead,  the  present  bill~vvas  filed  by  his  executors  agamst  George 
Wright,  the  co-surety,  and  the  said  George  Watson,  the  ^principal, 
stating  George  Watson  to  be  insolvent,  and  praying  a  contribution 
fi-om  the  said  George  Wright,  but  praying  no  relief  against  Watson. 
His  honor  was  very  clear  on  the  general  equity  of  the  case,  and  said 
it  had  been  established,  ever  since  the  origin  of  courts  of  equity,  that 

rj.  one  surety  had  a  right  to  call  on  another  for  contribution  in  cases  of 

this  nature;  but  his  honor  had  some  doubts  whether  it  was  naL_aJbso- 
lutely  necessary  to  prove  the  insolvency  of  the  principal,  which  was  not 
done  in  the  present  case.  ,  , 

UioCw><iJ  To  which  objection  it  was  answered,  Dy  the  counsel  for  the  plain- 
tiffpmat  although  such  was  the  rule  where  the  principal  was  not  before 
the  court,  yet  the  principal  being  here  a  defendant,  it  was  competent  to 
the_court  to  make  such  a  decree,  as  it  could  at  the  same  tTme~3irect 
payment  from  the  principal  to  the  co-surety,  anti'^-it  was  also  suggested 
that  there  might  be  a  difference  in  the  case,  where  the  money  had  been 
actually  paid  by  one  surety,  and  where  the  bill  was  only  under  appre- 
hensions of  plaintiff  being  called  upon  on  account  of  the  insolvency 
of  the  principal,  and  that  though  in  the  latter  case  it  would  be  clearly 
necessary  to  prove  the  principal's  insolvency,  it  might  not  be  necessary 
in  the  former;  but  his  honor  relied  on  the  circumstance  of- the  princi- 
pal being  a  defendant,  and  decreed  that  an  account  should  be  taken  of 
the  money  paid  by  Thomas  Wright  in  respect  of  the  matters  aforesaid, 
and  that  one  moiety  thereof  should  be  answered  by  the  jdelfiudant 
George  Wright  to  plaintiff,  together  with  one  moiety  of  plaintiff's 
costs,  and  that  George  Wright  should  recover  over  such  moiety  of  the 
money  and  costs,  together  with  his  own  costs  from  tlie  defendant 
George  \\''atson. 
i^  The  decree  was  that  it  should  be  referred  to  the  master  to  take  an 
account  of  all  sums  of  money  paid  by  Thomas  Wright,  deceased,  and 
the  plaintiff  Ann  Lawson  and  Thomas  ^^''right,  his  executors,  or  any  of 
them,  agreeably  to  the  undertaking  in  the  pleadings  mentioned,  and 
compute  interest  on  such  sums  of  money  at  the  rate  of  4  per  cent,  from 
the  times  the  several  payments  were  made,  and  to  tax  the  plaintiff  the 
costs  of  the  suit.  And  it  was  further  ordered  that  the  defendant 
George  Wright  did  pay  unto  the  plaintiffs  one  moiety  of  what  should 
be  found  for  principal  and  interest  as  aforesaid,  together  with  the 
costs  of  this  suit.  And  it  was  further  ordered  that  the  defendant 
George  Watson  did  pay  unto  the  plaintiffs  the  other  moiety  of  what 
should  be  found  for  principal  and  interest  as  aforesaid,  and  did  also 
pay  to  the  defendant  George  Wright  the  principal  and  interest  before 
directed  to  be  paid  by  him  to  the  plaintiffs,  together  with  the  costs  of 


Ch.  4)  THE  surety's  equity  of  contribution.  343 

the  said  defendant  George  Wright,  and  also  the  costs  which  he  should 
pay  to  the  plaintiffs  under  the  direction  before  given.  Reg.  Lib.  B- 
1786,  fol.  81. 


HARRISON  V.  LANE. 

(Court  of  Appeals  of  Virginia,  1834.    5  Leigh,  414,  27  Am.  Dec.  607.) 

This  case,  agjiLappeared-inpropf,  was  thus:  William  Lane  having 
been  appointed  sheriff  of  the  county  of  Fairfax,  James  Wigginton  . 
made  application  to  him  for  the  office  of  deputy,  and  offered  to  give  ^""^  '^^' 
hini  a  bond  for  the  faithful  discharge  of  the  office,  witlTlive  suretiej, 
namelyTFIedges,  Hayes,  Wagoner,  Purcell,  and  the  appellant,  Harrison. 
Lane  being,  at  the  time,  satisfied  with  the  sufficiency  of  the  surety  Har- 
rison, though  he  had  no  confidence  in  Wigginton's  solvency,  or  in  that 
of  the  other  sureties,  agreed  to  appoint  Wigginton  his  deputy,  upon  ' 

the  due  execution  of  an  official  bond  by  him  and  the  five  sureties  he 
had  named;  and  the  bond  was  accordingly  prepared,  executed  by 
Wigginton  and  the  four  first  named  sureties,  and  a  sixth  seal  put  to 
it  for  Harrison,  and  then  sent  by  Lane  to  Harrison  to  be  by  him  ex- 
ecuted; and  Harrison  did  execute  it  by  signing  his  name  opposite  the 
sixth  seal.  The  bond,  thus  executed,  was  delivered  to  Lane,  and  he 
thereupon  admitted  Wigginton  as  his  deputy;  but  after  Wigginton 
had  been  in  the  office  a  short  time,  Lane,  apprehending  that  all  the 
sureties  but  Harrison  were  in  doubtful  or  insolvent  circumstances, 
insisted  that  Wigginton  should  give  him  additional  security  for  the 
faithful  execution  of  the  office,  in  consequence  of  which,  Wigginton, 
with  Hancock,  Waugh  and  Blackburn,  as  his  sureties,  executed  another 
bond  to  Lane.  This  second  bond  was  the  same  in  form  with  the  >t^  U^ 
first  bond ;  that  is,  both  were  in  the  usual  form  of  a  deputy  shenff's 
official  bond  to  his  principal.  But  on  this  second  bond  there  was  a 
memorandum,  indorsed  and  signed  by  Lane,  expressing  that  it  was 
expressly  understood  that  in  case  Wigginton  should  be  delinquent,  and 
Lane  should  be  obliged  to  proceed  against  his  sureties  for  indemnifi- 
cation, he  (Lane)  would  not  "execute  the  sureties  in  this  bond,"  so 
loiig^as  the  sureties  in  the  first  bond  should  be  resident  in  the  state, 
and  it  should  appear  that  he  could  be  completely  indemnified  without 
resorting  to  the  sureties  in  the  second  bond.  And  it  was  proved,  by 
pafol  evidence,  that  this  memorandum  on  the  second  bond  was  ex- 
ecuted  at  the  same  time  with  the  bond,  and  that  the  memorandum  was 
rnade  by  Lane  in  conformity  with  a  previous  agreement  between  Wig- 
gmton  and  the  sureties,  Hancock,  Waugh  and  Blackburn,  on  the  one 
part,  and  Lane  on  the  other. 

Wigginton  was  then  permitted  by  Lane  to  continue  in  the  office  of  <^h  ,'j 
deputy,  in  which  he  committed  many  acts  of  official  misconduct,  for  '^"»*^'^  '^f 
which  Lane  was  sued,  and  several  judgments  were  recovered  against 
him ;  and  Lane  brought ^uits  against  Wigginton  and  his  sureties  in  the 


344  THE  EQUITABLE  AND   LEGAL   RIGHTS  OF  THE   SURETY.      (Part    2 

first  bond,  and  recovered  judgments  against  them  for  the  amounts  ad- 
judged  against  himself  on  account  of  Wigginton's  defaults  ;  but  before 
these  judgments  were  recovered  by  Lane,  Wigginton  and  all  the 
sureties  bound  in  the  first  bond,  except  the  appellant,  Harrison,  had 
become  insolvent,  so  that  the  whole  burden  fell  upon  Harrison  alone. 
<v>M6n^  (>^  Harrisonjhen  exhibited  a  bill,  in  the  superior_ccmrL  oi-charLcery  of 
Richmond,  against  Lane  and  Hancock,  Waugh  and  Blackburn,  the 
sureties  bound  in  the  second  bond,  alleging  that  Lane,  when  Wigginton 
oflfered  the  persons  named  in  the  first  bond  for  his  sureties,  was  well 
apprised  that  all  of  them  were  insolvent  but  Harrison,  and  induced 
Harrison  to  join  in  that  bond  by  concealing  the  fact  from  him,  and 
by  representing  to  him  that  other  good  sureties  would  also  become 
bound  for  Wigginton ;  that  when  Wigginton  tendered  him  the  first 
bond,  fully  executed  by  the  parties,  he  refused  to  receive  it  and  re- 
quired another  bond  with  other  sufficient  sureties ;  that  the  second 
bond  was  executed  in  consequence  of  this  requisition,  and  the  design 
of  it  was,  either  that  it  should  be  a  substitute  for  the  first  bond,  or 
that  the  sureties  in  the  second  bond  should  stand  equally  and  jointly 
responsible  with  those  bound  in  the  first,  for  all  the  acts  of  Wigginton 
in  his  office  of  deputj'  sheriflf ;  that  Lane  would  not  permit  Wigginton 
to  exercise  the  office  of  deputy  till  the  second  bond  was  executed,  and 
it  was  upon  the  security  of  that  bond  alone  that  Wigginton  was  ad- 
mitted as  his  deputy;  that  the  memorandum  indorsed  on  the  second 
bond  was  executed  some  time  after  that  bond  was  delivered,  and  thus 
Lane  attempted  to  alter  the  obligation  incurred  by  the  sureties  therein 
bound;  and  that  Lane,  having  absolutely  rejected  the  firs^  bond,  had, 
in  truth,  no  right  to  hold  it.  Therefore  the  bill  prayed'-^n  injunc- 
tion to  inhibit  Lane  from  executingTiIs  judgments  at  law  against  Har- 
rison ;  ana,  if  it  should  appear  that  Lane  was  entitled  to  the  benefit 
of  those  judgments  against  Harrison,  that  Hancock,  Waugh  and 
Blackburn  should  be  compelled  to  make  equal  contribution  with  him 
for  the  satisfaction  thereof. 

The  injunction  was  awarded.  The  defendants  answered,  showing 
the  facts  of  the  transaction  as  above  stated,  and  denying  all  the  al- 
legations of  the  bill  variant  from  that  state  of  the  case.  And  the 
evidence  filed  in  the  cause,  in  the  opinion  of  the  chancellor  and  of  this 
court,  instead  of  substantiating  the  allegations  of  the  bill,  proved  the 
truth  of  the  answers. 
(  The  chancellor  dissolved  the  injunction  and  dismissed  the  bill,  with 
^o*v/  -(costs;  from  which  decree,  this  court,  upon  the  petition  of  Harrison, 
/allowed  him  an  appeal. 

Carr,  J.  I  am  of  opinion  that  the  chancellor  was  right  in  dissolv- 
ing the  injunction.  Whether  he  ought  ever  to  have  granted  it,  is  a 
much  more  doubtful  question.  The  doctrine  of  contribution  between 
co-sureties  has  been  much  discussed.  It  is  clear  that  if  different  per- 
sons are  sureties  for  the  same  debt,  or  for  the  perfdfmancF75t^the 
same  duties,  each  will  be  made,  in  equity,  to  contribute,  though  they 


'4MfMkX«v^  ^in^^ 


/^ 


Ch.  4)  THE  surety's  equity  of  contribution.  345 

be  bound  by  different  bonds,  and  though  they  knew  nothing,  at  the^ 
tim"e7  of  the  obligations  of  -each  other.     But  then  they  miIsI~"Be  Tiire-^^.         l^ 
ties  to  the  same  extent,  and  for  the  same  debt  or  duty.     It  is  equally /^r'T    jrJL^ 
cleaFtHaFif  there  be  one  set  of  sureties  bound  for  a  debt,  and  then    '    j 
the  obligee  takes  another  bond  as  collateral  and  supplemental  security, 
these  last  obligors  binding  themselves  to  pay  if  the  principal  and  sure- 
ties in  the  first  bond  fail,  this  bond  will  bind  them  no  further  than  they 
have  contracted.     This  is  of  the  very  essence  of  the  contract;    and 
the  case  of  Craythorne  v.  Swinburne,  14  Ves.  160,  is  express  to  this 
point. 

Nor  is  the  taking  such  second  bond  a  fraud  upon  the  obligors  in 
the  first.  It  does  not  mcrease  their  burden,  or  any  way  change  their 
situation.  They  agreed  each  lo  execute  the  bond,  and  look  to  their 
principal  and  associates  for  safety.  What  is  the  case  here?  Wiggin- 
ton  applied  to  Lane  to  become  his  deputy,  and  stated  that  he  could 
give  certain  sureties.  Lane  agreed  to  take  the  bond  with  those  sure- 
ties. The  bond  was  prepared  with  the  six  names  in  the  body,  Har- 
rison's last,  and  with  six  seals.  It  was  executed  by  the  other  five,  and 
in  this  situation  was  presented  to  Harrison,  Nothing  was  said  to  h'ni 
of  additional  sureties.  The  very  form  of  the  bond  showed  him  that 
he  was  the  last  to  execute  it.  He  did  execute  it,  and  thereby  bound 
himself  jointly  and  severally  with  the  others,  to  be  liable  for  all  de- 
faults of  the  deputy.  Notwithstanding  this,  I  admit  that  if  another 
bond  had  been  afterwards  taken,  with  other  obligors  bound  for  the 
same  thing  and  in  the  same  manner,  Harrison,  on  paying  money  for 
the  deputy's  deUnquencies,  would  have  had  a  right  to  call  on  these  sub- 
sequent sureties  for  contribution. 

But,  in  the  case  before  us,  there  is  the  most  satisfactory  proof  that 
the  memorandum  indorsed  on  the  second  bond,  showing  that  this  bond 
Avas  a  supplemental  security,  formed  a  part  of  the  agreement  on  which 
the  bond  was  signed,  and  was  executed  at  the  same  time.  This  mem- 
orandum is  a  part  of  the  bond,  as  well  as  of  the  agreement,  and  must 
be  taken  as  if  incorporated  with  it.  Even  if  there  had  been  no  mem- 
orandum, parol  proof  of  the  agreement  (of  which  there  is  enough  in 
the  record)  ought,  I  think,  to  have  been  received,  and  for  this  the  case 
before  cited  is  express  authority. 

I  am  clear,  therefore,  that  the  decree  should  be  affirmed.  y 

Cabell,!.  If  the  sureties  "in  the  second  bond  were  bound  for  the 
sametKmg  for  which  the  sureties  in  the  first  bond  were  bound,  they 
would  be  liable  to  contribution,  although  their  engagement  was  made 
at  a  subsequent  time,  by  a  different  instrument,  and  even  without  the  ^ 
knowledge  of  the  first  bond.  But  the  memorandum  indorsed  on  the 
second  bond  is  to  be  considered  as  a  part  of  the  bond  itself;  and  the 
bond,  thus  modified,  shows  clearly  that  they  were  bound  for  a  different 
thing.  They  did  not,  like  the  sureties  in  the  first  bond,  bind  themselves 
absolutely  for  all  the  acts  of  Wigginton,  but  for  such  only  as  the  sure- 
tii^ln  the  first  bond  should  fail  to  make  good.     This  is  proved,  also. 


346  THE  EQUITABLE   AXD   LEGAL   RIGHTS  OF  THE  SURETY.      (Part   2 

by  the  parol  testimony,  which  is  admissible  in  a  case  like  this.  The 
sureties  in  the  second  bond  were  not,  therefore,  co-sureties  with  the 
sureties  in  the  first,  but  were  sureties  for  them.  The  doctrines  of 
the  law,  on  this  point,  are  well  explained  in  Craythorne  v.  Swinburne. 
■trnrf\^  r^v''^       The  decree  should  be  affirmed.  X 

jj.^  Tf-         Tucker,  P.     The  appellant  asks,  upon  the  facts  set  forth  in  this 

J  'j^  bill,  relief  against  the  sheriff,  or  a  decree  for  contribution  against  the 

"^  sureties  in  the  second  bond.     If,  as  is  alleged,  the  memorandum  on 

that  bond  was  executed  at  the  time  the  bond  itself  was  entered  into, 
it  is  difficult  to  perceive  upon  what  principle  the  plaintiff  can  expect 
to  charge  the  sureties  therein  bound.  The  doctrine  of  contribution, 
it  is  true,  may  extend  to  parties  who  are  bound  by  different  instru- 
ments, provided  they  are  all  sureties  for  the  same  person  and  the  same 
thing.  But  it  does  not  therefore  follow  that,  by  the  very  terms  of  their 
engagement,  the  sureties  in  a  separate  bond  may  not  make  theitis^iyts 
responsible  only  sub  modo,  and  place  themselves  out  of  the  reach  of 
the  principle  of  contribution.  "Whether,"  says  Lord  Eldon,  ^^contribu- 
tion depends  upon  a  principle  of  equity,  or  is  founded  in  contract,  it 
is'cTear  a  person  may,  by  contract,  take  himself  out  of  the  reach  of 
it.''  'The  question  is,  Whether  the  meaning  of  the  instrument  Is  tnat 
the  party  will  be  a  co-surety,  or  that  the  surety  in  the  former  instru- 
ment is  to  be  considered  a  principal."  "If  the  party,  not  constituting 
himself  co-surety,  engages  only  to  pay  if  the  creditor  cannot  get  pay- 
ment from  the  other  sureties,  he  withdraws  himself  by  his  contract 
from  the  reach  of  the  principle,  and  the  plaintiff  (the  surety)  cannot 
complain,  as  the  transaction  is  without  his  knowledge,  that  the  de- 
fendant (the  supplemental  surety)  bound  himself  only  to  the  extent  he 
thought  proper." 

In  a  subsequent  part  of  the  same  case,  Lord  Eldon  reiterates  the 
remark  that,  whether  the  doctrine  rests  "upon  contract  or  a  principle 
of  equity,  it  is  clear  that  a  party  may  take  care  by  his  engagement 
that  he  shall  be  bound  only  to  a  certain  extent.  That  is  proved  by  the 
case  of  Swain  v.  Wall,  1  Rep.  in  Ch.  80,  when,  the  engagement  being 
to  pay  in  thirds,  that  contract  was  held  to  take  them  out  of  the  prin- 
ciple that  would  have  required  a  moiety,  and  also  by  the  case  of  Deer- 
ing  V.  Earl  of  Winchelsea,  2  Bos.  &  Pull.  270,  where  it  was  admitted, 
that  Lord  Winchelsea,  though  liable  as  a  surety,  had  by  contract  with- 
drawn himself  from  a  liability  beyond  £4,000." — his  bond  having  been 
for  that  sum  only,  while  the  other  bond  was  for  il0,000.  Lord  Eldon 
proceeds:  "If  therefore  by  his  contract  a  party  may  exempt  himself 
from  the  liability,  or  from  that  extent  of  liability  in  which,  without  a 
special  engagement,  he  would  be  involved,  it  seems  to  follow  that  he 
may,  by  special  engagement,  contract  so  as  not  to  be  liable  in  any  de- 
gree. That  leads  to  the  true  ground,  the  intention  of  the  partj  to  be 
bound,  whether  as  a  co-surety,  or  only  if  the  other  does  not  pay~that 
is,  as  surety  for  the  surety,  not  as  co-surety  with  him."  Pursuing  these 
principles,  and  after  having  carefully  considered  the  case  in  2  Free- 


Ch.  4)  THE  surety's  equity  of  contribution.  347 

man,  97,  which  was  cited  by  the  counsel,  and  has  also  been  relied  upon 
here,  and  having  found  that  case  unsupported  by  the  register,  his 
Lordship  rejected  the  claim  to  contribution,  which  was  set  up  by  the 
plaintiff  in  the  case  of  Craythorne  v.  Swinburne,  14  Ves.  160.  That 
case  is  singularly  strong  in  its  application  to  the  case  at  bar.  A      .     /t?  aj«j 

It  is  not  necessary  to  go  into  a  philological  examination  of  the  mem-  ''^'^^  j 
orandum  on  the  second  bond.     I  am  satisfied  that  the  object  of  it  was 
to  absolve  the  supi5Temental  sureties,  unless  the  high  sheriff  could  not 
be  able  to  get  indemnity  from  the  sureties  in  the  first  bond.    They  had 
a  right  to  bind  themselves,  or  to  refuse  to  be  bound  altogether.    They 
had,  therefore,  a  right  to  say  how  far  they  would  be  bound ;   and  their 
obligation  cannot  be  carried  farther.     It  is  obvious  they  designed  only 
to  guaranty  the  sufficiency  of  the  former  sureties,  and^hey  were  thus   > 
(to  use  the  language  of  Lord  Eldon)  "not  co-sureties  with  them,  but  il[ 
in  truth  sureties  for  tliem."    The  question,  then,  which  it  is  most  im-  'J,  j.;^^.,vi,r>j<''-« 
portant  to  answer,  refers  itself  to  the  execution  of  this  memorandum.  (^^,^,  L^t4 
I  shall  only  say  that  I  am  satisfied  it  was  contemporary  with  the  ex-  ' 

ecution  of  the  bond.  The  nature  of  the  transaction  proves  it;  and 
so  does  the  improbability  that  Lane  would  have  signed  it  afterwards, 
when  the  obligors  were  in  his  power,  if  he. declined  to  do  so  when 
they  were  not.  The  fact  that  the  bond  with  its  indorsement  was  among 
the  records  of  the  court  (for  the  copies  are  certified  by  the  clerk)  sus- 
tains the  conclusion,  and  fortifies  the  presumption  that  this  mem- 
orandum was  made  when  the  bond  was  executed.  So  we  must  take 
it,  as  the  contrary  has  not  been  established  by  proper  and  adequate  tes- 
timony. Upon  the  whole,  I  am  satisfied  there  can  be  no  pretense  for 
charging  the  sureties  in  the  second  bond  with  any  part  of  Wigginton's 
defalcations.  .  a 

Then,  as  to  the  high  sheriff ;  It  cannot  be  denied  that  Harrison  ex-  S^^^^^ 
ecuted  the  first  bond  without  any  f  raudulentln3u"cements  held  out  to 
him  Dy  .uane^  and  I  think  it  cannot  be  denied  that  when  the  sheriff 
an3  Wigginton,  his  deputy,  qualified,  the  bond  was  a  valid  bond  as  to 
Harrison.  It  had  been  executed  by  him  absolutely,  and  without  ex- 
pectation or  assurance  that  other  sureties  would  join.  His  name  was 
last,  and  he  signed  opposite  to  the  only  remaining  seal;  and  it  was 
more  than  a  month  after  that  the  second  bond  was  executed.  The 
bojid,  then,  was  once  a  good  and  valid  bond.  How,  then,  has  Lane 
forfeited  his  rights  under  it?  Did  he  forfeit  them  by  taking  additional 
secnrity  for  his  own  prot-ertion  ?  I  apprehend  not.  The  very  doctrines 
we  have  been  considering  show  that  the  creditor  may  take  supple- 
mental security,  and  security,  too,  that  is  only  to  be  responsible  in  the 
last  resort.  The  case  of  Craythorne  v.  Swinburne  was  just  that  case. 
But  no  authority  can  be  necessary  to  establish  a  principle  so  plain. 
It  seemed  to  be  supposed  that  he  ought  not  to  have  taken  the  supple- 
mental security  with  the  qualification  contained  in  the  memorandum. 
But  non  constat  that  he  could  have  got  the  supplemental  security  with- 
out it;  and  was  he  to  forego  the  additional  security  altogether,  merely 


348  THE   EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part    2" 

because  he  could  not  prevail  on  the  parties  to  be  co-sureties  with,  in- 
stead of  being  mere  guarantors  for,  the  prior  sureties?  I  think  not. 
It  vvas  then  said  that  he  fraudulently  suppressed  his  knowled2.e_of_^the 
insolvency  of  the  four  first  sureties,  and  his  want  of  confidence  in  Wig- 
ginton.  There  can  be  no  fraudulent  suppression,  where  there  ii  no 
obligation  to  give  information.  Now  I  take  it  that,  whena  mari  joins 
with  others  in  a  bond,  it  is  his  business  to  look  to  the  conduct  of  the 
principal  and  the  solvency  of  the"  co-sureties.  It  is  not  the  business 
of  the  creditor;  and,  though  it  may  be  benevolent  and  kind  in  him  to 
put  his  surety  on  his  guard,  I  am  yet  to  learn  that  it  is  a  duty  which 
the  law  imposes. 

Upon  the  whole,  I  am  well  satisfied  that  the  case  has  been  rightly 
decided,  and  that  the  decree  should  be  affirmed. 

Decree  afiSrmed. 


GROSS  V.  DAVIS. 

(Supreme  Court  of  Tennessee,  18S9.    87  Tenn.  226,  11  S.  W.  92,  10  Am.  St. 

Rep.  G3u.) 

Appeal  from  the  Chancery  Court  of  Franklin  County;  W.  S.  Bear- 
den,  Chancellor. 

Caldwell,  J.    This  is  a  bill  for  contribution  among  sureties. 

In  April,  1860,  John  G.  Enochs  was  qualified  as  clerk  oT~tlie  county 
court  of  Franklin  county,  with  Gross,  Henderson,  Colyar,  Slatter,  and 
others  as  sureties  on  his  official  bond. 

After  the  close  of  the  war  several  suits  were  instituted  against  him 
and  his  sureties.  One  of  those  suits  finally  resulted  in  a  decree,  in 
this  court,  against  the  defendants  for  about  $800,  besides  costs.  The 
others  were  successfully  defended. 

Gross  paid  the  greater  part  of  the  decree  mentioned,  including  $130 
court  costs.  The  other  part  of  that  decree  was  paid  by  Davis,  as  per- 
sonal representative  of  Slatter,  who  had  died. 

Enochs,  the  principal,  and  all  the  sureties,  except  those  above  named, 
were  insolvent  when  the  present  proceedings  were  commenced,  and 
for  that  reason  were  not  made  parties. 

In  his  answer  Davis  set  up  the  fact  of  the  payment  made  by  him  on 
the  decree,  and  insisted  that  the  estate  of  his  intestate  was  thereby 
discharged   from   further  liability. 

Henderson  claimed  in  his  answer  that  he  had  paid  for  himself  and 
co-sureties  more  than  $1,000  in  fees  to  lawyers,  for  defending  the  sev- 
eral suits  brought  against  them  and  Enochs. 

Colyar  made  no  defense,  and  decree  pro  confesso  was  taken  against 
him. 

The  chancellor  adjudged  that  Gross  was  entitled  to  recouej:.-from 
Davis,  Henderson,  and  Colyar,  each,  one-fourth  of  the  sum  he  had 
paid,  with  interest,  making  the  recovery  against  each  of  the  three 


Ch.  4)  THE  surety's  equity  of  contribution.  349 

$210. OG.  He_then_ adjudged  that  Davis  was  entitled  to  a  credit  on 
the  recovery  againstTiim  by  the  amount  of  one-fourth  of  the  sum 
which  Davis  had  paid,  with  interest.  That  credit  being  $48.04,  the 
net  balance  of  the  recovery  against  Davis  was  $162.02.  Nothing  was 
allowed  Henderson  on  account  of  attorney's  fees  claimed  to  have  been 
paid^by  him. 

Both  Davis  and  Henderson  have  appealed.  V 

THe'decree  is  erroneous.  It  proceeds  upon  the  idea  that  every  surety 
who  has  paid  a  part  of  the  joint  liability  may  recover  from  each  of  his 
co-sureties  his  proportionate  part  of  the  sum  so  paid. 

As  applied  to  a  case  where  the  whole  liability  has  been  discharged 
by  one  of  several  sureties,  the  rule  adopted  by  the  chancellor  is  cor- 
rect ;  but  it  is  not  applicable  when  more  than  one  of  the  sureties  have 
ma3e_payments  on  the  joint  indebtedness.  In  the  latter  case  all  pay- 
ments must  be  added  together,  and  the  aggregate  divided  equally 
among;'  the  Sureties. 

To  iirusrr"ate :  If  the  $840.24  paid  by  Gross  had  discharged  the  whole 
liability,  and  none  of  the  other  sureties  had  paid  anything,  he  would 
be  entitled  to  a  decree  against  each  of  the  other  three  solvent  sureties 
for  one-fourth  of  that  amount,  namely,  $210.06.  But  as  the  chancel- 
lor adjudged  that  Gross  paid  $840.24  and  Davis  $192.16,  and  that  the 
other  sureties  had  paid  nothing,  he  should,  in  that  case,  have  added 
those  two  sums  together,  and  divided  the  aggregate  of  $1,032.40  into 
four  equal  parts  of  $258.10  each,  and  allowed  contribution  accordingly. 

The  decree  thus  indicated,  upon  the  data  used  by  the  chancellor, 
would  have  given  Davis  credit  for  the  full  amount  paid  by  him,  and 
settled  the  equities  of  all  the  sureties,  instead  of  allowing  him  credit 
for  only  $48.04,  and  leaving  him  -with  a  claim  for  the  same  amount 
against  both  Henderson  and  Colyar,  as  does  the  decree  actually  pro- 
nounced. 

It  isjwell  settled  th2i_one  surety^  may  have  contribution  from  his  co- 
sureties  only  when,  and  to  the  extent  that,  he  may  have  paid  more'than 
hisjiatable  proportion_of  the  joint  liability.  Brandt  on  Sur.  and  Guar. 
§  251. 

The  very  foundatlQii  .of  the  doctrine  is  the  fact  that  one  has  paid 
more  and  another  less  than  his  share.  Hence  Davis  could  not  main- 
tam  asnit  for 'contribution  at  all  under  the  facts  of  this  case.  He  could 
not  recover  from  Henderson  and  Colyar  the  one-fourth  of  the  amount 
hctias  paid.  Yet  the  decree  leaves  him  with  his  claim  therefor  against 
each  of  them.  \ 

Th£.  decree  of  the  chancellor  is  erroneous  not  only  in  the  result 
reached  upon  the  assumption  that  only  Gross  and  Davis  had  made 
gayirients  on  the  joint  liabilities,  but  it  is  also  erroneous  in  that  as- 
sumption itself ;  for  it  is  di.stinctly  proven  that  Henderson  paid  $1,087.- 
60,  for  which  all  the  sureties  were  legally  bound  to  contribute.  This 
sum  includes  principal  and  interest  up  to  the  time  he  gave  his  deposi- 
tion, which,  though  in  fact  a  little  earlier,  we  treat  as  of  the  date  of 


350  THE  EQUITABLE  AND   LEGAL  UIGnXS   OF  THE  SURETY.      (Part   3 

the  decree  below.  This  particular  date  for  the  addition  of  interest  is 
adopted  for  convenience,  because  the  sums  already  stated  as  having 
been  paid  by  Gross  and  Davis,  respectively,  include  interest  up  to  the 
same  date. 

Then  we  f^nd  the  fact  to  be  that  Gross  paid  $840.24,  Davis  $192.16, 
and  Henderson  $1,087.60,  making  a  total  of  $2,120,  one-fourth  of  which 
is  $530.  The  $530  represents  the  share  of  each  of  the  four  solvent 
sureties.  This  being  a  suit  in  equity,  the  rate  of  contribution  is  de- 
termined according  to  the  number  of  solvent  sureties,  and  not  by  the 
number  of  sureties  on  the  bond,  as  in  an  action  at  law.  Riley  v.  Rhea, 
5  Lea,  116;  Brandt  on  Sur.  and  Guar.  §  252.  In  chancery  the  in- 
solvent principal  and  insolvent  sureties  are  not  even  necessary  par- 
ties.    Brandt  on  Sur.  and  Guar.  §  256. 

Henderson  has  paid  more  than  his  part ;  hence  no  recovery  can  be 
had"^ganTst  Tiim,  "and,  notwithstanding  his  excessive  payment,  he  can 
have  no  recovery  in  his^Tavor  in  this  proceeding  for  the  excess,-  be- 
cause he  set  up  his  payment  as  a  matter  of  defense  only,  and  did  hot 
seek  any  affirmative  relief  against  any  one.  Gross,  however,  having 
filed  his  bill  for  that  purpose,  is  entitled  to  contribution  from  Davis, 
who  has  paid  less  than  his  share,  and  from  Colyar,  who  has  paid  noth- 
ing. The  amount  paid  by  Gross  in  excess  of  his  share  is  $310.24. 
That,  with  Tiiterest  from  date  of  decree  below,  he  is  entitled  to  recover 
froni  Davis  and  Colyar — one-half  from  each.  We  say  one-lialf  from 
each,  because  the  bill  treats  these  two  defendants  as  equally  liable  to  the 
complainant,  and  seeks  the  same  decree  against  each  of  them.  Such 
expression  in  pleading,  on  the  part  of  the  complainant,  will  be  re- 
garded, when  there  is  no  contravening  equity. 

The  fact  that  Davis  has  already  paid  something  and  that  Colyar  has 
pafd  nothing  affords  no  reason  why  Gross  should  not  have  an  equaT 
recovery  against  each  of  them,  for  one-half  the  excess  paid  by  Gross 
and  the  full  sum  paid  by  Davis  together  do  not  aggregate  as  much  as 
$530,  the  share  of  one  surety  in  the  whole  liability  discharge. 
^  It  has  been  argued  in  behalf  of  Gross  that  the  doctrine  of  contribu- 
tion'cloes  not  extend  to  attorney's  fees,  and  that,  for  that  reason, "the 
payment  of  $1,087.60  by  Henderson  was  properly  disregarded  by  tfre 
chancellor. 

In  tFis  view  we  cannot  concur.  Suits  were  commenced  against 
Enochs  and  his  sureties.  The  services  of  counsel  were  needed  by  the 
sureties,  who  made  a  common  defense.  Counsel  were  employed  in 
the  name  of  all  the  sureties,  and  rendered  services  for  their  mutual 
benefit.  Gross  knew  this.  He  accepted  the  services,  took  an  interest  in 
the  progress  of  the  litigation,  and  distinctly  agreed  with  his  co-sureties, 
from  time  to  time,  that  he  would  pay  his  share  of  the  fees.  These 
were  the  fees  paid  by  Henderson. 

The_  employment  of  counsel  was  not  only  prudent,  but  it  was  neces- 
sary, and  probably  resulted  in  saving  the  sureties  large  sums  of  money, 
A  surety  who  pays  fees  under  such  circumstances  is  entitled  to  con* 


Ch.  4)  THE  surety's  equity  of  contribution.  351 

tribution,  the  same.as  another  surety  who  pays  a  judgment  or  decree 
rgcQiered  against  them.  By  the  authorities  it  is  sufficient  that  the 
fees  were  incurred  in  making  a  prudent  defense.  Fletcher  v.  Jack- 
son, 56  Am.  Dec.  102,  23  Vt.  581;  Brandt  on  Sur.  and  Guar.  §  247; 
4  A.  &  E.  Enc.  of  Law,  3,  note  1.  X 

As  against  Gross  it  is  insisted  that  the  chancellor  erred  in  allow-  '^"^ *^^f*-r^ '^ 
ing  hTnrcohtnbution~7or  the  $130  of  court  costs  which  he  paid.  The  •^'^htir^ 
decree  in  this  respect  was  right.  It  has  been  well  said  by  the  Su- 
preme Court  of  Maine  that  "the  costs  cannot  be  distinguished  from 
the  debt.  Every  equitable  principle  which  entitles  the  plaintiff  to  con- 
tribution for  the  one  applies  equally  to  the  other."  Davis  v.  Emer- 
son, 17  Me.  64;   Brandt  on  Sur.  and  Guar.  §  247.  /^ 

.Contribution  was  decreed  as  to  traveling  expenses  in  Preston  v. 
Campbell,  3  Hayw.  20. 

Let  the  decree  below  be  reversed,  and  decree  be  entered  here  in  ac- 
cordance with  this  opinion.  One-fourth  of  all  costs  in  this  cause  will 
be  paid  by  each  of  the  four  parties.^ ^ 


MACKRETH  v.  WALMESLEY. 

(High  Court  of  Justice,  Cliaucery  Division,  1884.    51  L.  T.  R.  N.  S.  19.) 

This  was  an  action  by  the  plaintiff,  Mackreth,  as  surety  to  a  bond, 
against  his  co-surety,  Walmesley,  asking  for  a  declaration  that  as  be- 
tween them  the  co-surety  ought  to  be  treated  as  the. principal  debtor 
for  the  whole  amount  secured  by  the  bond,  or,  at  all  events,  to  the 
extent  of  il25.,  which  sum  had  been  paid  by  the  debtor.  Brooks,  out  of 
the  money  advanced  to  him,  to  the  defendant,  Walmesley,  in  respect 
of  an  antecedent  debt  due  from  Brooks  to  Walmesley. 
■"The  plaiTatilTs 'allegation  was  that  he  thought  the  money  was  be- 
ing advanced  to  the  debtor  for  the  purposes  of  his  business,  and  that 
if  he  had  known  that  part  of  it  was  to  go  to  the  defendant  he  would 
not  have  become  a  surety  to  the  bond,  and  he  contended  that  the  non- 
disclosure of  the  fact  vitiated  the  contract  as  between  himself  and  his 
co-surety. 

The  facts  are  fully  stated  in  the  judgment.! 

Kay,  J.  From  the  evidence  in  this  case  it  appears  that  in  the  vear 
1869  the  plaintiff,  who  is  a  solicitor,  was  asked  by  William  Broolcs,  an 
accountant,  to  become  surety  for  him.  Brooks  was  engaged  in  the 
wiridTng-up  of  some  company  or  companies,  in  which  business  the 
plaintiff  had  acted  as  solicitor.  The  suretyship  was  for  a  loan  of  iSOO., 
which  Brooks  was  about  to  borrow  from  a  life  assurance  companv. 
Brooks  told  the  plaintiff  that  the  defendant,  Walmesley,  who  he^said 

11  Accord,  on  the  apportionment  of  the  loss  among  the  solvent  sureties^ 
Vliet  V.  WyckoClE'lSn':  Eq.  642,  9  Atl.  679  (1887). 
t  The  arguments  of  counsel  are  omitted. 


352  THE   EQUITABLE  AND   LEGAL   RIGHTS  OF  THE   SURETY.      (Part   2 

was  a  rich  man,  was  to  be  a  surety,  but  that  the  company  required 
another,  whereupon  Mackreth  agreed,  as  ire  sayS7'T?rDbKgfe  imn,  and, 
on  the  13th  August,  1ST5,  a  bond  was  executed  by  the  three.  By  such 
bond  Brooks  and  the  plaintiff  and  the  defendant  bound  themselves 
jointly  and  severally  to  three  of  the  directors  of  the  company  in  the 
penal  sum  of  £1,000. ;  the  bond  being  conditioned  for  the  payment  of 
the  obligees  of  six  sums  of  £97.  10s.  each,  on  the  5th  April  and  the 
5th  October  in  every  year,  the  first  of  such  payments  to  be  made  on 
the  5th  April  then  next  ensuing,  and  for  payment  of  premiums  on  a 
policy  on  the  life  of  Brooks,  and  for  assigning  such  policy  to  the 
obligees  upon  trust  for  the  better  securing  payment  of  the  said  sums, 
or  such  of  them  as  might  remain  unpaid,  and  all  costs  and  expenses  to 
be  incurred  in  enforcing  payment  thereof.  Brooks  paid  three  install- 
ments, and  the  premiums  on  the  policy,  and  in  1877  he  applied  ^o 
the  company  for  a  further  loan,  and  told  the  plaintiff"  thatlHe~company 
were  going  to  lend  him  what  would  make  up  with  the  balance  oFlhe 
old  debt  another  £500.,  and,  on  the  13th  October,  1877,  the  plaTntiff 
joined  as  surety  in  a  new  bond  which  was  to  the  same  effect  as'the 
first.  Brooks  paid  two  installments  of  £97.  10s.  each  on  this  bond. 
On  the  9th  July,  1879,  he  absconded,  and  was  made  bankrupt,  and  no 
dividend  has  been  paid.  The  defendant  Walmesley  paid  two  install- 
ments on  the  bond  of  1877.  In  July,  1883,  the  company  brought  an 
action  against  the  plaintiff  and  defendant,  and  recovered  judgment  by 
default,  under  which  the  plaintiff  has  paid  them  about  £61.,  and  a  bal- 
ance of  £30.  odd  now  remains  due,  the  rest  having  been  paid  by  Wal- 
mesley. Mac,krcth  has  brought  this  action  against  Walmesley  alone, 
claiming  that  \\'almesley,  as  between  them,  should  be  treated  a.5,prin- 
'cipal  debtor  under  the  bond  of  1877,  either  altogether,  or  at  .least  to 
the  extent  of  £125.,  and  claiming  the  benefit  of  all  securities  given  to 
Walmesley  by  Brooks. 

The  ground  of  this  claim  is  as  follows:  It  seems  that  in  1874  an 
agreement  in  writing  was  made  between  Walmesley  and  Brooks,  by 
which,  in  consideration  of  £375.  advanced  by  Walmesley,  Brooks 
agreed  to  take  a  man  named  Smith  as  his  clerk  for  three  years  at  a 
salary  of  £100.  a  year,  and  to  repay  the  £375.  with  interest  at  10  per 
cent,  on  the  10th  March.  1877.  By  an  agreement  dated  the  13th 
August,  1875,  the  same  date  as  the  first  bond,  and  made  between 
Brooks  and  Walmesley,  reciting  the  agreement  for  suretyship  of  the 
first  £500.,  and  the  obligation  of  Brooks  to  pay  the  £375.  on  the  10th 
March,  1877,  Brooks  agreed  to  pay  to  Walmesley,  immediately  on 
the  receipt  of  the  £500..  £125..  on  which  Walmesley  was  to  pay 
interest  at  5  per  cent,  until  the  whole  was  repaid,  as  follows:  So 
soon  as  the  £375.  was  paid,  Walmesley  was  to  pay  the  assurance 
company  £27.  10s.,  part  of  the  last  installment  but  one,  and  £97.  10s., 
the  whole  of  the  last  installment  of  the  £500.,  but,  so  long  as  any  part 
of  the  £375.  and  interest  remained  due,  Walmesley  was  to  retain  suf- 
ficient of  the  £125.  to  indemnify  him  for  that  amount.     Walmeslev. 


Ch.  4)  THE  surety's  equity  of  contribution.  353 

as  I  understand,  has  applied  the  il25.  in  part  payment  of  his  debt  of 

£375.,  according  to  the  agreement.  )^,  , 

There  is  no  suggestion  that  these  agreements  were  known  to  the  "'^'^"''^Q'''*^ 
assurance  company.  There  was  no  communication  whatever  between 
Walmesley  and  Mackreth  in  relation  to  their  suretyship.  There  was 
not  any  misrepresentation  in  the  matter.  But  it  is  contended  that  the 
concealment,  or  non-disclosure,  by  Walmesley  of  the  agreement  of  the 
IJtTT' August,  1875,  entitled  Mackreth  to  throw  upon  him  the  whole 
burden  of  the  first  suretyship,  and  that  the  bond  given  in  October, 
1877,  was,  to  some  extent,  a  renewal  of  the  old  liability,  and  is  subject 
to  a  like  equity.  It  is  said  that  the  point  is  new,  and  certainly  no  case  ^M"-  ^  ft^^t^ 
exactly  like  this  has  been  cited.  But  the  principle  involved  is  veTy  ''-*^*fi4Jt^  i. 
simgl^e.  The  Tight  of  one  surety  against  another  is  ordinarily  for  ,^  ^vv),^,^- 
equal  or  proportioned  contribution.  It  was  a  right  acknowledged  at 
law,  and  might  be  enforced  by  assumpsit,  as  upon  an  implied  promise 
by  each  to  pay  his  aliquot  share  of  the  debt.  Co  well  v.  Edwards,  2  B. 
&  P.  268 ;  Batard  v.  Hawes,  2  E.  &  B.  287.  In  equity  the  relief  was 
larger,  being  extended  to  a  proportional  division  of  the  debt  among 
the  solvent  sureties,  in  case  of  any  being  bankrupt.  But  if,  as  is  well 
settled,  a  formal  contract  with  the  creditor  might  be  avoided  in  cer- 
tain cases  of  concealment  by  him  of  material  facts  from  the  surety, 
there  can  be  no  reason  why  the  implied  contract,  or  the  equity  for 
contribution,  between  the  sureties,  should  not,  in  like  manner,  be  re- 
sisted. If  there  be  a  duty  of  disclosure  between  parties  bound  by  an 
express  contract  in  such  cases,  why  should  there  not  be  a  like  duty 
where  the  contract  is  implied  ?  /  tiZ^<f^  ^ 

However,  it  is  very  clear  that  the  obligation  of  disclosure  by  the  ^,vj^^ 
crediTor  t6~tHe~surety  is  a  limited  one.  There  may  be_jiiany  .things 
in  the  knowledge  of  the  creditor  which  it  may  be  material  to  the  surety 
to  know,  but  the  non-disclosure  of  which  would  yet  be  no  defense.  In 
Hanulton  v.  Watson,  12  Clark  &  Fin.  109,  which  was  a  case  of  sure- 
tyship to  bankers  for  a  cash  account,  Lord  Campbell  said  it  would  pre- 
vent such  transactions  with  bankers  "if,  as  it  is  contended,  it  is  essen- 
tially necessary  that  everything  should  be  disclosed  by  the  creditor 
that  is  material  for  the  surety  to  know."  His  LrOrdship  points  out 
that  this  would  include  how  the  account  had  been  kept,  whether  the 
debtor  had  been  in  the  habit  of  overdrawing,  whether  he  was  punctual 
in  his  dealings,  and  the  like,  and  says  that,  though  all  these  things 
are  material  for  the  surety  to  know,  still,  if  he  does  not  put  questions, 
it  is  quite  unnecessary  for  the  creditor  to  volunteer  such  information, 
and  he  adds  that  the  criterion  whether  the  disclosure  should  be  made 
voluntarily  is  "whether  there  is  anything  that  might  not  naturally  be 
expected  to  take  place  between  the  parties  who  are  concerned  in  the 
transaction — that  is,  whether  there  be  a  contract  between  the  debtor 
and  the  creditor,  to  the  effect  that  his  position  shall  be  different  from 
that  which  the  surety  might  naturally  expect."  The  surety  is  certainly 
Hen.  Sub.— 23 


354  THE  EQUITABLE  AND   LEGAL  RIGUTS  OF  THE   SURETY.      (Part   2 

not  under  any  larger  obligation  to  his  co-surety  than  the  creditor  is 
under  to  both  of  them.  It  would  be  extremely  inexpedient  to  invent 
new  equities  to  enable  parties  to  mercantile  contracts  to  escape  from 
them,  or  to  enlarge  in  any  way  the  rules  of  law  or  equity  on  this  sub- 
ject. 

In  order  to  enable  a  man  to  resist  fulfillment  of  such  an  engage- 
ment as  arises  out  of  a  contract  like  the  present,  a  state  of  circum- 
stances should  be  proved  in  which  it  would  be  fraudulent  to  Insist 
upon  the  ordinary  consequences  of  the  contract.  This  was  the  prin- 
ciple of  the  decision  in  all  the  cases  that  have  been  relied  on.  In 
Pidcock  V,  Bishop,  3  B.  &  C.  605,  a  guarantee  of  i200.  "value  to  be 
delivered"  in  iron  was  avoided  by  a  secret  agreement  between  the 
vendor  and  purchaser  for  payment  of  10s.  a  ton  beyond  the  market 
price,  which  was  to  be  applied  in  payment  of  an  old  debt.  This  bar- 
gain, it  was  held,  increased  the  responsibility  of  the  guarantor,  and 
therefore  the  conce/ilment  of  it  was  a  fraud  upon  him.  The  guaranteed 
contract  was  not  performed.  The  value  of  the  £200.  w^as  not  deliv- 
ered in  iron.  In  Stone  v.  Compton,  5  Bing.  N.  C.  142,  there  was  a 
direct  misrepresentation  of  fact.  In  Smith  v.  Governor  and  Company 
of  the  Bank  of  Scotland,  I  Dow.  272,  the  House  of  Lords  had  to  deal 
with  the  case  of  a  cautioner  to  the  bank  for  one  of  their  agents,  and 
they  considered,  as  expressed  in  the  remarks  of  Lord  Eldon,  that  if 
the  bank  had  held  out  the  agent  as  a  trustworthy  person,  by  concealing 
facts  which  gave  them  ground  to  believe  that  he  was  not  so,  this 
might  be  a  defense.  The  case  was  referred  to  in  Railton  v.  Mathews, 
10  CI.  &  Fin.  934,  as  an  authority  for  the  proposition  there  established 
that  it  is  not  necessary  to  prove  that  the  concealment  was  willful  and 
intentional  with  a  view  to  the  advantage  which  the  person  so  con- 
cealing was  to  receive. 

There  may  be  a  case  of  improper  concealment,  or  non-communica- 
tion, which  may  be  a  defense  by  a  surety  where  there  was  not  anv 
niiitive  of  that  kind.  In  Lee  v.  Tones,  12  L.  T.  Rep.  N.  S.  122,  17  C!. 
B.  (N.  S.)  4S2,  the  concealment  by  the  creditor  of  a  large  debt  due 
from  the  principal  debtor  beside  the  amount  secured  was  held  to  be 
evidence  for  the  jury  in  support  of  a  plea  of  fraudulent  concealment 
of  a  material  fact.  Attention  is  called  in  that  case  to  the  decision  in 
Xorth  British  Insurance  Company  v.  Lloyd,  10  Ex.  523,  that  the  rule 
which  prevails  in  assurances  upon  marine  and  life  risks,  that  the  non- 
disclosure of  material  facts,  although  innocent,  vitiates  the  contract, 
ydoes  not  apply  to  contracts  of  guaranty.  The  nature  of  the  agreement 
in  this  case  which  was  not  disclosed  may  be  shortly  stated  to  be_an 
'/  engagement  to  make  a  provision  to  the  amount  of  il25.  for  a  bona 
fide  debt  due,  but  not  yet  payable,  from  the  principal  debtor  to  tlie 
co-surety.  But  if  that  debt  were  otherwise  paid,  then  the  £125.  was 
to  be  applied  to  pay  off  so  much  of  the  principal  debt/OThe  latter  ap- 
plication would  be  for  the  benefit  of  both  sureties.  I  cannot  see  how 
the  non-disclosure  of  this  part  of  the  arrangement  can  affect  the  riq^hts 


Ch.  4)  THE  surety's  equity  of  contribution.  355 

of  the  partiesL^-^t  is  the  former  part  of  the  agreement  on  which  the 
plaintiff  must  rely!  WaF  he  so  much  mjiired  by  the  cohceaTnTeht  of 
this  as  to  entitle  hVmlb  relief?  He  now  says  that  if  he  had  known 
it  he  would  not  have  become  surety.  But  I  confess  I  am  not  satisfied 
of  this.  Can  the  fact  of  the  debt  owing  by  the  principal  to  his  co- 
surety be  material?  If  so,  in  every  case  where  a  debtor  owes  money 
to  one  surety,  the  other  surety  may  get  rid  of  his  liability  if  this  fact 
is  not  disclosed.  This,  in  my  opinion,  is  not  maintainableC  ")Then  it  must 
be,  not  the  fact  of  the  debt,  but  of  the  provision  made  for  it,  on  which 
the  plaintiff  must  rely.  In  short,  his  case  iSj  where  a  debtor^.owing  to 
one  surety  a  sum  of  money,  says  to  him,  "If  you  will  become  surety 
r^'ITT  pay  your  debt,  or  part  of  it,  out  of  the  money  I  borrow,"  and 
this  is  not  disclosed  to  the  co-surety,  the  latter  may  avoid  his  contract. 

But  a  fact,  the  non-disclosure  of  which  enables  a  surety  to  obtain 
thij_.rjlief,  must  be  a  fact  which  affects  his  position,  so  as  to  make  it 
worse  than  he  supposed.  How  does  the  payment  of  a  debt  to  his  co- 
surety out  of  the  money  borrowed  injure  him?  Clearly  in  this  case 
the  object  of  borrowing  would  prima  facie  be  to  provide  for  the  debt- 
or's liabilities.  Paying  the  debt  to  the  co-surety  would  better  enable 
him  to  meet  his  liability  as  surety,  and  might  be  an  advantage  rather 
than  any  disadvantage  to  the  other  surety.  On  this  point  the  case  of 
Hamilton  v.  Watson,  to  which  I  have  already  referred,  is  of  some  au- 
thority. The  suretyship  was  for  an  account  of  the  principal  debtor 
with  a  banker.  He  was  at  the  time  indebted  to  the  bank  for  a  sum 
which  did  not  come  into  this  account,  and  the  credit  guaranteed  "was 
applied  by  the  bank  to  the  payment  of  the  old  debt.  It  was  held  that 
the  non-disclosure  by  the  bank  of  the  existence  of  the  old  debt,  or  of 
the  application  of  the  new  credit  to  pay  it,  did  not  enable  the  surety 
to  escape  from  his  liability.  Reliance  is,  however,  placed  on  the  lan- 
guage of  the  learned  judges  in  that  case  to  the  effect  that,  if  there  had 
been  a  stipulation  that  the  money  was  to  be  so  applied,  it  might  have 
affected  the  transaction;  but  the  case  is  certainly  not  a  decision  that, 
even  if  there  had  been  such  a  stipulation,  the  concealment  of  it  would 
have  avoided  the  contract.  There  is  nothing  in  the  language  of  the 
judges  from  which  it  can  be  inferred  that  they  would  have  held  in  a 
case  like  this  that  one  surety  was  bound  to  volunteer  the  disclosure  to 
the  other  of  this  agreement  with  the  debtor.  )<  dlL ^fJ ry^ 

I  have  considered  the  case  thus  far  as  though  the  liability  under  the  Jt .  ^       \    ■ 
nrst_bond  had  been  m  que&ticn.     It  certainly  does  not  strengthen  the  /  ^  i     / 
plaintift''s  claim  that  he  is  raising  this  opposition  to  his  liability  to  con-     "      "'"^ 
tribute  as  surety,  not  on  the  first,  but  on  the  second,  bond.    He  became 
surety  the  second  time,  as  he  had  done  before,  without  any  inquiry, 
and  with  a  readiness  which  convinces  me  that  if  he  had  known  all  the 
facts  he  now  knows  he  would  probably  have  made  no  objection.    Only 
a  portion  of  the  former  debt  then  remained,  and  this  he  knew  was  to 
be  paid  out  of  the  fresh  advance,  and  it  would  be,  in  my  opinion, 
somewhat  extravagant  to  hold,  even  if  he  might  have  escaped  liabil- 


^56  THE   EQUITABLE  AND   LEGAL  RIGHTS. OF  THE  SURETY.      (Part   3 

ity  on  the  first  bond  as  between  himself  and  his  co-surety,  that  this 
•equity  could  be  on  that  account  extended  to  his  liability  under  the 
new  contract. 

Upon  the  whole  I  am  of  opinion  that  this  action  fails,  and  must  be 
dismissed,  with  costs. ^* 


MICHAEL  V.  ALLBRIGHT. 
(Supreme  Court  of  Indiana,  1890.     126  Ind.  172,  25  N.  B.  902.) 

From  the  Steuben  Circuit  Court. 

CoFFKY,  J.  This  was  an  action  by  the  appellant  against  the  appel- 
lee for  contributipn.  The  complaint  alleges,  among  other  thin'gsTlhat 
on  the  1st  day  of  November,  1884,  Enos  Michael,  Phillip  J.  Michael, 
Jacob  K.  Fox,  Jacob  E.  Michael,  and  the  appellant  and  the  appellee, 
executed  to  John  A,  Thorp  their  promissory  note  for  the  sum  of  $1,- 
TOO ;  that  Enos  Michael  was  the  principal  in  said  note,  and  the  other 
makers  were  sureties  thereon ;  that  after  said  note  became  due  the  ap- 
pellant paid  the  same,  which  then  amounted  to  the  sum  of  $1,900; 
that  at  the  time  appellant  paid  said  note  the  principal,  and  all  the 
otlier  parties  thereto,  except  the  appellant  and  the  appellee,  then-were, 
and  ever  since  have  been,  wholly  insolvent,  and  had  not  then,  nor 
have  they  since  had,  any  property  subject  to  execution;  that  the  ap- 
pellee is  indebted  to  the  appellant,  by  way  of  contribution,  in  the  sum 
of  $1,000. 

Upon  issue  joined  the  cause  was  tried  by  a  jury,  resulting  in  a  ver-^ 
diet  for  the  appellee,  upon  which  the  court,  over  a  motion  for  a  new 
trial,  rendered  judgment. 

At  the  proper  time  the  appellant  entered  his  objection  to  the  trial 

of  the  cause  by  a  jury,  and  prayed  that  the  same  might  be  tried  by 

the  court ;  but  the  court  overruled  his  objection,  and  he  excepted. 

f    The  only  questions  presented  for  our  consideration  relate  to  the  ac- 

^       .  ^ tion~oFf he  court  in  submitting  the  cause  to  a  jury,  and  in  overruling 

**         the  appellant's  motion  for  a  new  trial. 

X  The  first  contention  of  the  appellant  is  that  the  cause  was  one  of 
exclusive  equitable  ^risdiction,  and  that  by  reason  of  the  provisions 
of  section  409,  Rev.  St.  1881,  it  was  triable  by  the  court,  and  not  by 
jury. 

Section  409,  supra,  provides  that  "issues  of  law  and  issues  of  fact 

in  causes  that,  prior  to  the  18th  day  of  June,  1852,  were  of  exclusive 

equitable  jurisdiction,  shall  be  tried  by  the  court." 

s       In  the  case  of  Judah  v.  Mieure,  5  Blackf.  171,  it  was  held  by  this 

\^jm  ivtvii ',    •     QQy^Yt  that  an  action  for  contribution  might  be  maintained  in  a  court  of 

'f law;  and  in  the  case  of  Sanders  v.  Weelburg,  107  Ind.  266,  7  N.  E. 

573,  it  was  held  that  such  an  action  was  properly  triable  by  jury. 

"Accord:  Weed  v.  Calkins,  24  Hun  (X.  T.)  582  (1881). 


Ch.  4)  THE  surety's  equity  of  contribution.  357 

It  is  conceded  by  the  appellant  that,  if  the  present  suit  was  an  ordi- 
nary action  for  contribution,  it  would  not  be  exclusively  within  the 
jurisdiction  of  a  court  of  equity;  but  he  contends  that  the  allega- 
tions in  the  complaint  to  the  effect  that  some  of  the  sureties  are  in- 
solvent gives  it  the  character  of  a  cause  of  exclusive  equitable  cog- 
nizance. 

It  cannot  be  successfully  disputed  that  the  courts  of  law  have  al- 
ways assumed  jurisdiction  in  actions  for  contribution,  though  it  has 
sometimes  been  held  that  a  plaintiff  in  an  action  at  law  could  not  re- 
cover more  than  an  aliquot  part  of  the  whole  sum  paid  in  discharge 
of  the  debt.  But  the  question  as  to  the.  extent  of  the  relief  granted  is 
not  the^test  as  to  whether  a  cause  belongs  exclusively  to  a  court  of 
equity;  but  the  question  is,  will  a  court  of  law  take  jurisdiction?  J[f 
a  "courts  of  law  will  take  jurisdiction  and  grant  some  relief,  then  the 
cause  does  not  belong  exclusively  to  the  courts  of  equity.  A  C4""/  ^  '^' 

""The  better  opinion,  however,  seems  to  be  that  courts  of  law  will  not   y^Of^^  ^^ 
only^take  jurisdiction  of  the  kind  of  actions  now  before  it,  but  that    -.c^^n 
they  will  grant  full  relief,  and  where  one  or  more  of  the  sureties  are 
insolvent  they  will  divide  and  apportion  the  amount  paid  among  those 
who  are  solvent.    Henderson  v.  McDuffee,  5  N.  H.  38,  20  Am.  Dec. 
557;  Mills  v.  Hyde,  19  Vt.  59,  46  Am.  Dec.  177. 

Our  opinion  is  that  the  cause  before  us  was  not  one  of  exclusive 
equitable  jurisdiction  prior  to  the  18th  day  of  June,  1852,  and  that 
the  court  did  not  err  in  awarding  to  the  appellee  a  jury  trial. 
~The~remaining  question  in  the  case  relates  to  the  sufficiency  of  the 
evidence  to  sustain  the  verdict. 

The  evidence  in  the  cause  is  quite  voluminous,  but  we  have  given 
it  a  careful  examination.  While  ,it  is  not  as  satisfactory  as  could  be 
desired,  we  are  not  able  to  say  that  there  is  no  evidence  in  the  record 
warranting  the  conclusion  reached  by  the  jury.  We  cannot  disturb 
the  verdict  on  the  evidence. 

Judgment  affirmed.^* 


LIDDELL  V.  WISWELL. 

(Supreme  Court  of  Vermont,  18S7.    59  Vt.  365,  8  Atl.  680.) 

Assumpsit.  Appeal  from  the  municipal  court  of  Rutland.  Plea  of 
discharge  in  bankruptcy.  Heard  by  the  court  on  pleadings  and  an 
apr^fT  -Statement,  September  term,  1886  ;  Veazey,  J.,  presiding.  _Judg^ 
ment  projorfma  for  the  plaintiff  to  recover  the  sum  of  $164.31  dam- 
ages  and  $7.93  costs,  it  being  one-third  of  the  sum  paid  by  the  said 

18  Accord:  Mills  v.  Hyde,  19  Vt.  59,  46  Am.  Dec.  177  (1846).  Contra:  Batard 
V.  HaWeS,  2  El.  &  Bl.  287  (1853).  Coiupare  Stothoff  v.  Dunham's  Ex'r.  19  N. 
J.  Law,  181  (1842);  Henderson  v.  McDuffee,  5  N.  H.  38,  20  Am.  Dec.  557 
(1829) ;  Moore  v.  Bruner,  31  111.  App.  40O  (1889)  ;  Easterly  v.  Barber,  66  N.  Y. 
<133  (1876) ;  Fischer  ^  Oaither,  32  Or.  161,  51  Pac.  736  (1898) ;  Wayland  v. 
•Tucker,  -i  Grat.  (Va.)  267.  50  Am.  Dec.  76  (1848),  obiter. 


358  THE  EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part   2 

Liddell  to  satisfy  the  judgment  rendered  against  him  on  the  note 
signed  by  the  plaintiff,  defendant,  and  seven  other  parties.  In  1872 
the  plaintiff  and  defendant,  residing  at  Hydeville,  Vt.,  in  common 
with  otlier  citizens,  were  interested  in  fitting  up  a  lodge  or  club  room 
for  the  use  of  a  society  to  which  they  all  belonged.  To  raise  money 
therefor  they  executed  a  note,  of  which  the  following  is  a  copy: 

"Hydeville,  April  1,  1872. 

"One  day  after  date  we  jointly  and  severally  promise  to  pay  D.  L. 
Dawley  or  bearer  three  hundred  dollars,  for  value  received,  with  in- 
terest annually." 

There  were  several  indorsements  on  the  note.  The  note  was  deliv- 
ered to  said  Dawley,  the  person  named  therein  as  payee,  who  was  also 
one  of  the  signers  and  makers  of  the  note,  and  equally  interested  with 
the  plaintiff  and  defendant  in  the  purposes  for  which  the  money  speci- 
fied in  the  note  was  being  raised.  On  receipt  of  the  note  said  Dawley 
furnished  the  society  the  sum  of  $300,  which  was  applied  to  the  pur- 
poses contemplated.  Dawley  continued  to  hold  the  note  for  a  year 
or  two,  when  he  sold  and  delivered  the  same  to  one  Foster  for  a  val- 
uable consideration.  Foster  sued  the  note  and  recovered  judgment 
against  the  plaintiff,  and  in  188-1  sold  the  judgment  to  one  Davis,  who 
recovered  a  second  judgment  against  the  plaintiff,  which  was  paid 
by  the  plaintiff  under  compulsion  of  an  execution,  amounting,  August 
5,  1885,  to  the  sum  of  $191.21.  Of  the  nine  signers  of  the  note  three 
died  insolvent  prior  to  August  5,  1885.  One,  J.  W.  Lee,  resides  in 
this  state,  but  is  insolvent ;  one,  E.  H.  Fifield,  long  ago  removed  from 
this  state ;  one  has  recently  died,  but  his  estate  is  solvent ;  said  Daw- 
ley removed  to  Colorado,  and  died  there  prior  to  said  August  5th,  but 
was  solvent  when  he  sold  the  note  and  at  the  time  of  his  death.  _Pn 
April  2,  1878,  the  defendant,  in  the  United  States  District  Court  for 
Vermont,  received  a  discharge  in  bankruptcy  from  all  debts  andliir- 
liilities  provable  under  tlie  United  States  bankrupt  aqt.^* 

Ross,  J.     There  were  nine  signers  to  the  note  of  April  1,  1872, 
f  feviU ':       Between  themselves  each  signer  was  principal  for  the  payment  of  one- 
ninth  of  the  note,  was  surety  to  each  other  signer  for  the  payment'  of 
one  other  ninth,  and  co-surety  for  the  payment  of  the  other  seven- 
ninths.    These  relations  the  plaintiff  had  to  each  of  the  other  signers. 
He  has  been  compelled  to  pay  the  whole  note,  with  an  accumulation 
,.  of  interest  and  costs.     He  seeks  contribution  from  the  defendant. 
'The  defendant  has  interposed  his  discharge  in  bankruptcy,  obtained  be- 
fore the  plaintiff'  was  compelled  to  make  payment.  'As  to  the  ninth  of 
the  note  for  the  payment  of  which  the  plaintiff  was  principal,  he  has 
no  right  of  contribution  from  any  one,  regardless  of  the  defendant's 
>y  discharge  in  bankruptcy.     To  the  ninth  of  the  note  for  the  payment 
-VvjrvM*-.!    of  which  the  defendant  was  principal  and  the  plaintiff  his  surety,  we 

think  the  discharge  in  bankruptcy  is  a  bar.    It  was  held  to  be  so  under 
T 

1*  The  arguments  of  counsel  are  omitted. 


Ch.  4)  THE  surety's  equity  of  contribution.  359 

the  bankrupt  law  of  1841.  The  plaintiff's  right  to  indemnity  arises 
from  the  contract  of  suretyship.  The  law  of  1841  allowed  contingent 
demands  to  be  proved,  and  the  liability  of  a  surety  for  his  principal 
was  held  to  be  such  a  demand — a  demand  arising  from  the  contract  it- 
self. A  distinction  was  taken  between  a  contingent  demand  and  a 
^contingency  whether  a  demand  will  ever  exist.  The  liability  of  a  sure- 
ty for  his  principal  was  held  to  be  the  former,  and  the  equitable  lia- 
bility between  co-sureties  to  sustain  the  burden  of  suretyship  equally 
to  be  the  latter.  Hence,  while  the  former  was  held  to  be  barred  by  a 
discharge  under  the  law  of  1841,  the  latter  was  held  not  to  be  barred 
when  the  payment  was  subsequent  to  the  discharge.  Swain  v.  Barber, 
29  Vt.  292.  y.      . 

By  the  bankrupt  law  of  1867  (Act  March  2,  1867,  c.  176,  §  19,  m' 
Stat.  525)  all  provable  claims  and  demands  are  barred  by  a  discharge. 
It  provides  for  proving  "contingent  debts  and  liabilities  contracted  by 
the  bankrupt"  in  two  ways :  First,  by  proving  the  whole  claim  and  re- 
ceiving a  dividend  thereon,  if  the  contingency  happen  before  the  order 
for  final  dividend ;  secondly,  by  having  the  value  of  such  debt  or  lia- 
bility ascertained  under  an  order  of  the  court,  proving  and  receiving 
a  dividend  on  the  amount  so  ascertained.  The  liabihty  of  the  princi-/^ 
pal  to  indemnify  his  surety  is  a  contract  liability,  a  direct  liability  of 
the  surety  to  the  creditor  in  actual  existence,  provable  under  the  bank- 
rupt law  of  1841,  though  the  surety  had  paid  nothing  thereon.  Mace 
V.  Wells,  7  How.  272,  12  L.  Ed.  698.  The  bankrupt  law  of  1867,  also, 
as  we  have  seen,  permits  such  liabilities  to  be  proved.  Hence  for  the 
ninth  of  the  note  for  the  payment  of  which  the  plaintiff  was  the  surety 
of  the  defendant  the  defendant's  discharge  in  bankruptcy  is  a  bar. 

The  plaintiff  and  defendant  were  co-sureties  for  the  payment  of  thej  'wVi'tStri; 
othe£_sevcn-ninths  of  the  note.  When  the  defendant  obtained  his  dis-  f^'^^f^i^^^ 
charge,  no  contingent  liability  for  contribution  existed  in  favor  of  the 
plaintiff,  only  a  contingency  that  such  a  liability  might  thereafter 
arise,  if  the  plaintiff  should  ultimately  be  obliged  to  bear  more  than 
his  proportionate  share  of  the  common  burden  that  might  be  cast  upon 
him  in  the  payment  of  that  part  of  the  note  for  which  they  were  co- 
sureties. The  implied  obligation  of  the  defendant  to  bear  his  pro- 
portionate share  of  the  common  burden  resting  on  all  the  co-sureties  is 
not  regarded  as  arising  from  contract,  but  from  an  equitable  duty 
which  the  sureties  are  supposed  to  be  cognizant  of,  and  assent  to,  at 
the  time  they  enter  into  the  contract  of  suretyship.  1  Lead.  Cas.  Eq., 
notes  to  Deering  v.  Earl  of  Winchelsea,  84,  and  cases  there  cited. 

In  Mason  v.  Lord,  20  Pick.  (Mass.)  447',  Shaw,  C.  J.,  says:  "The 
action  of  assumpsit  for  contribution  is  founded  purely  on  equitable 
principles.  It  proceeds  upon  the  broad  ground  that  when  two  or  more 
are  subject  to  a  loss  or  burden  common  to  all,  and  one  bears  the  whole 
or  a  disproportionate  part,  it  lays  an  equitable  claim  for  contribution 
from  those  who  are  thereby  proportionably  relieved."  The  doctrine 
thus  announced  has  been  adopted  by  this  court  in  Mills  v.  Hyde,  19 


'Ufjr^ 


3G0  TDE   EQUITABLE  AND   LEGAL  RIGHTS  OF  THE  SURETY.      (Part   2 

Vt.  59,  46  Am.  Dec.  177,  and  Strong  v.  :Mitchell,  19  Vt.  644.  Not  be- 
ing  a  contingent  liability  contracted  by  the  defendant  existing  at  the 
time  of  his  discharge,  it  was  not  provable  against  his  estate  in  bank- 
ruptcy,  and  is  not  barred  by  his  discharge. 
n  Oa  the  facts  shown  by  the  agreed  case,  the  plaintiff  is  under  no 
more  duty  to  go  into  a  foreign  jurisdiction,  and  attempt  to'secorfe 
some  indemnity  from  the  estate  of  D.  L.  Dawley,  than  is  the  defend- 
ant. It  may  be  doubtful  if  anything  can  be  secured  from  that  estJite, 
and,  if  there  can  be,  it  will  doubtless  be  attended  with  trouble  and  ex- 
pense. From  the  equitable  principles  which  control  this  class  of  lia- 
bilities, the  plaintiff  and  defendant  are  in  duty  bound  to  share  equally 
the  common  burden.  Hence  the  defendant  cannot  be  heard  to  claim 
that  it  is  the  duty  of  the  plaintiff  to  go  to  the  distant  state  of  Colorado 
and  endeavor  to  secure  something  from  the  estate  of  Dawley  to  re- 
lieve the  defendant  from  a  part  of  the  common  burden  now  resting 
wholly  on  the  plaintiff.  It  is  held  in  this  state,  and  generally,  that 
insolvency  of  one  or  more  of  the  co-sureties  is  regarded  in  actions 
at  law  for  contribution,  and  that  the  share  to  be  recovered  by  one 
who  has  paid  the  whole  debt  is  determined  by  the  number  of  solvent 
sureties ;  and  it  has  been  held  by  other  courts  that  removal  from  the 
state  is  for  this  purpose  equivalent  to  insolvency.  1  Lead.  CaS^  Eq., 
supra ;   Boardman  v.  Paige,  11  N.  H.  431. 

The  pro  forma  judgment  of  the  county  court  is  reversed,  and  judg- 
ment rendered  for  the  plaintiff  to  recover  one-third  of  seven-ninths 
of  the  debt  and  costs  paid  by  him  August  6,  1885,  with  interest  there- 
on since  August  6,  1885,  and  his  costs.^" 


CHAFFEE  V.  JONES  et  al. 
(Supreme  Court  of  Massachusetts,  1837.     19  Pick.  260.) 

Assumpsit  for  money  paid.^'    *    *    * 

The  case  was  subsequently  tried,  and  the  note  above  described  was 
given  in  evidence,  with  proof  that  the  plaintiff  had  paid  it,  the  prin- 
cipal being  insolvent. 

The  defendant  objected  to  the  plaintiff's  right  to  recover,  without 
an  averment  and  proof  of  notice  to  the  defendant  of  the  payment  of 
the  note,  and  a  demand  of  contribution,  before  the  action  was  com- 
menced. This  objection  was  overruled;  and  a  verdict  was  rendered 
for  the  plaintiff  for  one-third  of  the  amount  paid,  with  interest.^ ^ 

15  On  contribution  in  case  of  Joint  contracts  and  death  of  one  co-obligor 
surety,  see  (holding  the  executor  liable)  Bradley  v.  Burwell,  3  Denio  (NTX.) 
61  (1.940)  ;   Waters  v.  Riley.  2  Har.  &  G.  (Md.)  313,  18  Am.  Dec.  302  (1828). 

i«  Much  of  the  statement  of  facts  has  been  omitted,  together  with  the  opin- 
ion delivered  on  the  questions  raised  at  the  first  trial. 

17  The  arguments  of  counsel  are  omitted. 


Ch.  4)  THE  surety's  equity  of  contribution.  361 

Shaw,  C.  J.  The  court  are  all  of  opinion  that  this  objection  is  not 
well  founded.  It  depends  upon'an  old  arid  "very  well-settled  rule,  that 
when  the^e  is  a  present  duty  to  pay  money,  not  dependent  upon  any 
coliateralact  to  be  done,  or  condition  precedent  to  be  performed,  the 
common  averment  saepius  requisitus  is  sufficient;  but  when  some  col- 
lateral act  is  to  be  done  before  the  duty  arises,  and  which  is  necessary 
to  create  such  duty,  the  fact  must  be  averred  and  proved.  Com.  Dig 
"Pleader,"  C,  70.  This  principle  will,  we  think,  reconcile  most  of  the 
cases.  In  the  present  case  the  plaintiff  and  the  defendant  were  co- 
sureties, equally  liable  to  pay  the  note.  The  plaintiff  paid  the  whole, 
as  he  was  bound  to  do,  because  the  principal  and  the  other  sureties 
left  it  unpaid.  The  law  immediately  raised  an  obligation  from  the  de- 
fendant to  the  plaintiff  to  pay  an  aliquot  part  of  this  sum,  accord- 
ing to  the  number  of  the  sureties.  It  was  a  present  debt.  It  was  a 
payment  for  the  use  of  the  defendant,  upon  his  request  implied  by 
law.  No  ^p^ecial.  demand  and  notice  therefore  were  necessary;  the 
saspius  requisitus  was  sufficient. 
Judgment  on  the  verdict.^ ^ 

i8  4ecord:  Cage  v.  Foster,  5  Yerg.  (Tenn.)  264,  26  Am.  Dec.  265  (1833). 
On  right  of  contribution  lost  by  one  surety  giving  time  to  a  second  surety, 
and  thereby,  discha rging  a  third  surety,  see  note,  14  H.  li.  R.  547. 


PART  III 

DEFENSES  OF  THE  SURETY  AGAINST  THE 
CREDITOR  OR  PROMISEE 


CHAPTER  I 

DEFENSES  BASED  ON  THE  JOINT  NATURE  OF  THE  CON- 
TRACT—THE DEATH  OF  THE  SURETY 


COLLINS  V.  GRIFFITH. 

(High  Court  of  Chancery,  1725.    2  P.  Wms.  313.) 

A.,  B.  and  C.  were  bound  jointly  and  severally  in  a  bond  to  X.^- 
C.  dies.  J._S.  brings  a  bill  against  the  executors  of  C.  for  a  discovery 
of  his  personal  estate,  and  for  an  account  thereof,  and  to  be  paid  out 

^of  assets.  ^ 

>>>"^  7     The,_ defendant  demurred,  and  shewed  for  cause,  that  it  appeared 

^that  the  bond  was  a  joint  bond  (which  was  a  mistake,  it  being  joint 
and  several),  also" for  that  the  other  obligors  ought  to  be  parties  to  the 
suit,  and  to  the  account  that  was  to  be  directed  of  what  w^as  due  upon 
the  bond ;  for  perhaps  the  other  obligors  might  have  paid  the  whole, 
or  at  least  part  of  the  bond,  and  there  ought  to  be  but  one  account 
taken,  otherwise  there  might  be  a  multiplicity  of  suits,  and  the  de- 
fendant liable  to  a  double  account. 

Lord  Chancellor.  This  appears  to  have  been  a  bond,  as  well  sev- 
eral as  joint;  and^as  the  obligee  may  sue  it  severally  at  law,  so  rnay 
he  also  in  equity ;  if  it  were  not  so,  there  would  be  no  difference  in 
equity  betwixt  a  joint  bond,  and  one  joint  and  several;  and  if  any  of 
the  obligors  have  paid  all  or  part,  the  obligor  who  is  sued,  orchis  rep- 
resentative, must  bring  a  bill  and  have  it  allowed,  and  it  must  aIso"lie 
upon  him  (sed  vide  Madox  v.  Jackson,  3  Atk.  406)  to  compel  the  other 
obligors  to  contribute  towards  payment  of  the  debt;  the  creditor  lent 
his  money  upon  terms  to  have  a  security  upon  which  he  might  sue  the 
obligors  severally  if  he  thought  fit,  and  indeed  if  it  were  otherwise, 
that  which  was  intended  to  strengthen  the  security  would  tend  to  hurt 
it  extremely,  for  I  might  not  be  able  to  find  them  all  out,  and  by  the 
same  reason  that  all  the  obligors  are  to  be  sued,  if  any  are  dead,  their 
heirs  as  well  as  executors  are  to  be  made  parties,  and  then,  as  it  would 

(362) 


Ch.  1)     JOINT  NATURE  OF  CONTRACT DEATH  OF  SURETY.       363 

be  difficult  to  commence  the  suit,  so  the  suit  when  commenced  would 
be  subject  to  continual  abatements,  which  would  be  a  great  difficulty 
on  an  honest  creditor  who  has  fairly  lent  his  money. 

Whereupon  the  demurrer  was  overruled  with  great_cleaxnes5. 


RAWSTONE  V.  PARR, 
(nigh  Court  of  Chancery,  1827.    3  Russ.  424,  539.) 

By  the^  decree  in  this  cause  it  was  referred  to  the  master  to  take 
an  account  of  the  debts  of  the  testator,  James  Earn 

Messrs.  Oldam  &  Co.  claimed  before  the  master  to  prove  a  debt  due 
to_them  from  the  testator  The  master  reported  that,  Messrs.  John 
and  James  Ewing,  being  indebted  to  Messrs.  Oldam  &  Co.  in  the  sum 
of  £487.  14s.  for  goods  sold  to  them,  the  latter  had  demanded  pay- 
ment ;  when  the  Ewings,  being  unable  to  pay,  requested  Messrs.  Oldam 
&  Co.  to  give  them  time ;  and,  to  induce  them  to  do  so,  offered  to  se- 
cure the  payment  of  the  said  sum  of  i487.  14s.  by  the  promissory  note 
of  themselves  and  the  testator  James  Parr.  Messrs.  Oldam  &  Co. 
acceded  to  their  proposal;  whereupon  John  and  James  Ewin^.and 
James  Parr,  as  their  surety,  madeT^Tgned,  and  d^elivered  to  Messrs. 
Oldam  &  Co.  a  promissory  note  of  the  following  tenor: 

"Liverpool,  June  1,  1820. 

"Eighteen  months  after  date  we  promise  to  pay  to  Messrs.  Oldam 
&  Co.  i487.  14s.,  with  lawful  interest  from  the  14th  of  April  last 
till  paid;    for  value  received.  J.  and  J.  Ewing. 

"James   Parr,   Surety." 

The  master  further  found  that  the  testator,  James  Parr,  died  on  the 
6th  of  July,  1820 ;  that,  on  the  6th  of  February,  1821,  a  commission 
of  bankrupt  issued  against  John  Ewing;  that  his  estate  had  since  been 
conveyed  and  assigned  to  assignees,  duly  chosen  under  the  commis- 
sion; that  James  Ewing  had  left  this  country  insolvent,  having  com- 
pounded with  some  of  his  creditors  for  5s.  in  the  pound,  and  that  he 
now  resided  in  the  island  of  Newfoundland;  that  the  whole  of  the 
sum,  secured  by  the  promissory  note,  remained  due  to  Messrs.  Oldam 
&  Co. ;  and  that  they  had  offered  to  prove  the  said  debt  under  the 
commission  against  John  Ewing,  for  the  benefit  of  the  estate  of  the 
testator,  James  Parr,  after  being  fully  paid  20s.  in  the  pound. 

Tlnfjer  these  circumstances  the  master  was  of  opinion  that  Messrs. 
Oldam  &  Co.  were  not  entitled  to  claim  their  debt  against  the  estate 
Qf-the~testator,  they  not  having,  as  he  conceived,  a  remedy  at  law 
againstJiis_assets ;   and  the  master,  therefore,  disallowed  their  claim. 

Messrs.  Oldam  &  Co.  were  perniitted  to  except  to  the  report;  and 
the  exception  now  came  on  to  be  argued.^ 

3  The  arguments  of  counsel  are  omitted. 


fVt'. 


364  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (I'art    3 

The  Master  of  the  Rolls.  It  is  apparent,  from  the  na.t.urg_aLihis 
transaction,  that  the  promissory  note  was  drawn  in  the  form  of  a  joint 
security  merely  from  the  ignorance  of  the  parties,  and  that  the  real 
intention  was  that  the  testator,  James  Parr,  as  surety,  should  severally 
pay  the  debt,  on  the  default  of  the  Ewings.  The  case  is  the  same,  in 
principle,  as  if  the  security  were  a  joint  bond,  where  the  intention  was 
that  the  bond  should  be  joint  and  several ;  and  there  is  no  reason  why 
a  court  of  equity  should  not  relieve  from  such  a  mistake,  as  -well 
against  the  surety  as  against  the  principal. 

X         Exception  allowed. 
The  Lord  Chancellor.     The  claim  made  against  the  estate  of 
Parr  is  in  respect  of  his  being  one  of  the  makers  of  the  promissory 
1    ^  note ;    and  his  estate  can  be  liable  only  on  the  assumption  that  there 

was  a  mistake  in  the  form  of  the  note,  and  that,  in  signing  as  surety, 
he  meant  to  be  severally  liable  if  the  Ewings  did  not  pay.  Now  there 
^  is  nothing  to  satisfy  me  that,  if  the  attention  of  the  parties  had  been 
drawn  to  the  circumstance,  the  creditor  would  not  have  been  satisfied 
with  the  security  derived  from  Parr's  becoming  jointly  liable  with 
the  Ewings. 
'  But  if  any  argument  in  favor  of  presuming  a  mistake  were  to  arise 
out  of  the  circumstance  that  Parr  is  joined  as  surety,  how  is  the 
supposed  mistake  to  be  rectified?  It  is  said  it  may  be  rectified  by  mak- 
ing the  note  joint  and  several.  The  efifect  of  making  it  joint  and  sev- 
eral would  be  that  it  would  not  have  been  necessary  for  the  creditor  to 
sue  the  Ewings  in  the  first  instance,  and  that  he  might  have  proceeded 
against  Parr  alone,  without  even  joining  the  Ewings  in  the  action. 
But  if  Parr  signed  merely  as  surety,  and  if  effect  is  to  be  given  to  the 
7  contract  of  suretyship,  he  would  not  be  liable  except  on  the  default 
of  the  principal  debtors.  If,  therefore,  the  instrument  is  to  be  altered 
on  the  ground  of  its  not  having  carried  the  intention  of  the  parties 
into  eflfect,  I  cannot  satisfy  myself  that  their  intention  would  be  par- 
ried into  effect  by  making  it  joint  and  several. 

I  see  no  ground  for  saying  that  anything  more  was  intended-Jthan 
that  Parr  should  be  jointly  liable;  and  I  cannot  alter  the  instrument 
on  conjecture. 

The  Judgment  of  the  Master  of  the  Rolls  must  be  reversed;  and 
the  exception  overruled."  ~ 

"Accord:  Primrose  v.  Bromley,  1  Atkyns,  107  (1739):  Other  v.  Iveson,  3 
Drewry.  177  (1855). 

Where  the  obligation  is  Joint  and  several,  the  surety's  estate  Is  liable  for 
breaches  occurrinR  after  his  death.  White's  Erecntors  r.  Commonwealth,  39 
Pa.  167  (1861) ;  Primrose  v.  Bromley,  1  Atkyns,  107  (1739). 


Ch.  1)    JOINT  NATURE  OP  CONTRACT DEATH  OP  SURETY.       365 

HARRISON,  Ex'r  of  Minge,  v.  M.  FIELD,  Ex'r  of  J.  Field. 
(Court  of  Appeals  of  Virginia,  1795.    2  Wash.  [Va.]  136.) 

This  was  an  appeal  from  the  High  Court_o,LCliaLO-Cery,  The  case  was : 
The  testator  of  the  appellee  having  loaned  to  William  Claiborne  a  sum 
of  money,  he,  together  with  Minge  as  his  surety,  executed  a  joint  bond 
to  the  testator  for  payment  thereof.  The  bill  states  that  the  testator 
of  the  appellee  did  not  discover  until  after  the  death  of  Minge  (who 
was  survived  by  Claiborne)  that  the  bond  was  joint,  instead  of  joint 
and  several,  that  Claiborne  was  at  that  time  and  is  now  insolvent, 
that  the  loan  was  made  entirely  on  the  credit  of  Minge,  and  that  the 
bond  was  executed  at  a  time  when  Field  was  not  present.  The  ob- 
ject  of  the^ll  was  to  recover  the  debt  from  the  executor  of  Minge. 

The  appellant  demurred  to  the  relief  sought,  and  assigned  as  cause 
thereof  that  by  the  appellee's  own  showing  the  bond  was  joint,  and 
that  Minge  died  in  the  Hfetime  of  the  other  obligor.  He^lso  an- 
swered, asserting  that  Claiborne  was  in  good  circumstances  when  the 
loan  was  made ;  and  he  avers  that  he  neither  knows  nor  believes  that 
the  loan  was  made  on  the  credit  of  Minge,  or  that  the  bond  was  made 
a  joint  one  by  mistake  or  fraud. 

The  demurrer,  coming  on  by  consent  to  be  argued,  was  overruled, 
and  commissions  for  taking  depositions  were  awarded.     But  the  cause 
being  brought  on  during  the  same  term  for  a  hearing  upon  the  bill,/ 
answer,  and  bond,  a  decree  was  pronounced  thiat  the  appellant  out  ofL  'Vv^^ 
the  estate~oT  Mihge  in  his  hands  to  be  administered  should  pay  to  the[ 
appellee  the  principal  money  due  by  the  bond  (reduced  according  to) 
the  scale  of  depreciation),  with  interest  and  costs. 

From  this  decree  Harrison  appealed.* 

Roane,  J.  In  this  case  there  is  no  evidence  that  the  bond  was  made 
a  joint  bond  by  fraud^br  mistake,  or,  if  any  such  did  exist,  that  Minge 
was  privy  to  the  same.  The  chance  of  survivorship  was  equal,  and 
Minge  was  willing  to  submit  to  the  legal  consequences  of  such  a  bond. 
There  may  possibly  exist  reasons  with  an  obligor  for  preferring  a  joint 
to  a  joint  and  several  bond,  and  it  is  impossible  for  this  court  to  de- 
cide whether  such  reasons  did  or  did  not  prevail  with  Minge.  The 
law  is  laid  down  in  the  case  of  Towers  v.  Moor,  2  Vern.  99,  that  in 
a  joint  bond  the  duty  survives  against  the  surviving  obligor.  The  case 
of  Simpson  v.  Vaughan  goes  expressly  upon  the  lending  being  to 
both  of  the  obligors.  A  moral  obligation  therefore  was  imposed  upon 
both  by  the  contract  to  pay  the  debt,  and  if  by  the  form  in  which 
the  bond  was  drawn  the  remedy  was  gone  at  law,  the  court  thought  it 
equitable  to  relate  back  to  the  moral  obligation  which  was  equally  strong 
on  both  of  the  obligors.  But  in  this  case  the  surety  was  under  no  moral 
obligation,  not  having  been  a  borrower  of  the  money,  and  was  only 
bound  by  the  bond  itself.    No  antecedent  contract  therefore  subsisted 

*  The  arguments  of  counsel  are  omitted. 


3GG  DEFENSES   OF  SURETY   AGAINST   CREDITOR.  (Part    3 

between  him  and  Field  whereon  to  found  an  equity  for  the  extraordi- 
nary interposition  of  the  court  of  chancery.  The  case  of  Bishop  v. 
Church  also  goes  upon  the  lending  being  to  both  of  the  obligors.  I 
will  not  say  that  there  may  not  be  circumstances  which  would  sub- 
ject even  a  surety  to  the  relief  now  sought  for,  but  I  am  clear  that 
the  present  case  is  totally  destitute  of  them,  and  therefore  I  am  of 
opinion  that  the  decree  is  erroneous.  V 

fLEMiNG;_J^  In  the  cases  of  Simpson  v.  Vaughan  and  of  Bishop 
V.  Chilrch,  the  obligors  were  partners  in  the  business;  both  had  the 
benefit  of  the  money  lent,  and  the  survivor  became  bankrupt.  A 
stronger  case  could  not  have  occurred  to  warrant  the  equitable  relief 
granted  by  the  court.  In  the  latter  case,  the  Chancellor  postponed  a 
decision  of  the  cause,  that  inquiry  might  be  made  into  the  neglect  sug- 
gested against  the  obligee,  and  it  is  highly  probable  that,  if  it  had 
been  proved,  he  would  have  dismissed  the  bill.  In  this  case  FieM,  if 
he  could- upon  any  ground  have  been  entitled  to  the  relief  he  naw^asks 
for,  would  come  into  a  court  of  equity  with  a  very  bad  grace,  after 
lying  by  so  long  as  he  has  done,  until  Claiborne,  the  principal,  4ias 
been  reduced  in  his  circumstances,  and  as  the  answer  suggests  is  now 
unable  to  pay.  Upon  the  whole,  I  am  of  opinion,  that  Minge  was  a 
mere  surety,  not  bound  at  all  in  conscience,  and  his  executor,  being  ex-  \, 
onerated  at  law,  ought  not  to  be  charged  in  equity.  ^  /* 

The  President.  The  case  of  Acton  v.  Pierce,  2  Vern.  4S0,  in  prin- 
cipTe  haslio  apphcation  to  the  present.  A  husband  upon  his  marriage 
agreed  to  leave  his  wife  £1,000.  if  she  survived  him;  a  bond  for  this 
purpose  was  drawn  by  an  unskillful  hand,  and  was  made  payable  to  the 
wife,  with  condition  to  leave  her  the  £1,000.  In  that  case,  the  husband 
was  by  his  agreement,  and  for  a  consideration  deemed  valuable  in  law, 
a  debtor  to  the  wife,  and  under  a  moral  obligation  to  pay.  Though 
the  remedy  was  gone  at  law  by  the  intermarriage,  and  that,  in  con- 
sequence of  the  unskill fulness  of  the  draftsman,  yet  the  husband's  con- 
science was  bound,  and  therefore  the  court  very  properly  considered  him 
as  a  trustee  for  the  wife.  The  principle  contended  for  by  Mr.  Stark, 
that  a  loan  creates  a  moral  obligation  to  pay,  which,  being  a  duty  ante- 
cedent to  and  independent  of  the  bond,  cannot  be  discharged  by  the 
loss  of  the  bond,  or  by  other  accident  is  true,  as  to  the  borrower,  and 
the  cases  of  Simpson  v.  Vaughan  and  of  Bishop  v.  Church  are  de- 
cided upon  this  ground  only. 

The  Chancellor  indeed  in  Simpson  v.  Vaughan  is  made  to  say  that 
no  stress  was  laid  upon  the  circumstance  of  the  obligors  being  partners. 
But  this  is  certainly  a  mistake  of  the  reporter,  for  in  the  case  of 
Bishop  v.  Church  the  counsel,  speaking  of  Simpson  v.  Vaughan, 
says:  "The  consideration  your  Lordship  went  upon  was  that  it  was 
a  sum  lent  to  both,  of  which  both  had  the  advantage,  and  a  debt 
arose  against  both  from  the  nature  of  the  transaction."  In  this  as- 
lertion  he  is  not  contradicted  by  the  Chancellor,  which  would  seem 
to  prove  that  the  lending  and  borrowing  was  the  ground  upon  which 


Ch.  1)     JOINT  NATURE  OF  CONTRACT DEATH  OF  SURETY.       3G7 

the  decision  in  that  case  was  bottomed.  The  principle,  then,  of  these 
caa£s>JbLasL_nQ^application  to. the  present.  The  surety  received  no  benefit 
froriLthe  loan;  he  was  bound  by  no  contract,  express  or  impHed,  ante- 
ce4ent_to_the  bond;  he  was  under  no  moral  obligation  to  pay,  and,  of 
course,  equity  would  not  bind  him  farther  than  he  was  bound  at  law. 

It  is  a  maxim  that,  where  equity  is  equal,  he  shall  prevail  who  has 
the  law  in  his  favor,  and  the  cases  cited  in  Francis'  Maxims  of  Equity, 
p.  71,  as  an  illustration  of  the  principle,  are  very  strong  indeed  to 
show  that  a  surety  has  equal  equity  with  the  obligee,  and,  being  dis- 
charged at  law,  equity  will  not  charge  him. 

It  is  true  a  court  of  equity  will  set  up  a  lost  bond  against  a  surety; 
but  the  reason  is  that  the  surety  is  not  discharged  by  the  loss  of  the 
bond,  and  the  court  only  relieves  against  the  accident  by  setting  up 
the  evidence  of  the  debt.  v  w. 

It  was  argued  that  it  did  not  appear  that  Minge  was  a  surety.  This 
is  a  fact  not  to  be  disputed,  since  the  bill  itself  so  states  it.  Bonds  are 
sometimes  so  drawn  that  it  is  impossible  to  distinguish  the  surety  from 
the  real  debtor;  but,  when  distinguished  by  proof,  the  uncertainty 
arising  from  the  face  of  the  instrument  can  make  no  difference  in  the 
principle.  Since  the  act  of  assembly  which  gives  to  sureties  a  sum- 
mary remedy  against  their  principals,  it  might  be  well  to  distinguish  in  '  " 
the  bond  the  one  from  the  other.  X 

It  was  contended  that  the  demurrer  admitted  the  truth  of  the  alle-  ^"^  ^  ^^ 
gations  in  the  bill.  It  iS-Jjue  that  a  demurrer  without  an  answer  does 
ad_mit_the  facts  charged  on  the  other  side;  but  if  the  defendant  also 
answers,  and  denies  the  allegations  of  the  bill,  as  the  defendant  has 
done  in  this  case,  it  cannot  be  said  that  they  are  acknowledged.  When 
the  demurrer  was  overruled,  general  commissions  for  taking  deposi- 
tions were  awarded,  of  which  the  plaintiff  might  have  availed  himself 
if  he  had  wished  to  establish  any  facts  important  to  his  cause.  But, 
instead  of  this,  he  appears  to  have  consented  to  bring  on  the  cause  for 
a  hearing  without  testimony,  and  therefore  there  is  no  ground  for 
giving  him  an  opportunity  now  of  taking  depositions. 

The  jopinionof  the  court  is  "that  the  testator,  David  Minge,  having 
been  neiuier  the" borrower  nor  the  user  of  the  money  Tent  to  and  used 
by  ClaDDorne,  but  a  surety  only,  ought  not  in  equity  to  be  further  or 
otherwise  bound  than  he  was  bound  by  the  contract  at  law ;  and,  no 
fraud  or  mistake  appearing  to  have  occurred  in  the  writing  of  the  bond, 
it  is  to  be  considered  as  a  joint  obligation  and  subject  to  the  legal 
consequence  of  Minge  and  his  representatives  being  discharged  by  the 
death  of  him  in  the  lifetime  of  Claiborne,  and  that  the  said  decree  is 
erroneous." 

Decree  reversed,  with  costs,  and  the  bill  dismissed.' 

5  Accord:  Weaver  v.  Shryock,  6  Serg.  &  R.  (Pa.)  2G2  (1820) ;  Kennedy  v. 
Cai-penter,  2  Wliart.  (Pa.)  ?>44  (18.37).    But  see  iufra^  effect  of  statntoi-j  changes. 

Coiitra:  Susong  v.  Vaiden,  10  S.  C.  247,  30  Am.  Rep.  50  (1878)7  a  "judicial 
reversal  of  the  common-law  doctrine  of  survivorship. 

Iu_mauy  states  by  statute  the  estate  of  a  deceased  joint  promisor  is  made 


368  DEFENSES  OF  SURETY  AGAINST  CREDITOR.       (Part  3 


WINSLOW  V.  PARKURST'S  HEIRS. 

(Supreme  Court  of  Errors  of  Connecticut,  1791.    1  Root,  268.) 

Petition  in  chancery,  showing  that  said  Parkurst  and  one  Glea- 
son  were  jointly  bound  to  the  petitioner  for  ilOO.,  which  had  never 
been  paid;  that  since  the  death  of  said  Parkurst  judgment  and  ex- 
ecution had  been  obtained  against  said  Gleason,  and  returned  non  est, 
and  that  he  is  become  bankrupt ;  that  said  Parkurst  left  a  plentiful 
estate,  which  has  descended  and  come  to  his  heirs,  the  "petittonees ; 
that  said  Gleason  was  his  executor,  but  never  gave  any  bond  for  a 
faithful  administration;   and  that  he  is  without  remedy  at  law. 

The  Court,  upon  inquiry,  found  the  facts  proved,  and  ordered 
and  decreed  the  heirs  of  said  Parkurst  should  contribute  and  pay 
said  debt  to  the  petitioner  in  proportion  to  the  interest  they  severally 
received  of  their  father's  estate.' 

liable  in  the  same  manner  as  though  the  contract  was  joint  and  several.  .See, 
inter  alia: 

Pollard's  Code  of  Virginia.  1904,  §  2855:  "Of  Writings  Binding  Persons 
Jointly. — The  representative  of  one  bound  with  another,  either  jointly  or  as  a 
partner,  by  judgment,  bond,  note,  or  otherwise  for  the  payment  of  a  debt,  or 
the  performance  or  forbearance  of  an  act,  or  for  any  other  thing,  and  dying 
in  the  lifetime  of  the  latter,  may  t>e  charged  in  the  same  manner  as  such  rep- 
resentative might  have  been  charged,  if  those  bound  jointly  or  as  partners 
had  been  bound  severally  as  well  as  jointly,  otherwise  than  as  partners. 
Code  1849.  p.  5S2,  c.  144,  §  13." 

Wisconsin:     St.  1898,  p.  24.12.  §  3S4S. 

Massachusetts:    Rev.  Laws  1902,  vol.  2,  p.  1293,  c.  141,  §  8. 

New  Hampshire:     Pub.  St.  1901.  p.  630,  c.  191,  §  20. 

New  Jereey:  2  Gen.  St.  1895,  title  "Obligations,"  p.  2336,  §  3,  construed  in 
Thompson  v.  Johnson,  40  N.  J.  Law,  220  (1878)  to  apply  to  simple  joint  con- 
tracts. 

See  Donnerl)erg  v.  Oppenheiraer,  15  Wash.  290,  46  Pac.  2.54  (1896) ;    Hudel- 

son  V.  Armstrong.  70  Ind.  99  (1880),  construing  Act  Dec.  30,  1817  (Rev.  Laws 

1824,  c.  55) ;    Redman  v.  Marvil.  73  Ind.  593  (1881) ;    Tremain  v.  Severiu,  16 

\      Ind.  App.  447,  45  N.  E.  020  (1S96) :    Burns'  Ann.  St.  Ind.  1908.  §§  2830,  6.54. 

NfiivlilanJc:  Code  Civ.  I'roc.  (0th  Ed.  Parker)  §  758.  Pj:ii)r. -tO_  the.  ajnend- 
meut  by  Laws  1877,  c.  416,  the  common-law  doctrine  of  survivorship  existed 
in  New  York.  See  Getty  v.  Binsse,  49  N.  Y.  385.  10  Am.  Rep.  379  (1S72) ;  Da- 
vis v.  Van  Buren,  72  N.  Y.  587  (1878)  ;  Chard  v.  Hamilton.  .56  Hun  (N.  Y.)  259, 
9  N.  Y.  Supp.  575  (1890),  atlirmed  in  125  N.  Y.  777,  27  N.  E.  409  (1891).  Ju 
New  York,  before  the  amendment  of  the  Code  in  1877,  the  distinction  was 
further  made  that  if  the  surety  receives  a  benefit  from  the  transaction  his  es- 
tate is  not  disc-harged.  notwithstanding  the  joint  nature  of  the  contract.  RiclT- 
ardson  v.  Drainer.  87  N.  Y.  337  (1882).  •  ~     ' 

In  Penn.sylvauia,  see  Act  April  11,  1848  (P.  L.  536),  construed  in  Bowman's 
Adni'rs  v.  Kistler,  33  Pa.  100  (1859) ;  Hughes'  Appeal,  13  Pa.  Super.  Ct  240 
(1900). 

See,  also,  cases  collected  In  Ames'  Cases  on  Suretvship,  p.  332,  note  1;  7 
Am.  &  Eng.  Ency.  Law  (24^1  Ed.)  p.  101. 

The  Question  of  sunMvorship  in  joint  contracts  is  in  the  main  one  of  local 
•statutory  provisions.  See,  further,  as  to  particular  jurisdictions:  Stimsoffs 
American  Statute  Law,  p.  453.  §  4113,  art.  411. 

If  a  joint  judgment  is  obtained  against  principal  and  surety,  jointly  bound, 

8  Accord:  Cox  v.  Maddux,  72  Ind.  200  (1880);  Smith  v.  Ballantyne,  10 
Paige  (S.  Y.)  101  (1843). 


Ch.  2)  PERFORMANCE  IMPOSSIBLE — DEATH  OF  SURETY.   '  369 


CHAPTER  II 

IMPOSSIBILITY  OF  PERFORMANCE-THE  DEATH  OF 
THE  SURETY 


SAYMOND  V.  GENT. 

(Court  of  Queen's  Bench,  1596.    1  Rolle's  Abr.  p.  14,  pi.  6.) 

If  A  buys  goods  of  B  and,  because  B  distrusts  the  payment  of  A, 
J.  S.  promises  that  if  A  does  not  pay  it  at  such  a  day  he  himself  will 
pay  it,  J.  S.  dies  and  the  monies  are  not  paid  at  the  day,  the  executors 
of  J.  S.  can  be  charged  in  an  action  on  the  promise  afthough  it  is 
collateral.^ 


In  re  WHELAN. 

DODD  V.  WHELAN. 

(High  Court  of  Justice,  Chancery  Division,  Ireland.    [1897]  1  Ir.  R.  575.) 

Adjourned  summons. 

The  Bank  of  Liverpool,  Limited,  claimed  to  be  creditors  on  the 
est  a  te_qf__i]ie_decea&ed,--jxiliii  Xolan  Whelan^'Jn  respect  of  three  bills' 
f or__i2,0iKL-f a rh ,,  which  had  been  discounted  by  them  in  April  and 
May.-  1895^  after  Whelan's  death.  -  and^^also   for  advances  made"  in 

the  death  of  the  surety  after  judgment  would  at  the  common  law  discharge 
hlLlsIate.  United  States  v.  Price,  50  U.  S.  83,  13  L.  Ed.  56  (1850);  Fielden 
V.  Lahens,  6  Blatchf.  524,  Fed.  Cas.  No.  4,773  (1869).  This  rule  has  likewise 
been  altered  in  many  American  states  by  statutory  provisions.  See  Baskin  v. 
Huntington,  130  N.  Y.  313,  29  N.  E.  310  (1891). 

In^some  jurisdictions  by  express  statutes  joint  contracts  are  made  joint  and 
seyeral.  Rev.  Laws  Minn.  1905,  §  4282;  Morgan  v.  Brach,  104  Minn.  247,  116 
N.  W.  490  (1908) ;  Civ.  Code  Ala.  §  2503 ;  Code  Tenn.  1896,  §§  4484,  4486 ;  Code 
W.  Va.  1906,  §  3787 ;    Code  Iowa  1897,  §§  3465,  3468,  3542. 

Other  statutory  provisions  designed  to  destroy  the  incidents  of  joint  con- 
tracts  are:  Rev.  Codes  Idaho  1908,  §§  4147,  4860,  4865;  Code  Civ.  Proc.  Cal. 
§§  388,  414,  989,  994 ;  Code  Civ.  Proc.  N.  Y.  §§  1932-1947 ;  Comp.  Laws  S.  D. 
1908,  vol.  2,  pp.  341,  405,  §§  113,  466,  471 ;  2  Gen.  St.  N.  J.  1895,  title  "Obliga- 
tions," p.  2336,  §  2. 

1  Accord:  Y.  B.  12  Hen.  VIII,  fol.  11,  pi.  3 ;  In  re  Silvester,  [1895]  1  Ch. 
573,bond  of  sureties  to  guaranty  payment  for  carriage  of  coals ;  Fewlass  v. 
Keeshan,  88  Fed.  .573,  32  C.  C.  A.  8  (1898) ;  In  re  Busch's  Estate,  12  Phila. 
(Pa.)  53  (1878)  ;  United  States  v.  Keiver  (C.  C.)  56  Fed.  422  (1893),  bond  for 
appearance  of  principal  at  court ;  White's  Exr's  v.  Commonwealth,  39  Pa. 
167  (1861) ;  De  Morat  v.  Howard,  6  Pa.  Dist  Rep.  761  (1896) ;  Holthausen  v. 
Kells,  18  App.  Div.  80,  45  N.  Y.  Supp.  471  (1897),  estate  of  surety  for  tenant 
held  liable  for  rent  accruing  after  surety's  death ;  Pond  v.  United  States,  111 
Fed.  989,  49  C.  C.  A.  582  (1901). 

Hbn.Sub.— 24 


r- 


370  DEFENSES  OF  SURETY  AGAINST   CREDITOR.  (Part   3 

December,  1895^  for  the  firm  of  Whelan  &  Maher.  in  which  the  de- 
ceased  Tiad  been  a  partner,  and  which  was  admittedly  insolvent.  No 
notice  of.  Whelan's,  death  had  been  given  to  the  bank,  but  it  was~a^- 
mitted  that  in  November,.  1895,  the  bank  manager  hadT  heard, .  m  a 
conversation  with  a  stranger,  that  the  guarantor  was  dead.  ^Theclaim- 
ants  relied  on  a  letter  of  guarantee  dated  2.")th  March.  1S91,  given  to 
them'by  the  deceased,  which  stated :  "This  is  to  be  a  continumg 
guarantee,  notwithstanding  any  changes  in  the  partnership  of  \^nielan 
&  Maher." 

The  chief  clerk  ruled  that  the  guarantee  ceased  on  thedeath  of 

Whelan  on  12th  April,  1895,  and  the  questions  submitted  tor  aecision 

of  the  judge  were:  JV)  Did  the  guarantee  continue  to  the  closing 

Jof'the  account  on  Ist  January,  189G?    J2)^If  not,  did  the  guarantee 

(determine  at  the  death  of  Whelan  or  upon  notice  of  his  death?  ^ 

CriATTi-RTON,  Vice  Chancellor.  This  is  a  claim  made  by  the  Bank 
of  Liverpool  to  be  allowed  as  creditors  of  the  deceased,  whose  assets 
are  being  now  administered,  on  foot  of  a  guarantee  given  by  him 
for  the  balances  to  be  from  time  to  time  due  to  the  Bank  by  the  firm 
of  Whelan  &  Maher.  There  is  no  question  as  to  the  liability  of  the 
deceased  as  guarantor  for  the  portion  of  the  claim  of  the  bank  which 
was  due  by  Whelan  &  Maher  at  his  death,  but  the  executors  ot'~\Vhelan 
dispute  their  liabilitj^'io  any  portion  of  the  claim  which  is  for  advances 
to  the  firm  after  the  death  of  the  testator ,^©r,  if  this  be  too  extensive, 
to  the  portion  of  the  claim  which  was  for  advances  since  the  bank  had 
knowledge  of  his  death.  They  contend  that  it  is  not  necessary  to  prove 
any  formal  notice  given  to  the  bank  of  the  death,  or  of  the  intention  to 
terminate  the  guarantee  as  to  future  advances. 
^  I  do  not  think  that,  having  regard  to  the  decision  of  the  Court  of 
Exchequer  in  Bradbury  v.  Morgan,  1  H.  &  C.  249,  and  the  cages 
which  have  followed  it,  I  can  hold  that  the  mere  fact  of  the  death 
ofthe  guarantor,  unknown  to  the  creditor,  terminated  the  operation  of 
the  guarantee.  But  the  question  arises  whether  mere  knowledge  of 
the  death  has  that  operation,  without  formal  notice  being  given  by  the 
executors  to  determine  the  guarantee.  The  nature  of  such  guarantees 
and  the  right  to  determine  them  was  carefully  considered  by  Bowen,  J., 
in  the  case  of  Coulthart  v.  Clementson,  5  Q.  B.  D.  42,  an  action 
which  was  tried  by  him  on  circuit,  when  he  reserved  the  case  for  his 
further  consideration.  It  was  argued  before  him  subsequently,  and 
he  again  took  time  for  consideration,  so  that  the  questions  there  raised 
were  fully  deliberated  on  by  that  eminent  judge,  and  his  opinion  is  en- 
titled to  great  weight.  He  put  the  case  as  one  of  contract,  and  refers 
to  the  decision  of  the  Court  of  Common  Pleas  in  Offord  v.  Davies, 
12  C.  B.  (N.  S.)  748,  and  held  that  it  was  established  by  authority- 
that  such  continuing  guarantees  can  be  withdrawn  on  notice  during  the 
lifetime  of  the  guarantor,  and  that  a  limitation  to  that  effect  must  be 

*  The  arguments  of  counsel  are  omitted. 


Ch.  2)  PERFORMANCE  IMPOSSIBLE — DEATH  OF  SURETY.  371 

read,  so  to  speak,  into  the  contract.  He  then  proceeded  to  consider 
the  question  of  what  is  to  happen  on  the  death  of  the  guarantor,  and 
asks  if  the  guarantee  is  then  to  become  irrevocable  and  to  go  on  for- 
ever? He  repHes,  and  I  think  conclusively,  that  such  a  consequence  of 
the  death  would  be  absurd.  In  this  conclusion  I  entirely  agree.  He 
then  proceeds  to  consider  what  notice  should  be  deemed  sufficient, 
and  asks.  Must  the  executor  give  special  notice  vthat  the  guarantee  is 
withdrawn,  or  is  it  not  enough  that  the  creditor  should  be  warned  of 
the  death  of  the  guarantor  and  the  devolution  of  his  estate  to  others? 
and  holds  that,  in  the  absence  of  special  option  to  the  personal  repre- 
sentative to  continue  the  guarantee,  the  notice  of  the  death  of  the 
testator  and  of  the  existence  of  a  will  is  constructive  notice  of  the 
determination  of  the  guarantee  as  to  future  advances. 

These  words  cannot  be  limited  to  cases  where  a  will  exists,  and  are 
a  fortiori  applicable  to  cases  of  intestacy,  for  such  an  option  could 
only  be  given  by  a  will,  and  if  no  will  exists  no  such  option  can  exist. 
In  the  absence  of  express  authority  from  the  deceased,  whether  he 
dies  intestate  or  makes  a  will  not  giving  such  option,  it  would  be 
equally  outside  the  duty  of  the  executor  or  of  the  administrator,  as 
the  case  may  be,  to  continue  the  course  of  dealing.  Knowledge  of  the 
death  therefore  is,  as  xonsidered  by  Bowen,  J.,  sufficient  to  put  the- 
creditoron  inquiry  whether  there  is  any  testamentary  authority  before 
making  further  advances.  Nor  is  there  any  hardship  upon  or  injustice 
to  the  creditor  in  so  holding.  His  knowledge  of  the  death  should  be 
enough  to  require  him  to  hold  his  hand,  and  ascertain  whether  or  not 
there  is  any  option  given  to  the  personal  representatives  of  the  guar- 
antor to  continue  the  course  of  deahng,  or  rather  to  enter  into  a  new 
contract  of  suretyship.  The  decision  in  Coulthart  v.  Clementson,  5 
Q.  B.  D.  42,  is  clear  that,  in  case  no  such  option  exists,  the  course  of 
dealing  is  determined  by  knowledge  of  the  death. 

The  opinion  of  JMellish,  L.  J.,  in  Harriss  v.  Fawcett,  L.  R.  8  Ch. 
App.  866,  a  case  referred  to,  not  on  this  part  of  the  question,  by  Bowm- 
en, J.,  in  Coulthart  v.  Clementson,  5  Q.  B.  D,  42,  is  quite  in  accordance 
with  his  views. 

The  case  of  Coulthart  v.  Clementson,  5  Q.  B.  D.  42,  was  commented 
on  by  Romer,  J.,  in  In  re  Silvester,  [1895]   1  Ch.  573;    but  I  cannot 
regard  the  dicta  of  the  learned  judge  as  sufficient  to  displace  the  de- 
cision of  Bowen,  J.,  which  was  not  appealed  from,  and  which  I  am  ^  *^         a..    . 
prepared  to  follow.    Of  course,  in  the  case  of  express  provisions  in  the         -  ta'm.ijum- 
contract  of  guarantee,  effect  mT^isttycgtven  to  them,  according  to  the        ""^^^""^  y^i<' 
true  construction  of  the  instrument;   but  there  is  not,  in  my  opinion, 
anything  in  this  letter  of  guarantee  bearing  upon  the  present  question,  y         f^ 

I  therefore  hold  that  the  advances  made  by  the  bank  subsequent^'^    Av^f-^.-, 
to  their  having  knowledge  of  the  death  of  the  testator  are  not  covered 
by  the  guarantee,  but  that  those  made  prior  to  this  were  so  covered". 

The  evidence  of  the  time  at  which  the  bank  first  knew  of  the 
testator's  death  is  not  satisfactory,  and  consists  of  the  admission  of 


372  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

their  principal  officer  that  he  knew  of  it  in  either  November  or  De- 
cember, 1895.  I  shall  therefore  assume  the  date  of  the  1st  of  De- 
cember, 1895,  as  the  time. 

The  claimants  to  have  their  costs  with  their  demand. 


In  re  GRACE. 
BALFOUR  V.  GRACE. 

(High  Court  of  Justice,   Chancery   Division.     [1902]   L.   R,  1  Ch.  Div.  733.) 

Point  of  law. 

In  1882  the  plaintiff,  Blayney  Reynell  Balfour,  who  was  the^wner 
of  certain  estates  in  Ireland,  appointed  one  DoUing  to  act  as  agent  to 
his' estates  and  receiver  of  the  rents  thereof,  and,  in  consideration  of 
this  appointment.  Dolling,  and  his  father-in-law,  John  Gregory  Grace, 
as  his  surety,  executed  a  joint  and  several  bond,  dated  June  25,  1883, 
for  the  sum  of  £3,000.  in  favor  of  the  plaintiflf.  This  bond  was  given 
at  the  plaintiff's  request  by  way  of  security  for  the  due  performance  by 
Dolling  of  his  duties  and  obligations  as  the  plaintiff's  agent  and  re- 
ceiver. 

The  bond  was  in  the  following  form : 

"Know  all  men  by  these  presents  that  we,  Galedon  Josias  Radcliffe 
Dolling,  of  34  Mountjoy  Square,  in  the  city  of  Dublin,  Esquire,  and 
John  Gregory  Grace,  of  No.  38  Wigmore  street,  London,  in  the  county 
of  Middlesex,  and  of  Springfield,  Dulwich,  Esquire,  are  jointly  and 
severally  held  and  firmly  bound  to  Blayney  Reynell  Balfour,  of  Town- 
ley  Hall,  Drogheda,  in  the  city  of  Louth,  Esquire,  in  the  sum  of  i3,000., 
to  be  paid  to  the  said  Blayney  Reynell  Balfour,  or  his  attorney,  his 
executors,  administrators,  or  assigns,  for  which  payment  to  be  well  and 
truly  made  we  bind  ourselves  and  each  of  us,  one  and  each  and  every 
of  our  heirs,  executors,  and  administrators,  jointly  and  severally, 
firmly  by  these  presents." 

The  bond  then  recited  that  Dolling  had  previously  been  employed 
by  the  plaintiff's  predecessor  in  title,  B.  T.  Balfour,  as  agent  of  the 
estates,  and  proceeded  as  follows: 

"And  whereas,  the  said  Blayney  Reynell  Balfour  has  appointed  the 
said  G.  J.  R.  Dolling  his  agent  or  receiver  of  the  rents,  issues,  and 
profits  of  all  his  estates  in  Ireland ;  and  whereas,  upon  such  appoint- 
ment of  the  said  G.  J.  R.  Dolling  as  aforesaid  the  said  B.  R.  Balfour 
required  the  said  G.  J.  R.  Dolling  to  enter  into  security  for  the  sum 
of  £3,000. ;  and  whereas,  the  said  J,  G.  Grace  has  consented  to  become 
surety  for  the  said  G.  J.  R.  Dolling :  Now,  the  condition  of  the  above 
obligation  is  such  that,  if  the  above  bounden  G.  J.  R.  Dolling  shall  pay 
or  cause  to  be  paid  to  the  said  B.  R.  Balfour  all  sums  of  money  which 
shall  represent  the  rents,  issues,  and  profits  of  the  said  estates  payable 


Ch.  2)  PERFORMANCE  IMPOSSIBLE — DEATH   OF   SURETY.  373 

to  the  said  B.  R.  Balfour,  as  executor  of  the  said  B.  T.  Balfour,  and 
shall  and  will  from  time  to  time,  and  at  all  times  hereafter  as  often  as 
requested  by  the  said  B.  R.  Balfour,  his  executors,  administrators,  or 
assigns,  well  and  truly  pay  or  cause  to  be  paid  unto  the  said  B.  R.  Bal- 
four, his  executors,  administrators,  or  assigns,  all  such  sum  or  sums  of 
money  asjTe,_tlie^said  C.  J.  R.  Dolling,  shall  have  had  or  received  of  the 
said^rents  and  profits  oTfhe  said  estates,  and  shall  and  will  render  to  the 
said  B.  R.  Balfour  and  his  heirs,  executors,  administrators,  and  assigns 
true,  just,  full,  and  perfect  accounts  of  all  and  every  such  sum  and  sums 
of  money  as  shall  be  by  him  had  or  collected  from  the  tenants  and  oc- 
cupiers of  the  said  estates,  or  from  or  on  account  of  the  rents  and  prof- 
its of  the  said  estates,  or  any  part  thereof,  or  for  or  on  account  of  the 
said  B.  R.  Balfour,  his  heirs,  executors,  administrators,  or  assigns, 
and  shall  and  will,  while  he  shall  continue  to  act  as  such  agent  or  re- 
ceiver, well,  justly,  truly,  and  honestly  in  every  respect  conduct  himself 
in  the  said  office  of  agent  or  receiver  of  the  said  rents,  then  this  obli- 
gation and  every  matter  and  thing  therein  contained  shall  be  void  and 
of  no  effect;  otherwise,  the  same  shall  remain  in  full  force  and  virtue 
in  law." 

Dolling  continued  to  act  as  the  plaintiff's  agent  and  receiver  until 
about  February,  1900;  but  in  April,  1900,  he  executed  an  assignmerit 
tcra"frustee  for  the  benefit  of  his  creditors,  and  left  the  country,  having 
failed  t_o, account  to  the  plaintiff  for  large  sums  received  on  his  belialf. 

T.  G.  Grace  died  on  August  13,  1889,  having  by  his  will  appointed  the 
defendants  to  be  his  exfj^jffj'rs-  This  was  an  action  by  the  plaintiff 
seeking  to  make  the  defendants  liable  upon  the  bond. 

THe_defendants^-pleaded  that  the  liability  of  their  testator  under  the 
bond  ceased  upon  his  death.  -  y 

I5y  an  order  dated  October  28,  1901,  upon  the  application  of  the    ' 
plaintiff,  and  upon  an  admission  by  him  that  the  said  J.  G.  Grace  died 
on  August  13,  1889,  and  that  he,  the  plaintiff,  had  notice  of  the  deatl\ 
shortly  after  that  date,  the  following  point  of  law  was  directed  to  he<^  'W.'^-f 
tried  before  any  evidence  was  given  or  issue  of  fact  tried,  narriely:  i 
"Whether  the  liability  (if  any)  of  the  said  J.  G.  Grace  under  the  bond 
dated  the  25th  of  June,  1883,  was  determined  on  the  death  of  the  said 
J.  G.  Grace,  or  when  such  death  first  became  known  to  the  plaintiff." 
During  the  course  of  the  argument  the  form  of  the  questi_on  was 
slightly  amended,  and  as  amended- Jead.  as   follows:    "Whether  the 
liabiTTtyTif  any)  of  the  said  J.  G.  Grace  under  the  bond  was  determined 
immediately  Qi-^ierwiseby  the  mere  fact  of  his  death  coming  to  the 
knowledge  oFtlie  plaintiff.^"  _. 

Joyce,  J.    I  think  it  is  undoubted  law  that  a  continuing  guarantee  '^    '  a. 
not^  under  seal  for  future  advances,  if  not  so  framed  as  to  become'^^"^  /^  7*^4. 
operative  before  it  is  acted  on,  may  be  revoked  or  withdrawn  altogether       t.  f  \~ 
before  being  acted  on,  and  as  to  further  or  future  transactions  may  be  ^  o~» 

«  The  arguments  of  counsel  are  omitted. 


.-V••-U)^fa- 


374  DEFENSES  OF  SURETY   AGAINST   CREDITOR.  (Part   3 

terminated  at  any  time  unless  the  contrary  be  expressly  stipulated. 
Now,  the  reasons  for  this  in  the  case  of  such  a  guarantee  are,  I  think, 
pretty  obvious  on  a  moment's  consideration,  and  they  are  put  very 
lucidly  in  the  judgment  of  Erie,  C.  J.,  in  Offord  v.  Davies,  12  C.  B. 
(N.  S.)  MS. 

\\'hen  such  a  guarantee  is  under  seal,  I  think  it  has  been  held  at  law 
that  the  guarantor  is  not  entitled  by  notice  to  determine  its  operation. 
But  in  equity  I  think,  even  in  the  case  of  a  continuing  guarantee  under 
seal,  such  a  guarantee  as  that  I  have  mentioned,  where,  as  Lush,  L. 
J.,  puts  it  in  the  case  of  Lloyd's  v.  Harper,  16  Ch.  D.  319,  "the  con- 
sideration is  fragmentary,  supplied  from  time  to  time,  and  therefore 
divisible,"  the  operation  of  the  guarantee  as  to  future  transactions  may 
be  determined  by  notice.  Now,  the  right  to  determine  or  withdraw  a. 
/^  guarantee  by  notice  forth\Yith  cannot  possibly  exist,  in  my  opinion, 
wITeri^the  consideration  for  it  is  indivisible,  so  to  speak,  and  moves 
from  the  person  to  whom  the  guarantee  is  given  once  for  all,  as  m 
the  case  of  the  consideration  being  the  giving  or  conferring  an  of- 
fice or  employment  upon  any  person  whose  integrity  is  guaranteed."^ It 
is  impossible  that  the  guarantor  should  be  entitled  by  notice^'  unless 
he  has  expressly  so  stipulated,  to  determine  that  guarantee  instanter. 
Time  must  be  allowed — at  all  events,  it  is  admitted  that  some  time  must 
be  allowed — for  a  lawful  determination  of  the  employment  by  the 
person  to  whom  the  guarantee  is  given,  and  I  think,  witlTTreterence 
to  a  guarantee  of  the  nature  which  we  have  to  consider  in  the  present 
case,  many  other  considerations  are  applicable  besides  merely  a  lawful 
determination  of  the  employment  by  giving  six  months'  notice,  or 
something  of  that  kind.  As  I  said  in  the  course  of  the  argument,  six 
months'  notice  might  determine  the  employment  just  in  the  midst  of  the 
audit  or  receipt  of  the  rents;  or  the  employer  might  be  placed  in  such 
a  position  with  reference  to  the  person  employed  that  it  might  be  most 
inadvisable  and  injurious  to  him  to  put  an  immediate  end  to  the  em- 
ployment. 

If,  however,  such  a  guarantee  can  be  determined  by  notice  at  all, 
the  question  what  length  of  notice  the  employer  must  necessarily  be 
entitled  to,  I  think,  has  not  been  determined,  and  must  depend  "Upcm 
^  /  the  circumstances  of  the  particular  case.  Now,  that  being  s^,  ther"€  is 
/'no  difficulty  whatever  to  my  mind  in  answering  the  question  which  was 
argued  before  me  as  it  originally  stood.  iMvould  have_hejeiLiiiipossible 
to  hold  that  with  respect  to  this  guarantee,  where  there  is  no  stipulation 
to  the  contrary,  the  liability  of  the  guarantor  under  the  bond  was  de- 
termined  immediately,  either  on  the  death  of  the  guarantor  or  ohjhe 
fact  of  his  death  coining  to  the  knowledge  of  the  person  to  whom  the 
guarantee  was  given.  But  I  am  told  that  that  is  not  the  real  question, 
and  it  was  proposed  to  alter  the  question  in  a  form  which  was  partly 
suggested  by  myself,  and  the  question  I  have  to  decide  is  whether  the 
liability,  if  any,  of  Mr.  Grace  under  the  bond,  was  determined,  im- 
mediately or  otherwise,  by  the  mere  fact  of  his  death  coming  to  the 


Ch.  2)      PERFORMANCE  IMPOSSIBLE — DEATH  OF  SURETY.        375 

knowledge  of  the  plaintiff.  Now,  whatever  the  true  answer  to  that 
question  may  be,  and  whether  such  a  guarantee  as  this  can  be  de- 
termined by  notice  or  not,  I  certainly  agree  with  what  Romer,  J.,  says 
in  In  re  Silvester,  [1895]  1  Ch.  573,  577,  where  he  observed,  on  Lord 
Bowen's  decision  in  Coulthart  v.  Clementson,  5  Q.  B.  D.  42 :  "I  de- 
sire to  add  that  I  do  not  assent  to  the  general  proposition  that,  where 
a  person  who  is  himself  entitled  to  the  benefits  of  a  contract  of 
guaranty  has  notice  of  the  death  of  the  guarantor  and  that  he  left 
a  will,  he  is,  without  more,  affected  with  notice  of  the  contents  of  the 
will,  or  is  bound  to  assume  that  prima  facie  it  would  be  a  breach  of 
trust  on  the  part  of  the  executor  not  to  give  notice  to  determine  the 
liability." 

I  desire  to  express  my  entire  agreement  with  that,  whatever  the 
proper  answer  be  to  the  question  whether  such  guarantee  as  that 
which  we  have  to  consider  in  this  case  can  be  determined  by  notice 
or  not.  Really  what  we  have  to  decide  is  this :  Whether,  when  the 
guarantee  is  of  this  kind,  given  as  part  of  the  consideration  for  the 
appointment  to  an  office  or  employment  of  a  person  by  another  to 
whom  the  guarantee  is  given,  the  law  requires  the  guarantor,  in  case 
he  desires  the  guarantee  to  be  determinable  by  notice  or  by  his  death,  to 
have  it  expressly  so  stipulated;  or  does  the  law  require  the  person  to 
whom  the  guarantee  is  given  to  have  it  expressly  so  stipulated  if  the 
guarantee  is  not  to  be  determined  by  notice  or  by  the  death  of  the 
guarantor  ?  Well,  after  listening  to  the  argument  and  giving  some  con- 
sideration to  the  case,  I  have  come  to  the  conclusion  that  upon  the 
whole,  where  an  office  or  employment  is  conferred  in  consideration 
of  such  a  guarantee  as  that  in  this  case,  it  is  safer  to  hold  that  the 
guarantor  must_jexpf es'sty  so  stipulate  or  provide  if  he  desires  the 
guarantee  to  be  determinable  by  notice,  or  to  be  determined  by  his  own 
dealh.  And  in  coming  to  that  conclusion  I  rely  on  Gordon  v.  Calvert, 
2  Sim,  253,  4  Russ.  581,  29  R.  R.  94,  and  also  upon  what  I  understand 
to  be  the  reasoning  of  the  Lords  Justices  in  Lloyd's  v.  Harper,  16  Ch. 
D.  290,  although  I  have  not  forgotten  that  there  was  a  special  fact 
in  that  case,  namely,  that  the  person  whose  integrity  was  there  guar- 
anteed was  in  what  was  analogous  to  employment  which  could  not  be 
determined  by  Lloyd's. 

Therefore  I  can  answer  this  question,  as  altered,  by  saying  that 
theriiabil-itji^^t.any,  of  the  said  John  Gregory  Grace  under  the  bond 
dated  June  25.  1883.  was  not  determined,  immediately  j3r  otherwise. 
b^he  mere  fact  of  his  death  coming  to  the  knowledge  of  the  plaintiff. 


376  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

KNOTTS  V.  BUTLER,  Adm'r,  et  al. 
(Court  of  Appeals  of  South  Carolina,  18G8.     10  Rich.  Eq.  143.) 

Before  Wardlavv,  Ch^  at  Oxangebufg,  February,  1857. 

Wardlaw,  Ch.  Iiri847,  and  for  some  time  afterwards,  Sanders 
Glover,  Sanders  L.  Glover,  and  William  R.  Davis,  conducted  the  busi- 
ness of  factors,  in  the  city  of  Charleston,  as  partners,  under  the  style  of 
Glovers  &  Davis.  For  the  credit  and  accommodation  of  the  firm,  some 
of  their  friends  in  the  country  signed  the  following  guaranty:" 

"To  the  President  and  Directors  of  the  Bank  of  the  SFate  of  South 
Carolina : 
"The  subscribers  hereby  guarantee,  jointly  and  severally,  the  pay- 
ment of  all  drafts  or  notes  made,  or  to  be  made,  by  Messrs.  Glovers  & 
Davis,  factors,  of  Charleston,  and  of  all  drafts  accepted  by  them,  which 
may  be  discounted  by  you;  and  \yejdeclare_tliis..lQ  be^ai  sontiiiuing 
guaranty,  and  that  it  is  to  remain  of  force  till  revoked  by  vi^ritten  notice 
tcTthe  president  or  cashier  of  said  bank;  and  we  waive  notice  of  the 
"acceptance  of  this  guaranty.  This  guaranty  to  take  eflfect  from  the  date 
hereof,  and  our  liability  thereunder  not  to  exceed  five  thousand  dol- 
lars. Charles  Gloy^r, 

"William  Knotts, 
"V.  D.  VTJSmison, 
"James  Grimes." 

The  guaranty  is  undated,  except  by  a  pencil  mark,  SeptembeF7-'i^47 ; 
and  it  is  conceded  that  it  was  delivered  to  the  bank  about  that  time. 

In  August  and  September,  1852,  Glovers  &  Davis  made_ fivej;iotes 
for"tHFaggregate  sum  of  $19,300,  payable  at  the  said  Bank  of  the  State, 
which  were  discounted  by  said  bank,  and,  not  being  paid  at  maturity, 
were  protested  for  non-payment. 

On  February  9,  1854,  the  bank  brought  an  action  of  assumpsit 
against  the  plaintiff,  Knotts,  in  the  court  of  common  pleas  "for  Orange- 
bu'rg,  for  recovery  of  so  much  of  said  unpaid  notes  as  was  pro- 
tected by  the  guaranty;  and  at  spring  term,  1856,  of  said  court,  re- 
covered judgment  against  him  for  $5,000,  with  interest  from  October 
1,  1852,  and  costs.  Onjanuary  12,  1857,  plaintiff  Knotts  satisfied 
this  judgment  in  full,  viz.,  $5,752.40. 

Charles  Glover,  one  of  the  guarantors,  died  intestate,  February'  11, 
1848,  and  administration  of  his  estate  was  pr>rr|mit|-pH  tn  thf^  ^^- 
f enfant,  JoellSutler,  April  6,  1848,  who  published  the  proper  riotice 
for  twelve  mqnths  to  creditors  to  present  their  demands.  He  avers  that 
he  had  no  notice  of  this  guaranty  until  the  commencement  of  the  suit 
against  Knotts.  The^bank  presented  no  claim  against int€&tet*^««tate, 
and  gave  no  notice  to  the  administrator. 

Glovers  &  Davis  are  insolvent ;  and  so,  also,  are  two  of  the 
guarantors,  V.  D.  V.  Jamison  and  James  Grimes.     The~e?tater-"of. 


Ch.  2)  PERFORMANCE  IMPOSSIBLE — DEATH  OF  SURETY.  377 

Charles  Glover  is  ample,  and  much  of  it  remains  undistributed  in  the 
hands  of  the  administrator. 

Plaintiff  filed  this  bill  January  12,  1857,  against  the  administrator  of 
Charles  Glover,  and  against  Jamison  and  Grimes,  to  compel  "contri- 
buHpn  for  his  payment  in  ^extinguishment  of  their  common  guaranTy. 

Defense  is  made  only  in  behalf  of  Charles  Glover's  estate.  By  the 
expiress  terms  ot  the  guaranty,  it  was  continuing  as  t(5"  existing  and 
future  drafts  and  notes  of  Glovers  &  Davis,  discounted  by  the  bank, 
until  revoked  in  a  special  mode  by  written  notice  to  the  president  or 
cashier.     The  liability  of  the  guarantors  was  limited  only  as  to  the  .     K^rL 

amount.     The  statute  of  limitations,  which  is  pleaded,  but  not  urged,''' ^'  ^^  '      T^ 
is  inapplicable  between  the  bank  and  the  guarantors,  and  there  is  no 
pretense  of  improper  delay  on  the  part  of  the  plaintiff  in  seeking  a        .    i         p 
remedy.    It  is  supposed,  but  without  reason,  that  he  is  in  some  fault  for''  ^^  ***^  '^ 
not  giving  notice  to  the  administrator  of  the  liability  of  intestate's 
estate;  but  he  and  intestate  were  equal  joint  contractors,  bound  by  the 
same  law  and  equities,  and  without  any  special  duty  on  his  part  to 
intestate.    Until  he  discharged  the  guaranty,  his  laches  could  not  begin.  ^ 

It  is  urged^  however,  that  the  death  of  intestate,  more  than  fnur.^    /  ^  ^  ^^jj^l 
years  before  the  debt  to  the  bank  protected  by  the  guaranty  was  ^  ^^     ^^; 
created,   and^  the   notice   of,  administrator  to   creditors,   ^^e  together^^^^-       '  »L 
equivalent  to  the  special  revocation  of  the  guaranty 'stipulated  in  the  ijj-    ^V^"^   / ' 
instrument,  as  equity  looks  to  substance  and  not  form;    consequently  />La+-         ' 
that  the  liability  of  intestate  to  the  bank  and  to  the  plaintiff  had  ceased. 
The  notice  to  creditors  required  by  our  act  of  1789  is  intended  for  the 
protection  of  an  administrator  who  proceeds  to  make  regular  distri- 
bution of  the  estate,  in  ignorance  of  some  dormant  debts  of  his  in- 
testate;  but  until  he  has  made  distribution,  and  so  long  as  he  retains 
assets  for  the  satisfaction  of  all  debts,  it  is  quite  immaterial  to  creditors 
and  to  himself  whether   or  not  he  may  be   informed  of  particular 
claims,  not  brought  specially  to  his  attention  ..within  a  year.     An  ad- 
ministrator becomes  a  debtor  by  relation  and  not  by  his  own  contract, 
and  does  not  necessarily  know,  nor  is  bound  to  know,  all  demands 
created  by  his  intestate;   and  this  affords  an  adequate  reason  why  he 
should  not  suffer  in  his  private  estate   from  laches   of  creditors   in 
bringing  forward  their  claims,  but  where  the  reason  is  inapplicable 
the  unnecessary  protection  ceases.  i\yi^dj^r 

Here  there  was  no  debt,  no  breach  of  the  guaranty,  at  the  death  of  w^^J;;:?  ^J',. 
the,  intestate.     Intestate  contracted  for  an  indefinite  space  of  time  to  t^  f^.fvJ'^ 
indemnify  the  bank  in  discounting  certain  drafts  and  notes ;  and  no      '- 
principle   requires  that  his   contract   should   terminate   with   his   life. 
The  frnnranty  i^  ^inf  the  mere  delegation  of  an  agency  to  the  bank 
to  deal,  instead  of  Charles  Glo\^f7"as^princlpal,'\viTtrGlovers  &  Davis, 
in  certain  matters,  which  would  cease  at  the  principal's  death ;    but 
itis  a  contract  to  indemnify  against  certain  acts  of  third  persons,  and 
t6~assumelanuture  contingent 'liability,  if  these  acts  be  done. '  What 
obstructs  one  from  indemnifying  against  the  consequences  of  an  event 


378  DEFENSES   OF   SUKETY   AGAINST   CREDITOR.  (Part    3 

which  may  not  happen  for  more  than  four  years  after  his  death,  more 
than  giving  his  promissory  note,  which  may  not  reach  maturity  for 
j(^  more  than  four  years  from  his  death  ?     It  is  asked^  How  long  shall 
^    such  guaranty  continue  in_force?    And  the  answer  is,  until  it  be  end- 
ed"according  to  its  terms.     The  administrator,  on  wliorirfhe  liability 
devolved,  might  have  given  the  written  notice  to  the  presidenT^or 
cashier,  prescribed  by  the  instrument.    I  am_of  opinion  that  the  plaintiff 
is  entitled  to  contribuiiflii  from  the  defendants,  and  that  the  case  is 
governed  by  the  doctrines  of  McKenna  v.  George,  2  Rich.  Eq.  15. 
'"^  '  ^     As  to  the  costs  of  the  law  case,  as  there  is  no  evidence  that  Knotts 

■;  defended  except  for  his  own  accommodation,  or  of  any  agreement  on 
n^  tys^^  tfJ-^sl  ^  the  subject,  or  of  any  benefit  from  the  defense  to  the  guarantors, 
plaintiff  is  not  entitled  to  contribution  on  that  score. 
)(  It  is  adjudged  and  decreed  that  the  plaintiff,  William  Knotts,  re- 
cover from  the  defendant,  Joel  Butler,  administrator,  one  moiety  of  the 
sum  paid  by  the  plaintiff  in  extinguishment  of  the  guaranty,  with  in- 
terest from  January  12,  1857.  It  is  further  adjudged  that  a  lien  be 
created  on  the  estates  of  V.  D.  V.  Jamison  and  James  Grimes,  re- 
spectively, for  their  equal  shares  in  liability  under  said  guaranty ; 
and  it  is  ordered  that  if,  when  the  defendant,  Butler,  as  administrator, 
shall  have  paid  said  moiety,  the  said  defendant  and  the  said  plaintiff' 
may  have  execution  against  said  Jamison  and  Grimes,  to  compel  contri- 
bution, care  being  taken  that  actual  contributions  be  kept  equal,  and 
that  no  party  be  exempt  from  one-fourth  part  of  the  sum  covered  by 
the  guaranty. 

It  is  further  ordered  that  the  parties  have  leave  to  apply,  at  the  foot 
of  this  decree,  for  further  orders  in  execution  of  the  decree.'*     *     *     * 
Appeal  dismissed.' 


ROYAL  INS.  CO.  v.  DAVIES. 
(Supreme  Court  of  Iowa,  1875.    40  Iowa,  469,  20  Am.  Rep.  581.) 

Appeal  from  Scott  Circuit  Court. 

The  plaintiff's  petition  states  that  on  or  about  January  26.  1872.  W. 
F.  Kidder,  as  principal,  and  John  LrDavTes,  as  surety,  executed  and 
delivered  to  the  plaintiff  their  bond  as  follows : 

"Know  all  men  by  these  presents,  that  I,  William  F.  Kidder,  of  the 
town  of  Davenport,  county  of  Scott,  state  of  Iowa,  as  principal,  and 
John  L.  Davies,  of  the  town  of  Davenport,  county  of  Scott,  state  of 
Iowa,  as  surety,  are  held  and  firmly  bound  unto  the  Royal  Insurance 

*  The  opinion  deals  only  with  the  right  of  contribution^  and  the  opinion  of 
Dunkin,  Chancellor,  is  omitted. 

5  Bramwell,  B..  in  Bradhury  v.  Morgan.  1  Hurl.  &  C.  249  (1SG2),  said:  "If  the 
guarantee  had  been  in  these  terms.  'I  request  you  to  deliver  to  A.  to-mofrow 
morning  goods  of  the  value- of  £50.,  and  in  consideration  of  your  so  doing  I 
will  pay  you,'  and  before  the  morning  the  guarantor  died,  but  the  goods  were 


Ch.  2)  PERFORMANCE   IMPOSSIBLE DEATH   OF   SURKTY.  379 

Company  of  Liverpool,  a  corporation  authorized  by  act  of  Parliament, 
and  located  at  Liverpool,  England,  in  the  sum  of  one  thousand  dollars, 
to  be  paid  unto  the  said  company,  their  certain  attorneys  or  assigns, 
to  which  payment,  well  and  truly  to  be  made,  we  jointly  and  severally 
bind  ourselves,  our  heirs,  executors  and  administrators,  jointly  and 
severally  by  these  presents. 

"Sealed  with  our  seals  and  subscribed  at  Davenport,  Iowa,  this  26th 
day  of  January,  1872. 

"The  condition  of  this  obligation  is  such  that  whereas,  the  above- 
named  W.  F.  Kidder,  has  been  appointed  by  the  aforesaid  company 
their  agent  for  the  city  of  Davenport,  county  of  Scott,  and  state  of 
Iowa,  during  the  pleasure  of  the  manager  and  attorney  thereof,  by 
reason  whereof  and  as  such  agent  he  will  receive  into  his  hands  and 
possession  divers  sums  of  money,  policies,  chattels  and  other  effects, 
the  property  of  said  company,  and  is  bound  to  keep  true  and  ac- 
curate accounts  of  said  property  and  of  receipts  and  disbursements,  and 
to  deliver,  account  for,  and  pay  over  the  same  when  demanded  and  di- 
rected according  to  the  instructions  of  the  directors  of  said  company. 

"Now,  therefore,  if  the  said  W.  F.  Kidder  shall  promptly  pay  to 
the  said  company  the  amounts  received  from  time  to  time,  and  shall 
well  and  truly  perform  all  and  singular  the  duties  as  agent  of  said 
company,  as  directed,  according  to  the  provisions  of  the  charter,  by- 
laws, rules  and  regulations  of  said  company  now  existing,  or  which 
may  be  adopted  by  said  company,  for  and  during  the  time  he  of- 
ficiates as  said  agent,  and  shall  deliver  all  the  property  which  he  may 
receive  and  hold  as  said  agent,  to  his  successor  in  office,  or  to  such 
other  person  as  the  said  company  or  its  authorized  officers  may  direct, 
then  this  obligation  shall  be  null  and  void;  otherwise,  remain  in  full 
force  and  virtue. 

"[Signed]  W.  F.  Kidder.       [Seal.] 

"John  L.   Davies.   [Seal.] 

"Signed,  sealed  and  delivered  in  the  presence  of 
"H.  Goodrich." 

It  is  further  alleged  that  Kidder  was  duly  appointed  agent  of  plaintiff 
January  26,  1872,  and  continued  to  act  until  his  death,  December 
19,  1872 ;  that  at  tjiejime  of  his  death  he  was  indebted  to  the  plaintiff 
in  the  sum  of  $219.58,  for  premiums  collected  by  him  in  October,  1872  ; 
arid  tliaf  plaintiff  has  expended  $11.50  in  an  effort  to  collect  said  sum 
from  the  estate  of  said  Kidder. 

The  defendant  answered,  admitting  substantially  the  allegations  of 
the  petition,  and  alleging  as  an  affirmative  defense  thereto  that  John 
L.  Davies,~fhe  surety,  died  on  the  23d  day  of  April,  1872  ;  that  thereby 

duly  delivered,  I  can  see  no  reason  why  the  personal  representative  of  the 
guarantor  should  not  be  liable ;  and  whether  a  guarantor  says,  'Deliver  some 
goods  on  a  given  day,'  or  'Deliver  a  quantity  of  goods  upon  any  day,  or  days,' 
can  niake  no  difference."'  The  learned  Baron  also  states  that  the  law  is  in- 
<?orrectly  stated  in  Williams  on  Executors  (5th  Ed.)  1859. 


3S0  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   a 

his  estate  was  discharged  from  any  further  liability~oa  said  bond ; 
afnl  that  up  to  the  time  of  his  decease  the  conditions  of  said  bondJl^d 
not  been  broken ;  but  that  the  breaches  thereof  alleged  in  the  petition 
happened  after  the  death  of  said  Davies. 

!To  this  answer  the  plaintiff  denjurred,  which  being  overruled  and 
plaintiff  standing  thereon,  judgment  was  rendered  for  defendant. 
Plaintiff  appeals. 

Miller,  C.  J.  The  question  presented  in  the  record  Is  whether  the 
death  of  Davies,  the  surety  in  the  bond,  operated  in  law  as  a  dis- 
charge of  his  estate  from  liability  for  the  default  of  the  principal,  hap- 
pening after  the  death  of  the  surety;  in  other  words,  whether  the 
death  of  the  surety  operated  to  terminate  the  obligation  assumed  by 
him  when  he  executed  the  bond  on  his  part.  It  is  not  claimed  on  the 
part  of  the  defendant  that  the  liability  of  the  surety,  or  his  obligation 
as  such,  was  terminated  by  reason  of  any  act  or  omission  of  the  plain- 
tiff ;  but  it  is  claimed  that  the  obligation  of  the  surety  ceased,  and  the 
bond  became  defunct,  as  to  every  act  done  after  the  death  of  the  surety, 
by  reason  of  such  death  alone.  By  the  terms  of  the  bond  the  surety, 
Davies,  bound  himself,  his  "heirs,  executors  and  administrators,"  as 
surety  for  his  principal,  Kidder.  This  language  shows  no  infentiew  to 
limit  the  liability  to  the  lifetime  of  the  surety;  gn  the  contrary,  it  im- 
ports that  the  liability  shall  continue  after  his  death,  and  bind  his  heirs 
and  personal  representatives.  This  intention  is  further  manifested  by 
the  subsequent  language  of  the  bond,  in  defining  more  particularly  the 
obligation  assumed  by  the  obligors  therein.  It  is  that,  "if  the  said  W.  F. 
Kidder  shall  promptly  pay  to  the  said  company  the  amounts  received 
from  time  to  time,  and  shall  well  and  truly  perform  all  and  singular 
the  duties  as  agent  of  said  company,  as  directed,  according  to  the 
provisions  of  the  charter,  by-laws,  rules  and  regulations  of  said  com- 
pany now  existing  or  which  may  be  adopted  by  said  company,  for 
and  during  the  time  he  officiates  as  said  agent,  *  *  *  then  this 
obligation  shall  be  null  and  void ;  otherwise,  remain  in  full  force  and 
virtue." 

This  languagejelearly  shows  that  the  obligation  of  the  surotioo  to  the 
bond  was  to  continue  for  and  during  the  time  Kidder,  the  principal, 
should  officiate  as  agent  of  the  company.  Of  course,  the  death  of 
Kidder  would  terminate  the  obligation  of  the  sureties,  for  thereby 
the  agency  of  Kidder  would  terminate.  The  terms  of  the  bond  con- 
tinue the  liability  of  the  sureties  as  long  as  Kidder  should  act  as 
agent  of  the  company,  and  this  liability,  likewise  by  the  terms  of  the 
bond,  extends  to  the  heirs  and  legal  representatives  of  the  sureties. 
They  are  bound  by  as  clear  and  unmistakable  language  as  that  which 
binds  the  sureties  personally.  Instead  of  there  being  any  intent  man- 
ifested to  limit  the  obligation  of  the  sureties  to  the  terms  of  their  re- 
spective lives,  it  is  clearly  shown  that  it  was  intended  the  obligations 
should  extend  to  and  bind  the  heirs  and  personal  representatives  of 
the  sureties,  and  that  the  binding  force  of  the  bond  and  the  sureties' 


Ch.  2)      PERFORMANCE  IMPOSSIBLE — DEATH  OF  SURETY.        381 

liabilities  should  continue  as  long  as  Kidder  should  act  as  the  agent 
of  the  company. 

No  case  exactly  in  point  has  been  cited  by  appellant,  and  no  author- 
ity whatever  is  cited  by  appellee.  We  are  clear,  however,  that  upon  the 
general  principles  regulating  contracts,  and  the  terms.of  the  bond  in 
thia!£ase,  the  death  of_the  surety,  Davies,  did  not  terminate  the  binding 
force  of  the  bond  upon  his  heirs  and  legal  representatives  for  the 
failure  of  Kidder,  while  he  was  the  agent  of  the  plaintiff,  to  pay  over 
money  coming  into  his  hands  as  such  agent.  The  case  of  Gordon  v. 
Calvert,  4  Russ.  581,  cited  by  appellant,  supports  the  view  we  have 
here  taken. 

The  court  erred  in  overruling  the  plaintiff's  demurrer  to  the  answer. 

Reversed.* 


CALVERT  et  al.  v.  GORDON,  Ex'x. 

(Court  of  King's  Bench,  1828.     Dan.  &  L.  Merc.  Cas.  173,  3  Man.  &  Ry.  124.) 

Debt  on  bond  conditioned  for  the  fidelity  of  R.  Edwards,  as  collecting 
clerk  to  the  pTamtiffs, 'whilst  he'should  continue  in  their  service.  The 
issue""of  fact  raised  by  the  pleadings  was  whether  Edwards  had  re- 
ceived and  duly  accounted  for  certain  sums,  and  the  point  of  law  in- 
volved was  whether  the  defendant,  being  the  executrIx~oT"tlTe"^"irrety, 
could  immediately  release  herself  from  further  liability  by  giving  notice 
to  the  plaintiffs  that  she  would  no  longer  be  responsible.  The  "case 
came  on  for  trial  at  Guildhall,  before  Lord  Tenterden,  at  the  sittings 
after  Trinity  term,  when  a_yerdict  was  taken  by  consent  for  the  plain- 
tiff sj_  and  F.  Pollock  now  moved  the  court,  either  for  a  new  trial,  on 
theground  that  the  jury  ought,  upon  the  point  of  "law, 'to"have'"5'een 
directed  to  find  nominal  damages  only  on  one  of  the  breaches,  or, 

6  Accord:  Lloyd's  v.  Harper,  L.  R.  16  Ch.  Div.  290  (18S0) ;  Estate  of  Rapp 
V.  I'lTceni.x  Ins.  Co.,  113  111.  390,  55  Am.  Rep.  427  (18S5). 

Similarly  the  estate  of  the  surety  of  an  executor  or  administrator  is  bound 
for  defaults  occurring  after  the  suretj^'s  death.  See  cases  under  title  "Exec- 
utors and  Administrators,"  11  A.  &  E.  Ency.  df  Law  (2d  Ed.)  p.  897.  And,  by 
a  statute  making  heirs  liable  to  a  decedent's  creditors,  the  heirs  of  a  guard- 
ian.    Voris  V.  State,  47  Ind.  345  (1874). 

Similarly  the  estate  of  the  surety  of  a  bank  cashier.  Shackamaxon  Bank 
V.  Yard,  143  Pa.  129,  22  Atl.  908,  24  Am.  St.  Rep.  521  (1891).  Of  a  city  treas- 
urer. Mowbray  v.  State,  88  Ind.  324  (1882).  Of  a  guardian.  Moore  v.  Wal- 
lis,  18  Ala.  458  (1850).  Of  an  administrator.  Hightower  v.  Moore,  4G  Ala. 
387  (1871) ;  Cotton  v.  State,  64  Ind.  573  (1878).  Of  a  deputy  sheriff.  Green 
V.  Young,  8  Greenl.  (Me.)  14,  22  Am.  Dec.  218  (1831) ;  Carr  v.  Ladd,  Smith  (N. 
H.)  45  (1803).  In  the  last-cited  case  the  court  remarked:  "The  proper  remedy 
against  the  mischiefs  that  have  been  suggested  by  the  counsel  for  the  de- 
fendant would  he  for  the  sureties  to  stipulate  only  for  a  cei-tain  time,  or  to 
iiUrofhico  a  stipulation  that,  on  notice  by  the  surety  that  he  would  no  longer 
be  holden,  the  responsibility  should  terminate.  If  no  such  covenants  are  in- 
serted, and  the  covenantors  oblige  themselves  as  long  as  the  deputy  remains 
In  ofBce,  it  must  depend  on  the  pleasure  of  the  sheriff  how  long  they  shall  h§ 
bound.    Arguments  for  inconvenience  have  no  place  where  the  law  is  clear." 


382  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

if  the  court  were  not  inclined  to  grant  this,  then  his  application  was 
that~the  judgment  should  be  arrested.  The  court,  with  some  reliict- 
ance,  allowed  him  to  proceed ;  and  he  contended  that  the  defendant  was 
not  answerable  in  damages  to  the  plaintiffs,  the  liability  being  deter- 
mined on  the  delivery  of  the  notice ;   but 

Per  Curiam.  We_are  not  called  upon  now  to  say  what  ^flect  a 
notice  to  the  obligee  from  the  surety  that  from  some  future _day  he 
would  no  longer  hold  himself  liable  would  have  in  determining,  that 
iHa'bility.  The  question  raised  by  these  pleadings  is  whether  the  ob- 
\ligation  would  cease  from  the  very  day  in  which  the  notice  is  given. 
jThg^rehas  been  no  reason  assigned_wjijv  it  sjiould.  A  party  deliberately 
entering  into  suretyship  cannot  release  himself  at  any  moment.  It 
would  be  hard  upon  the  master  if  he  could.  The  master  cannot,  upon 
the  instant,  dismiss  his  clerk,  and  provide  himself  with  another.  _^  It 
is  said  that  it  will  be  a  hardship  on  the  surety  if  his  liability  is  to  cotv 
tinuejperhaps  during  the  whole  life  of  the  person  for  whose  fidelity  he 
engages.  It  may  be  so].  but  we  can  only  look  to  the  instrument,  and, 
jvicTging  from  that,  we  must  collect  that  it  was  his  intention  so  to  bind 
himself.  If  it  be  found  inconvenient  to  incur  an  obligation  so  ex- 
tensive (as  it  may),  it  may  in  future  be  matter  .of  consideration 
whether  it  cannot  by  some  means  be  limited.  All  difficulties  would  be 
obviated  if  a  provision  were  embodied  in  the  instrument  that  the  obligor 
should  be  discharged  from  his  liability  in  a  specified  time  after  due 
notice  given. 

Rule  refused. '^ 

There  had  been  a  demurrer  to  the  pleadings  in  this  cause,  which 
was  argued  in  Hilary  term  last,  and  is  reported  in  7  Barn.  &  C.  809. 
In  giving  judgment  on  that  occasion,  Bayley,  J.,  expressed  a  strong 
doubt  (though  the  point  was  not  judicially  before  the  court)  whether 
a  surety  could  discharge  himself  by  such  a  notice.  The  hint  of  the 
Chief  Justice  as  to  future  surety  bonds  is  well  worth  attention. 

7  In  J\\c  iiriiicipal  case  an  application  wa.s  afterwards  made  to  cliaucery 
witliout  success.     Soc  (iordon  v.  Calvert,  2  Simons,  253  (18287," 4  Ittls^.  ."Si. 

Iflnoasoutbus  Appeal.  75  Pa.  344  (1S74),  the  surety  of  a  lessee  ou  a  lease 
for  one  year,  which  provided  that  on  the  lessee's  holding  over  the  lease  would 
l>e  extended  another  year,  died,  and  six  months  before  his  death  he  notified 
the  landlord  that  he  would  not  be  responsible  any  longer  than  the  current 
year.     Held  that  his  estate  was  not  liable  for  rent  beyond  the  current  .rear. 

The  proper  interpretation  of  a  provision  for  special  notice  to  terminate  a 
suretyship  upon  the  guarantor's  death  was  decided  in  In  re  Silvester.  [1895] 
1  Ch.  573.  to  require  not  only  notice  of  the  death  but  of  an  intention  to  de- 
termine the  liability. 


Ch.  2)      PERFORMANCE  IMPOSSIBLE — DEATH  OF  SURETY.        383^ 


OAY  et  al.  v.  WARD,  Adm'x. 

(Supreme  Court  of  Ei-rors  of  Connecticut,  1895.     67  Conn.  147,  34  Atl.  1025, 

32  L.  R.  A.  818.) 

Action  for  contribution,  brought  to  the  Superior  Court  in  Hartford 
County,  and  reserved  by  that  court,  Thayer,  J.,  upon  an  agreed  state- 
ment  of  facts,  for  the  advice  of  this  court.  Judgment  advised  for  the 
defendants. 

The  case  is  sufficiently  stated  in  the  opinion. 

George  W.  Wheeler,  J.®    This  case  comes  before  us  for  our  ad^  pu^' 
vice,  on  a  reservation  upon  an  agreed  statement  of  facts,  and  with  cL  a 
stipulation,  entered  into  by  all  the  parties  to  the  record,  that  all  ques-\   -^^-^^ 
lions  arising  upon  the  pleadings  or  upon   the   agreed   facts  may  be' 
finally  determined  by  this  court.  >    - 

On  January  8,  1872,  the  stockholders  of  the  Delaney  Sr  Munson 
Manufacturing  Company,  located  at  Farmington,  Connecticut,  ex- 
ecuted and  delivered  to  the  National  Exchange  Bank  of  Hartford  a 
contract  of  continuing  guaranty  in  the  form  of  a  bond,  the  terms  of 
which  appear  at  length  in  the  opinion  of  this  court  in  the  case  of  Na- 
tional Exchange  Bank  v.  Gay,  57  Conn.  224,  231,  17  Atl.  555,  4  L. 
R.  A.  343,  brought  against  one  of  the  guarantors  upon  the  bond. 

This  bond  guaranteed  to  the  bank  "the  full,  prompt  and  ultimate 
payment"  of  all  commercial  paper  which  the  bank  may  "have  dis- 
counted or  may  hereafter  discount  *  *  *  to  an  amount  not  to  ex- 
ceed $15,000  in  all  at  any  one  time."  It  provided  that,  upon  notice 
to  the  bank  by  one  or  all  of  the  guarantors  upon  such  instrument,  such 
guarantor  or  guarantors  should  not, be  holden  upon  said  bond  for  any 
liability  created  by  such  company  subsequent  to  the  giving  of  such  no- 
tice. From  the  date  of  the  bond  to  February  9,  1888,  the  bank  dis- 
counted commercial  paper  of  said  company,  upon  which  date  the  com- 
pany failed.  On  January  21,  1889,  the  bank  recovered  judgment 
against  the  executors  of  Gay,  one  of  the  guarantors  upon  the  bond, 
for  the  sum  of  over  $11,000,  which  sum,  together  with  the  expenses 
of  the  suit,  the  executors  paid.  '  Subsequently  Wadsworth,  another 
guarantor  upon  the  bond,  voluntarily  paid  to  the  executors  dt  Gay 
oiTe-half  of  said  amounts. 

The  present  ^ction  is  brought  by  the  executors  of  Gay_and_of_\i^ds- 
wortli  again sEme  administratrix  of  Augustus  Ward,  a  guarantor  tip- 
on  the  bond,' William  Potts,  administrator  upon  the  estate  of  Samuel 
S.  Cowles,  a  guarantor  upon  the  bond,  Horace  Cowles,  a  son  of  said 
Samuel  S.  Cowles,  and  Mary  C.  Hardy,  a  purchaser  from  a  distributee 
of  the  estate  of  Horace  Cowles. 

Said  Ward  died  April  6.  1883;  his  estate  was  duly  settled  and  dis- 
tribution made  December  8,  1883.     Said  Samuel  S.  Cowles  died  in- 

8  The  arguments  of  counsel  have  been  omitted. 


384  DEFENSES  OP  SURETY  AGAINST  CREDITOR.  (Part   3 

1873;  his  estate  was  duly  settled  and  distribution  made  June  7,  1873, 
a  part  being  distributed  to  his  son,  Horace  Cowles  who  died  in  1876 ; 
his  estate  was  duly  settled  and  distribution  made  September  25,  1876. 
A  part  of  the  estate  inherited  by  Horace  Cowles  from. his  father,  Sam- 
uel S.  Cowles,  was  purchased  by  Mary  C.  Hardy  from  a  distributee 
of  the  estate  of  Horace  Cowles,  and  owned  by  her  when  she  was  made 
a  party  to  this  action. 

Ah  of  the  discounts  existing  February  9,  1888,  which  the  estate  of 
Gay  and  Wadsworth  paid,  were  made  by  the  bank  long  subsequent  to 
the  death  of  Samuel  S.  Cowles,  and  none  were  renewals  of  discounts 
made  in  his  lifetime.  FiYe  thousand  dollars  of  said  $11,000,  were.dis- 
counts  made  by  the  bank  after  having  notice  of  Ward's  death,  and  $6,- 
000  of  said  $11,000  were  renewals  of  paper  made  after  notfcg'jof 
Ward's  death^  but  of  paper  originally  discounted  prior  to  Ward's 
death.  The_bank,  Gay,  and  Wadsworth  had  immediate  notrce"^oTTlie 
death  of  said  Samuel  S.  Cowles  and  of  Ward.  The  said  ManuTacturing 
Company  was  solvent  at  the  time  of  the  death  of  said  Samuel  S. 
Cowles  and  of  Ward. 

The  stockholders  of  the  Delaney  &  Munson  Manufacturing  Com- 
pany, by  pledging  their  individual  credit  to  the  National  Exchange 
Bank,  secured  funds,  through  discounts  made  by  the  bank,  with  which 
to  conduct  its  business.  "To  avoid  the  inconvenience  of  indorsements 
by  several  individuals  upon  each  of  a  large  number  of  original  notes 
and  the  renewals  thereof,  the  obligors  made  one  comprehensive  con- 
tinuing contract  of  indorsement  in  the  form  of  a  guaranty  under  their 
respective  hands  and  seals."    National  Excliange  Bank  v.  Gay,  supra. 

The  bond  constituted  a  contract  of  continuing  guaranty  upon  the 
part  of  its  obligors  or  guarantors  of  payment  of  all  paper  discounted 
by  the  bank  up  to  the  limit  of  the  amount  named  in  the  bond.  No 
consideration  passed  at  the  execution  of  the  bond.  Each  discount, 
when  made  upon  the  credit  of  the  guaranty,  constituted  a  considera- 
tion, separable  and  divisible.  No  obligation  arose  and  no  liability  was 
created  until  a  discount  was  made  upon  the  credit  of  the  guaranty. 
The  bond  was  framed  to  meet  the  contingency  of  the  long  continua- 
tion of  discounts  by  the  bank,  and  the  extension  and  renewal  of  dis- 
counts made  upon  the  security  of  its  guaranty. 

Upon  the  nature  of  this  guaranty  this  court  expressed  itself,  in  the 
case  we  quoted  from  above,  as  follows:  "To  guarantee  'full  and 
prompt'  payment  would  meet  the  case  of  a  note,  on  usual  bank  time, 
actually  to  be  paid  in  full  at  maturity.  To  guarantee,  in  addition  to 
'full  and  prompt'  payment,  the  'ultimate'  payment,  can  have  no  other 
meaning  than  that  the  obligor  should  continue  bound  to  the  end  of  all 
substitutions,  renewals  and  extensions." 

The  bank  was  under  no  compulsion  to  discount  the  company's  paper. 
It  might,  at  its  option,  refuse  to  continue  discounting  it.  When  it 
made  the  discounts,  the  guaranty  of  the  bond  attached.  Each  guar- 
antor upon  the  bond  might,  upon  notice  in  writing  to  the  bank,  termi- 


Ch.  2)      PERFORMANCE  IMPOSSIBLE — DEATH  OF  SURETY.        385 

nate  all  liability  thereafter  arising  under  the  bond.  Unless  the  terms 
of  the  guaranty  forbid,  the  law  writes  in  the  contract  of  continuing 
guaranty  a  like  power  to  revoke  the  guaranty  upon  notice.  Coulthart 
V.  Clementson,  L.  R.  5  Q.  B.  Div.  42 ;  Jordan  v.  Dobbins,  122  Mass. 
168,  23  Am.  Rep.  305 ;  Agawam  Bank  v.  Strever,  18  N.  Y.  502.  > 

The  effect  of  Jhe  death  of  a  guarantor  upon  a  continuing  guarr  ^Mj^fAl^^ 
anty  has  been   determined  differently  in   different  jurisdictions.      In  4«*^-^ ^ir^^WJ 
Massachusetts  the"death  is  held  to  work  a  revocation  of  the  guaranty.    tZcy^iA^^. 
The  court  in  construing  a  continuing  guaranty  of  the  sale  of  goods, 
in  the  case  of  Jordan  v.  Dobbins,  supra,  said :    "Death  terminates  the 
power  of  the  deceased  to  act,  and  revokes  any  authority  or  license  he 
may  have  given,  if  it  has  not  been  executed  or  acted  upon.    His  estate 
is  held  upon  any  contract  upon  which  a  liability  exists  at  the  time  of 
his  death,  although  it  may  depend  upon  future  contingencies.     But  it 
is  not  held  for  a  liability  which  is  created  after  his  death,  by  the  ex- 
ercise  of  a  power  or  authority  which  he  might  at  any  time  revoke." 
See,  also,  Hyland  v.  Habich,  150  Mass.  112,  22  N.  E.  765,  6  L.  R.  A. 
383,  15  Am.  St.  Rep.  174. 

In  England  death  does  not  work  a  revocation  of  the  continuing 
guaranty.  The  case  of  Coulthart  v.  Clementson,  supra,  was  an  ac- 
tion brought  by  a  bank  upon  a  continuing  guaranty  against  the  ex- 
ecutor of  a  deceased  guarantoi*.  The  court  said :  "A  guaranty  like 
the  present  is  not  a  mere  mandate  or  authority  revoked  ipso  facto  by 
the  death  of  the  guarantor." 

These  two  cases  illustrate  the  two  views  held  by  courts  of  different 
jurisdictions.     We  prefer  to   adopt  the   latter  view.     To   adopt 'the  , 

MasTachusetts  doctrine  would  impose  upon  the  guarantee  the  burden 
of  knowing  at  all  times  whether  oj  not  the  guarantors  are  in  life. 
There  could  be  no  safety  in  relying  upon  the  credit  of  the  guarantor 
unless  at  the  moment  of  reliance  the  guarantee  knew  the  guarantor  to  ■ 
be  in  life.  The  practical  difficulties  in  the  way  of  a  guaranty  so  con- 
strued would  prevent  credit  being  given  upon  it  and  curtail  a  useful 
method  of  commercial  business.  Further  a  guaranty  of  this  nature 
is  intended  to  continue  until  revoked  by  act  of  the  parties  or  its 
equivalent.  /^  KwiW  ^"^^ 

Bjit-when  the,  guarantee  has  knowledge  of  the  death  of  the  guar-  x     j^l,JctI^  ■- 
antor,  such  knowledge  works  a  revocation  of  the  guaranty.    The  g^r-       ^   lit*' 
apty  po  longer  relies  upon  the  credit  of  the  deceased  guarantor.    Each  ^    ^^*^  ^^■***' 
advance  made  by  the  guarantee  constitutes  a  fresh  consideraFion,  and, 
when  made,  an  irrevocable  promise  or  guaranty  on  the  part  of  the 
living  guarantors.     Each  advance  thereafter  made  is  upon  the  credit 
of  the  living,  not  of  the  dead,  guarantor.    AVere  this  not  so — unkss  it 
be  held  that  the  representatives  of  the  deceased  may  upon  notice  termi- 
najt£_ihe  guaranty — the  guaranty  terminable  at  the  option  of  the  guar- 
antor during  life  becomes,  upon  his  death,  never-ending.     The  ITmi- 
tation  which  the  law  gives  the  living  is  denied  the  dead.     Estates 
Hen.  Sub.— 25 


3S6  DEFENSES  OF  SURETY  AGAINST  CREDITOR  (Part   3 

must  remain_iiiisettled,  devises  of  property  be  witliheld  so  long  a&  the 
guaranty  may  last,  and  the  representatives  of  the  deceased  guarantor 
be  powerless  to  save  his  estate  from  a  loss  which  neither  he  nor  they 
authorized  or  received  benefit  for.  Such  a  result  justifies  and  im- 
pels a  court  in  reading  into  the  guaranty  a  limitation  of  termination 
of  the  guaranty  upon  notice  of  the  death  of  the  guarantor,  as  well  as 
upon  notice  from  the  living  guarantor.  Any  notice  of  death  which 
brings  that  fact  within  the  knowledge  of  the  guarantee  is  a  proper 
and  sufficient  notice. 

In  the  case  of  Coulthart  v.  Clementsqn,  supra,  the  court  said :  "It 
is  now  established  by  authority  that  such  continuing  guaranties  can 
be  withdrawn  on  notice  during  the  lifetime  of  the  guarantor,  and  a 
limitation  to  that  effect  must  be  read,  so  to  speak,  into  the  contract.. 
But  what  is  to  happen  on  his  death  ?  Is  the  guaranty  irrevocable  and  to 
go  on  forever?  It  would  be  absurd  to  refuse  to  read  into  the  lines 
of  the  contract,  in  order  to  protect  the  dead  man's  estate,  a  limitation 
which  is  read  into  it  to  protect  him  while  he  is  alive.  *  *  *  gut 
if  the  executor  has  no  option  of  the  sort,  then,  in  my  opinion,  the  notice 
of  the  death  of  the  testator  and  of  the  existence  of  a  will  is  constructive 
notice  of  the  determination  as  to  future  advances  of  the  guarantee. 
The  bank  from  that  moment  are  aware  that  the  person  who  could 
during  his  lifetime  have  discontinued  tlie  guaranty  by  notice  cannot 
any  longer  be  a  giver  of  notices ;  that  his  estate  has  passed  to  others, 
who  have  trusts  to  fulfill,  and  it  is  easy  for  them  to  ascertain  what 
those  trusts  are.  If  these  trusts  do  not  enable  the  executor  to  con- 
tinue the  guaranty,  then  the  bank  has  constructive  notice  that  the 
'  guaranty  is  withdrawn."     Nat.  Eagle  Bank  v.  Hunt,  Adm'r,  16  R.  I. 

148,  13  Atl.  115;   Harriss  v.  Fawcett,  L.  R.  15  Eq.  Cas.  311. 

The^uthorities  uniformly  hold,  either  that  death,  ipso  facto,  or  notice 
of  death,  revokes  a  continuing  guaranty.  The  fact  that  the_  instrument 
is  "under  seal  cannot  change  its  nature  or  construction.  Jordan  v. 
Dobbins,  122  Mass.  168,  23  Am.  Rep.  305 ;  Offord  v.  Davies,  12  C.  B. 
X.  S.  T48.  A  similar  doctrine  holds  that  notice  of  the  dissolution  of  a 
copartnership  revokes  a  continuing  guaranty  made  by  the  copartner- 
ship. City  Nat.  Bank  of  Poughkeepsie  v.  Phelps,  86  N.  Y.  484. 
P^  ^ff%^^  r^  The  application  of  these  principles  to  the  case  in  hand  is  this:  All 
'  °  of  the  discounts,  for  which  recovery  was  had  against  Gay's  estate  and 

payment  made  by  Gay's  executors  and  Wadsworth,  were  made  after 
notice  of  the  death  of  Samuel  S.  Cowles.  His  representatives  are 
therefore  freed  from  all  liability  for  such  discounts.  Liability,  if  any, 
for  discounts  so  made  upon  the  credit  of  the  guaranty,  could  only  ac- 
crue against  the  estate  of  Samuel  S.  Cowles,  and  could  in  no  view 
of  the  case  be  maintained  against  the  estate  of  Horace  Cowles,  or 
^lary  Hardy. 

Five  thousand  dollars  of  the  said  discounts  were  made  after  notice 
of  the  death  of  Augustus  Ward.     His  representatives  are  therefore 


/ 


Ch.  2)  PERFORMANCE  IMPOSSIBLE — DEATH  OP  SURETY.  387 

freed  from  all  liability  for  such  discounts.  The  remaining  discounts, 
$6,000,  were  originally  made  before  the  death  of  Augustus  Ward.  His 
death,  with  notice,  did  not  relieve  his  estate  from  liability  for  such  dis- 
counts. For  all  discounts  made  prior  to  his  death,  whether  original  dis- 
counts, or  renewals,  or  extensions  thereof,  his  estate  is  liable  upon  his 
death. 

The  duty  of  the  bank  upon  this  bond,  if  it  desired  to  hold  the  estate  "^j/p 

of  Ward  liable,  was  to  enforce  its  claim  upon  the  paper  existent  at      .  ,^  ^^ 

Ward^s  death,  against  his  estate.  Instead  of  this  the  bank  renewed  arrd 
extended  its  discounts,  taking  new  paper  for  the  old,  without  the 
knowledge  or  acquiescence  of  the  representatives  of  Ward.  There- 
after the  bank  must  look  to  the  remaining  guarantors  upon  the  bond. 
It  waived  its  right  to  enforce  payment  from  the  estate  of  Ward,  when 
it  accepted  paper  in  renewal  of  the  old.  Each  renewal  of  the  old  paper 
constituted  payment  of  the  old  paper,  so  far  as  Ward's  estate  was  con- 
rerned.  Each  renewal  so  made  had,  for  its  security,  the  guaranty  of 
thj£_liidng  guarantors  upon  the  bond,  who  had  not  notified  the  bank  of 
th£._t£rmination  of  their  liability  upon  the  guaranty. 

The  conclusion  arrived  at  is  just  to  the  bank,  for  it  can  cease,  upon 
notice  of  the  death  of  a  guarantor,  to  renew  paper  then  discounted, 
and  can  enforce  its  payment  against  the  estate  of  the  deceased  guar- 
antor. It  is  just  to  the  remaining  guarantors,  who  can,  upon  notice  of 
the  death  of  a  guarantor,  terminate  their  liability,  and,  if  compelled  to 
pay  that  liability,  by  appropriate  remedy  compel  the  estate  of  the  de- 
ceased guarantor  to  contribute  his  proportion  to  the  liability  incurred. 
For  all  liability  arising  before  notice  of  the  death  of  the  guarantor,  the 
remaining  guarantors  can  provide  by  the  terms  of  the  guaranty. 

In  the  case  at  hand  all  the  guarantors  upon  this  bond  had  notice  of 
the  death  of  both  Samuel  S.  Cowles  and  Augustus  Ward,  and  made  no 
attempt  to  terminate  their  liability  upon  the  bond,  and  no  efifort  to  com- 
pel the  estate  of  either  to  help  meet  the  liability  existing;  but  there- 
after, without  the  knowledge,  consent,  or  acquiescence  of  the  repre- 
sentatives of  Cowles  or  Ward,  renewed  the  old  paper  through  a  long  ' 
series  of  years,  and  increased  their  own  liability  by  fresh  discounts. 

A  renewal  of  paper  made  before  the  death  of  a  guarantor,  upon  thg 
credit  of  a  bond  guaranteeing  payment  of  such  paper,  made  after  notice 
of  said  death  to  the  guarantee,  terminates  the  liability  of  such  guar- 
antor after  said  notice. 

The  precise  question  at  issue  was  determined,  in  accordance  with  the 
conclusions  we  reach,  in  the  case  of  National  Eagle  Bank  v.  Hunt,  16 
R.  I.  148,  153,  13  Atl.  115.  In  its  opinion  the  court  said:  "The  guar- 
anties in  the  case  at  bar  come  within  the  second  class  above  considered. 
They  were,  therefore,  upon  the  authorities  cited,  terminated  by  the 
death  of  the  guarantor,  and  notice  of  it  to  the  plaintiff,  as  to  all  sub- 
sequent transactions.  As,  however,  the  note  described  in  the  declara- 
tion had  been  discounted,  and  the  net  proceeds  had  been  paid  to  the 


388  DEFENSES  OF  SURETY  AGAINST  CnEDITOE.  (Part   3 

maker  prior  to  the  death  of  the  guarantor,  the  plaintiff  would  have  been 
entitled  to  recover,  but  for  the  fact,  set  up  in  the  pleas,  that  after  notice 
of  the  death  of  the  guarantor  it  extended  the  time  of  payment  for  a 
further  period  by  taking  a  new  note  from  the  principal  debtor  and  re- 
ceiving the  interest  thereon  in  advance,  without  the  consent  of  the  de- 
fendant, and  without  any  reservation  of  his  right,  assented  to  by  the 
principal,  to  insist  upon  immediate  payment  by  the  principal,  and,  in 
default  of  such  payment,  to  pay  the  debt  himself,  and  proceed  at  once 
against  the  principal.  That  such  action  on  the  part  of  the  plaintiff  was 
sufficient  to  release  the  estate  of  the  guarantor,  and  the  defendant  as 
his  representative,  from  liability,  is  too  well  established  to  need  the 
citation  of  authority." 
f"  The  question  whether  a  guaranty  will  be  revoked  by  notice  of  death, 
when  by  the  terms  of  the  guaranty  the  guarantor  could  not  in  life  have 
revoked  the  guaranty,  is  not  before  us,  and  we  express  no  opinion  upon 
tjiis  point. 
„;»f^.>CV  ftt'  y^  ^TEFclaim  that,  because  the  bond  of  guaranty  in  this  case  bound  the 
/   ^,  guarantors  to  the  "full,  prompt  and  ultimate  payment"  of  all  paper 

J^  discounted  after  the  execution  of  such  bond,  therefore  the  guaranty 

covers  discounts  made  before  the  death,  and  the  renewals  of  such  dis- 
counts made  after  the  death  of  the  guarantor,  cannot  be  sustained.  The 
guaranty  here  applies  to  paper  discounted,  and  to  the  renewal  or  ex- 
tension of  such  discounts,  before  the  decease  of  a  guarantor.  Other- 
wise a  continuing  liability  existed  against  the  estate  of  the  deceased 
guarantor  so  long  as  the  renewals  were  made.  Such  a  result  w-as  not 
intended  by  the  parties  to  the  bond.  They  did  not  intend  to  continue 
a  liability  after  the  death  of  a  guarantor,  for  an  indefinite  period,  which 
he  and  they  could  terminate  at  any  time  during  his  life.  A  contract 
of  guaranty  is  to  be  construed  so  as  to  promote  the  us.e_axid_convenience 
oLcomniercial  intercourse.  Davis  v.  Wells,  104  U.  S.  159,  169,  26  L. 
Ed.  6S6.  And  its  language  is  not  to  be  extended  by  any  strained  con- 
struction, for  the  purpose  of  enlarging  the  guarantor's  liability.  Hall 
v.  Rand,  8  Conn.  560,  573.  But  its  construction  is  to  be  according  to 
what  is  fairly  to  be  presumed  to  have  been  the  understanding  of  the 
parties,  without  any  strict  technical  nicety.  Lee  v.  Dick,  10  Pet.  482, 
493,  9  L.  Ed.  503 ;  Evansville  Nat.  Bank  v.  Kauf  mann  et  al.,  93  N.  Y. 
273,  281,  45  Am.  Rep.  204.  These  established  rules  of  construction 
.accord  with  the  construction  we  give  to  the  guaranty  before  us. 
^AfVvJl'^  '      ^^^^  deem  it  unnecessary  to  discuss  other  questions  argued  before 

us,  since  the  questions  considered  are  decisive  of  the  case. 
^        \ye.have  not  overlooked  the  fact  that  there  has  been  a  misjoinder  of 
parties  defendant.     The  estate  of  Horace  Cowles   and  ^lary  Hartly 
were  strangers  to  the  guaranty.     The  representatives  of   Samuel  S. 
Cowles  are  alone  liable  upon  his  obligations. 

There  is,  as  well,  a  misjoinder  of  parties  plaintiff.    ^Ir.  Wadsworth 
voluntarily  paid  one-half  of  the  amount  recovered  against  the  estate  of 


Ch.  2)  PERFORMANCE  IMPOSSIBLE — DEATH  OF  SURETY.  389 

Gay.  He  cannot  now  maintain  with  Gay's  representatives  an  action  to 
compel  payment  to  them  of  the  share  of  other  guarantors  paid  by  him 
for  them. 

The  superior  court  is  advised  to  render  judgment  in  favor  of  the  de- 
fendants.   In  this  opinion  the  other  judges  concurred." 


HECHT  et  al.  v.  WEAVER. 
(Circuit  Court  of  United  States,  District  of  Oregon,  1888.    34  Fed.  111.) 

Deady,  J.     A  motion  for  a  new -tyial  in  this  case  was  argued  and  \  .»'^^> 
submitted  with  the  one  in  the  foregoing  case. 

Th^  action  was  commenced  by  the  plaintiffs,  who  are  citizens  of 
Massachusetts,  against  the  defendant,  as  administrator  of  the  estate 
of  Hans  Weaver,  deceased,  to  recover  the  sum  of  $4,475.90  on  a  bond 
executed  to  the  plaintiffs  by  Philip  Peters,  Hans  Weaver,  Robert 
Phipps,  as  sureties,  and  W.  F.  Owens,  as  principal,  on  October  24, 
1884,  in  the  penal  sum  of  $15,000,  conditioned  that  if  Owens  shall  pay 
on  demand  the  sums  of  money  advanced  to  him  by  the  plaintiffs,  then 
the  obligation  to  be  void,  and  otherwise  to  remain  in  full  force.  _.  The 
bond  also  contains  a  stipulation  to  the  eft'ect  that  its  duration  might  be 
terminated  on  notice  to  the  obligee,  after  all  liabilities  thereunder  were 
discharged.  The  bond  purported  to  be  signed  by  the  obligors  "in  the 
presence  of  Lafayette  Owens  and  T.  C.  Stearns" ;  and  the  former, 
when  called  as  a  witness  by  the  plaintiffs,  testified  that  he  signed  the 
bond  as  a  witness  at  the  request  of  Owens,  but  the  other  parties 
thereto  were  not  present,  nor  did  he  see  them  sign  the  same.  Stearns 
was  not  called. 

Weaver  and  Owens  died,  as  stated  in  the  foregoing  case,  and  due 
demand  was  made  upon  their  administrators  for  the  balance  due  the 
plaintiff's,  with  similar  results.  The  answer  of  the  defendant  was  con- 
fined to  a  denial  of  any  knowledge  or  information  of  the  matters  in 
controversy.  On  the  trial  the  jury  found  a  verdict  for  the  plaintiffs 
for  the  sum  of  $3,975.90  on  which  they  had  judgment. 

The  motion  for  a  new  trial  is  based  on  the  same  grounds  as  the  one 
in  the  Hall  Case  (C.  C.)  34  Fed.  104,  with  the  addition  of  the  follow- 
ing: 

It  appear-5-that  some  of  the  advances  to  Owens  were  made  after 
the^eath  of  Weaver,  and  that  no  notice  was  given  by  the  adrrrin- 
istrator  to  terminate  the  undertaking  of  the  deceased.  The  court  in-"l 
structed  the  jury  that  Weaver's  estate  was  liable  in  the  hands  of  hisV  'V**^ 
admini.stratoj.  for  these  advances,  and  this  instruction  is  claimed  to  > 
be  erroneous,  and  a  new  trial  asked  therefor.  — —— . 

•  Accord:  Coulthart  v.  Clementson,  5  Q.  B.  Div.  42,  (1879). 


390  DEFENSES  OF  SURETY  AGAINST  CREDITOR.       (Part  3 

On  a  careful  examination  of  the  authorities  I  have  concluded  that 
\vhene\'er^the  undertaking  of  the  surety  is  for  a  definite  period,  as  for 
the  conduct  of  an  officer  during  his  term  of  office,  or  for  the  repayment 
of  advances  made  to  the  principal  in  the  bond  until  notice  is  given  the 
obligee  that  the  liability  is  terminated,  the  estate  of  the  surety  in  the 
hands  of  his  administrator  is  answerable  for  any  default  of  the~pffqcipal 
occurring  after  his  death :  and  this  is  especially  so  where,  as  in 
tlifs  case,  the  surety  bound  himself,  his  "heirs,  executors  and  admin- 
istrators" for  the  performance  of  his  undertaking.  Insurance  Co.  v. 
Davies,  40  Iowa,  469,  20  Am.  Rep.  581 ;  Green  v.  Young,  8  Greenl. 
(Me.)  14,  22  Am.  Dec.  218 ;  Knotts  v.  Butler,  10  Rich.  Eq.  (S.  C.)  143 ; 
Moore  v.  Wallis,  18  Ala.  458;  Hightower  v.  Moore,  46  Ala.  387; 
Mowbray  v.  State,  88  Ind.  327. 

The  motion  is  denied.^" 

1 0  Ob,. the  subject  of  statutory  Hens  to  jireserye  contlngentjclalms.  against 
the  estates  of  sureties  in  Pennsylvania,  see  Stevenson,  Trustee,  v.  Long,  23 
Pa.  Co.  Ct  R.  3!)t  (1S!)G),  construing  Act  June"8,  1S93.  §  1  (P.  L.  392). 

Act  .Tune  8,  l.S!)3:  "Section  1.  Be  it  enactecl,  etc..  that  no  debts  of  a  dece- 
dent dying  after  the  passage  of  this  act,  except  they  be  secured  by  mortgage 
or  judsnient,  shall  remain  a  lien  on  the  real  estate  of  such  decedent  longer 
than  two  years  after  the  decease  of  such  debtor,  unless  an  action  for  the  re- 
covery thereof  be  commenced  against  his  heirs,  executors  or  administrators 
within  the  period  of  two  years  after  his  decease,  and  duly  prosecuted  to  juds- 
nient,  or  a  copy  or  particular  written  statement  of  any  bond,  covenant,  debt 
or  demand,  where  the  same  is  not  payable  within  the  said  period  of  two 
years,  shall  be  filed  within  the  period  of  two  years  in  the  office  of  the  pro- 
thonotary  of  the  county  where  the  real  estate  to  be  charged  is  situate,  and 
then  to  be  a  lien  only  for  the  period  of  two  years  after  said  bond,  covenant, 
debt  or  demand  becomes  due.  And  it  shall  be  the  duty  of  the  prothonotary 
of  said  county,  when  a  statement  as  aforesaid  is  filed  in  his  office,  to  index 
the  same  in  the  Judgment  docket  as  other  liens  are  indexed." 


Ch.  3)  PERFORMANCE  IMPOSSIBLE — DEATH  OF  PRINCIPAL.  391 


CHAPTER  III 

IMPOSSIBILITY  OF  PERFORMANCE— THE  DEATH  OF  THE 

PRINCIPAL 


NELSON  V.  ANDERSON. 

(Court  of  Appeals  of  Virginia,  1800.     2  Call,  2S6.) 

Anderson  brought  actions  of  debt^in  the  District  Court,  against 
Nelson;_as  security  to  Maury,  upon  two  appeaTlSonds  dated  December 
iTTTSSTthe  conditions  of  which  after  reciting  the  judgments  aapealed 
from,  proceeded  thus :  "Now,  if^the  said  Walker  Maury  shalKeffec- 
tually  prosecute  the  said  appeat, "perform  the,  judgment  of  the  Gen- 
erd  Court,  and  pay  all  costs  and  damages  which  shall  be  awarded^y 
thV"said"General  Court,  in  case  the  judgment  aforesaid  shall  be  af- 
firmed, then  the  above  obligation  to  be  void;  otherwise,  to  remain  in 
full  force  and  virtue."  The  plaintiff  assigned  for  breaches  of  the  con- 
ditions  "that  Walker  MauryTnamed  in  the  said  condition,  did  not'el- 
fectually  prosecute  the  appeal  mentioned  in  the  said  condition  accord- 
ingl:o"llie  form  and  effect  thereof." 

The  defendant  took  oyer  of  the  bond  and  condition,  and  pleaded: 
"That  the^aid  Walker  Maury  departed  this  life  before  the  trial  of  tjie 
appeal,  for  the  efifectual  prosecution  of  which  this  defendant  is  charged 
by~\he  plaintiff's  declaration  to  have  bound  himself,  and  the  failure  in 
the  same,  on  the  part  of  the  said 'Walker  Maury,  is  assigned  as  the 
breach  of  the  condition  of  the  writing  obligatory  in  the  plaintiff's 
declaration  mentioned,  whereby  an  abatement  of  the  said  appeal  was 
adjudged  by  the  court  before  whom  the  said  appeal  was  depending  on 
the  5th  day  of  May,  1790,  at  which  time,  and  at  all  times  since,  no  re- 
vival of  the  said  appeal  has  been  adjudged  or  effected.  Wherefore  he 
says  that  he  ought  not  to  be  charged,  etc.  All  which  he  is  ready  to 
verify.  Wherefore  he  prays  judgment,  etc."  General  demurrer  there-  f  Ac.-aV 
to_b.y_±he_4)laintiff ;   and  joinder. 

The  second  bond,  the  pleadings,  demurrer  and  joinder,  are  in  all 
respects  the  same  as  the  first,  except  that  in  the  plea  the  words,  "and 
the  failure  in  the  same,  on  the  part  of  the  said  Walker  Maury,  is  as- 
signed as  the  breach  of  the  condition  of  the  writing  obligatory  in  the 
plaintiff's  declaration  mentioned,"  are  omitted. 

The  district  court  gave  judgment  for  the  plaintiff;   and  Nelson  ap^^!W\-/ 
pealed  to  this  court. ^ 

Lyons,  Judge,  delivered  the  resolution  of  the  court:  That  condi- 
tions of  this  kind,  where  the  act  was  to  be  performed  personally  by  one 

1  The  arguments  of  counsel  have  been  omitted. 


^92  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

of  the  parties,  were  for  the  benefit  of  the  obligors,  who  stood  excused 
when  the  act  of  God,  or  of  the  law,  prevented  the  performance. 
Laughter's  Case,  5  Co.  21.  That  it  rested  on  the  same  footing  as  costs, 
which  are  not  recoverable,  where  the  party  dies  and  the  suit  abates, 
unless  it  be  revived.  That  the  party  here,  who  was  to^perform^  being 
dead,  it  was  impossible  that  the  stipulated  act  could  be  done  ^b^Jhi^m, 
.wlTTch,  therefore,  excused  the  security.  But^  as  the  conditiono?~the 
/bond  also  was  that  he  should  pay  the  debt  in  case  the  judgment  ^hould 
be  affirmed,  if  an  affirmance  had  taken  place  after  the  death  of  £he 
principal,  the  securities  would  have  been  liable;  and  it  was  in  the 
power  of  the  appellee  to  have  sued  a  scire  facias,  and  obtained  a 
judgiTient  of  affirmance,  if  there  was  no  error;  whereas,  it  was  not  in 
the  power  of  the  security  to  have  done  this ;  neither  could  he  have 
compelled  the  executor  to  have  sued  a  scire  facias,  and  revived  the  ap- 
peal. That,  consequently,  as  the  appellee  might  have  done  it,  and  the 
security  could  not,  it  was  more  reasonable  that  the  appellee  should 
suffer  for  the  neglect,  than  that  the  security  should ;  especially  when  it 
was  considered  that,  if  he  had  actually  sued  a  scire  facias,  the  judgment 
might,  perhaps,  have  been  reversed.  So  that,  although  the  security 
was  not  in  danger,  if  the  cause  had  been  brought  to  a  hearing  in  the 
appellate  court,  he  might  be  rendered  liable,  in  consequence  of  the  neg- 
lect to  obtain  the  scire  facias,  which  never  could  be  right.  That  the 
court  was  therefore  of  opinion  that  the  judgment  should  be  reversed, 
and  judgment  entered  for  the  appellant,  upon  the  demurrer. 
Judgment  reversed. 


DAVIDSON  et  al.  v.  TAYLOR. 
(Supreme  Court  of  the  United  States,  1827.    12  Wheat.  G04.  6  L.  Ed.  743.) 

Marshall,  C.  J.,  delivered  the  opinion  of  the  court. 

This  is  a  case  of  bail,  and  is  to  be  decided  by  the  principles  of  Eng- 
lish law,  which  the  case  finds  constitute  also  the  law  and  practice 
of  Maryland  on  the  subject.  According  to  these  principles,  the.  allow- 
ance of  the  bail  to  surrender  the  principal,  after  the  return  of  a  ca.  sa., 
is  considered  as  a  matter  of  favor  and  indulgence,  and  not  of  right, 
and  is  regulated  by  the  acknowledged  practice  of  the  court.  To  many 
purposes,  the  bail  is  considered  as  fixed  by  the  return  of  the  ca.  sa. 
But  the  courts  allowed  the  bail  to  surrender  the  principal,  within  a 
limited  period  after  the,  return  of  the  scire  facias  against  them,  as 
matter  of  favor,  and  not  as  matter  pleadable  in  bar.  In  certain  cases, 
even  a  formal  surrender  has  not  been  required,  where  the  principal  was 
still  living,  and  capable  of  being  surrendered,  and  an  exoneretur  would 
be  entered,  and  the  principal  discharged,  immediately  upon  the  sur- 
render. But  the  rule  has  never  been  applied  to  cases  where  the  prin- 
cipal  dies  before  the  return  of  the  scire  facias.  In  such  a  case  the  bail 
is  considered  as  fixed  by  the  return  of  the  ca.  sa.  and  his  deatli"  after- 


Ch.  3)  PERFORMANCE  IMPOSSIBLE — DEATH  OF  PRINCIPAL.  39^^ 

warda,  and  before  the  return  of  the  scire  facias  does  not  entitle  the.bail 
tojnjxoneretun    TEe~p!ea  is  therefore  bad  ;  and  the  judgment  is  af- 
firmed, and  six  per  centum  damages  and  costs.^ 
Judgment  affirmed. 


LEGATE  et  al.  v.  MARR. 
(Supreme  Ck)urt  of  Indiana,  1847.     8  Blackf.  404.) 

Error  to  the  Bartholomew  Circuit  Court. 

Blackford,  J.  This, was  an  action  of  debt  founded  on  a  penal  bond,  PJ?d>,.i.w:a^ 
alleged  to  have  been  executed  to  the  plaintiffs  in  error  by  James  Marr, 
who  was  the  defendant's  intestate,  together  with  Henry  Dritt,  George 
Finer,  and  Daniel  B.  Holtshouse.  The  condition  of  the  bond  was  that 
saicL  Dritt,  who  had  appealed  from  a  judgment  of  a  justice  of  the 
peace  against  him  in  favor  of  said  plaintiffs,  should  prosecute  the  ap- 
peaFwith  effect,  and  pay  the  condemnation  money  and  costs  in  case 
judgment  should  be  rendered  against  him  in  the  circuit  court.  Two 
breaches  were  assigned :  ^  (IJi  That  Dritt  did  not  prosecute  his  appeal 
with  effect,  but  wholly  failed  to  do  so,  etc.;  (2)  that  after  the  trans- 
cript of  the  judgment  mentioned  in  the  appeat'bond  was  filed  in  the 
circuit  court,  and  before  the  suit  on  appeal  was  tried,  the  said  Dritt 
died,  and  the  suit  on  appeal  was  thereby  abated. 

The  defendant  craved  and  obtained  oyer  of  the  bond  on  which  the 
present  suit  was  founded.  The  bond  given  on  oyer  commenced  as 
follows:  "Know  all  men  by  these  presents,  that  we,  Henry  Dritt, 
Samuel  H.  Steenbarger,  George  Finer,  Daniel  B.  Holtshouse,  and 
James  Marr,  are  held,"  etc.  Plea. to  the  first  breach,  that  after  the 
execution  of  the  bond,  and  before  the  first  day  of  the  term  of  the  cir- 
cuit court,  the  appellant  died,  and  the  suit  on  appeal  became  thereby 
abated. 

Tl^gjiefendant  demurred  to  the  second  breach,  and  the  plaintiffs  de-] 
murred  to  the  plea  to  the  first  breach. 

The.  court  overruled  the  demurrer  to  the  plea,  sustained  the  de- 
murrer to  tlie  second  breach,  and  gave  judgment  for  the  defendant.       ) 

In  support  of  the  judgment,  the  defendant  contends:    (1)     *     *     *  ^ 
(2)  That  the  decease  of  the  appellant,  and  the  consequent  abatement  of 
the  suit  on  appeal,  did  not  show  a  breach  of  the  condition  of  the 
bond.^     *     *     * 

On  the  other  point  the  defendant  must  also  fail.  The  condition  of  the 
bond,  was  that  the  appeal  should  be  prosecuted  with  eft'ect ;  that^.is, 
that  it  should  be  successfully  prosecuted.     It  has  not  been  so  prose- 

2  Accord:  Hamilton  v.  Dunldee,  1  N.  H.  172  (1818) ;  Olcott  v.  Lilly,  4  Johns. 
(N.  Y.)  407  (1809). 

8  A  portion  of  the  opinion  dealing  with  the  question  of  a  ^iriance  has  been 
omitted. 


fw^^ 


39i  DEFENSES  OF  SURETY   AGAINST  CREDITOR,  (Part   3 

cuted ;   and  the  failure  so  to  prosecute  it  was  not  owing  to  any  fault 
on  the  part  of  the  obligees. 

Per  Curiam.     The  judgment  is  reversed,  with  costs.     Cause  re- 
manded, etc.* 


GARGAN  et  al.  v.  SCHOOL  DIST.  NO.  15. 
(Supreme  Court  of  Colorado,  1877.     4  Colo.  53.) 

Appeal  from  District  Court  of  Weld  County. 

The  plaintiff  in  the  court  below  obtained  a  verdict  in  the  penalty  of 
the  bond,  and  damages  were  assessed  in  the  sufti  of  $443.03.  A  motion 
for  a  new  trial  was  overruled,  and  judgment  entered  on  the  verdict, 
and  thereupon  the  defendants  prayed  an  appeal  to  this  court. 

Stone,  J.  Goddard  and  Gargan  entered  into  written  contract  with 
the  School  District,  appellee,  for  doing  certain  work  in  the  building 

■«  In  the  case  of  joint  contracts  at  coraniou  law.  the  death  of  the  principal 
would  plainly  he  no  defense  for  the  surety.  The  principal's  estate  waSTTis- 
ohnrjred  hy  tlie  doctrine  of  survivorship  of  all  liaTiillty  to  the  obligee  or^rom- 
isee.     Iliciaardson  v.  Ilorton,  6  Beav.  185  (1S49). 

>Iany  American  jurisdictions,  however,  have  modified  the  law  of  joint  con- 
tracts by  statutes  jrivinis:  a  remedy  asrainst  the  estate  of  the  decedent  loi«t 
contractor.  See  note  to  Harrison  v.  Field,  ante.  p.  .^6.5.  See  Code  N.  Y.  § 
400;  li)wman's  Adm'r  v.  Kistler.  33  Pa.  106  (1859).  See  Stimson's  American 
Statute  Law,  vol.  1,  p.  4.">3,  §  4113. 

And.  independent"  of  statutory  intervention,  some  American  courts  of  eq- 
uity hold  tlie  estate  of  the  deceased  principal  liable,  though  the  contracfTD^ 
joint    See  Wlnslow  v.  Heirs  of  Parkhurst,  and  note,  ante,  p.  ,3(58. 

Aside  from  cases  of  joint  liability  and  the  survivorship  incident  thereto,  if 
a  breach  of  the  principal's  contract  occurs  before  his  death,  and  his  estate 
would  be  lialile  (e.  g.,  simple  contract  debts  due  from  decedent  in  his  llfetira?), 
so.  also,  is  his  surety.  P.og'^s  v.  State.  40  Tex.  10  (1S7G) ;  Parker  v.  riom"Tin?k. 
ml  App.  T)iv.  440.  94  N.  Y.  Supp.  249  (190.")):  .Tohuson  v.  Bank.  12  Miss.  10.5. 
43  Am.  Dec.  480  (1S43) ;  Baker  v.  Elliot.  73  Me.  392  (1882).  See,  also,  the 
numerous  cases  on  the  point  that  the  laches  of  the  creditor  in  not  presenting, 
hrs  claim  against  the  principal's  estate  does  not  prevent  recovery  against  the 
suretv.  -  — " 

Ordinarily  the  estate  of  the  decedent  is  liable  for  the  breach  of  all  con- 
tracts occurring  in  decedent's  lifetime.  " 

IVliere  the  principal  commits  a  tort  in  his  lifetime,  the  action  for  which 
does  not  survive  against  the  principal's  estate,  the  surety  is  discharged  by  the 
principal's  death.     Melviu  v.  &-aus.  48  Mo.  App.  421  (1892). 

But  if,  by  statute,  the  action  for  the  tort  survives,  the  surety  is  not  dis- 
charged.   State  ex  rel.  v.  Soale,  3G  Ind.  App.  73.  74  N.  E.  1111  (1905). 

If  the  breach  of  the  contract  occurs  after  the  death  of  the  principal,  his 
estate  would  be  liable  on  certain  kinds  of  contracts  (e.  g..  debts  maturing  aft- 
er death),  and  the  surety's  liability  is  also  evident.  Baker  v.  Elliot,  73  Me. 
392  (1882) ;  Peabody  et  al.  v.  Ohio,  for  Use.  etc..  4  Ohio  St.  387  (18.54) ;  Flm- 
endorf  v.  Whitney.  153  Pa.  400,  25  Atl.  607  (1893);  City  of  Great  Falls  v. 
Hanks.  21  Mont.  83.  .^.2  Pac.  785  (1898).  Contra:  State,  etc.,  v.  Vanauda.  7 
Blackf.  (Ind.)  214  (1844). 

If,  however,  the  estate  of  the  principal  is  not  liable  for  a  post  mortem 
breacli  of  contract  (e.  g..  a  contract  for  personal  services  or  a  guardian's  lia- 
bility), neither  Ls  the  surety.    Garrett  v.  Reese,  99  Ga.  494,  27  S.  E.  7.50  (18.00). 

The  same  principle  discharges  the  sureties  of  a  lunatic  who  has  made  a 
contract  for  personal  services.  Grove  v.  Johnston,  24  Law  Reports  (Ireland) 
Q.  B.  Div.  352  (1889). 


Ch.  3)  PERFORMANCE   IMPOSSIBLE DEATH   OF   PRINCIPAL.  3D5 

of  a  schoolhouse,  and  to  secure  the  due  performance  of  the  contract  on 
their  part  they,  together  with  Niemeyer  and  Getz,  as  sureties,  executed 
a  bond  to  the  district  in  the  penal  sum  of  $1,000. 

This  action  is  in  debt  on  the  bond,  brought  against  Gargan  and  the 
sureties  aforesaid  (Goddard  having  died  before  performance  of  the 
contract) ;  the  breaches  assigned  being  the  failure  of  Gargan  and 
Goddard  in  the  hfetime  of  the  latter,  and  of  Gargan  afterward,  to 
perform  certain  of  the  work  specified  in  the  contract,  and  for  unskill- 
ful performance  of  portions  of  what  was  done,  whereby  damage  ac- 
crued, etc. 

The  pleas  are:  (1)  Nil  debet;  (2)  non  est  factum;  (3)  non-perform- 
ance by  plaintifif  of  conditions  as  to  payment;  (4)  non-performance 
as  to  conditions  to  be  performed  by  plaintiff  respecting  the  foundation 
of  the  building;  (5)  covenants  performed;  (6)  nul  tiel  corporation; 
and  (7)  set-off. 

From  the  view  which  we  take  of  this  case,  under  the  state  of  the 
pleadings  presented  by  the  record,  we  do  not  deem  it  necessary  to  ex- 
amine in  detail  all  the  questions  offered  for  our  consideration  by 
counsel  for  appellants  upon  the  very  numerous  assignments  of  error 
and  the  elaborate  briefs  filed  in  the  cause.  .       , 

The  plea  of  nil  debet  interposed  was,  in  this  action,  bad  on  demurrer ;  U  1)''^^  ■ 
but,  having  been  replied  to,  the  plaintiff  was  thereby  put  upon  proof  of 
every  allegation  in  his  declaration,  and  the  defendants  were  at  liberty 
to  avail  themselves  of  any  ground  of  defense  which  in  general  might 
be  taken  advantage  of  under  that  plea.    1  Chit.  PI.  483. 

This  plea  puts  in  issue  the  existence  of  the  debt  at  the  time  of  plead- 
ing and  consequently  any  matter  may  be  given  in  evidence  under  it 
which  shows  that  nothing  was  due,  at  that  time,  as  payment,  release, 
.or  other  matter  in  discharge  of  the  debt.  1  Chit.  PI.  481.  And  hence 
under  issue  made  by  this  plea  as  it  stood,  it  was  competent  for  the 
sureties  to  have  shown  the  death  of  Goddard,  one  of  the  principals  in 
th^  bond,  in  discharge  of  any  liability  thereafter.  y  «  ^      ^  j  . 

Mr.  Chitty  lays  down  the  doctrine  that,  "if  a  person  engage  as  surety    *   ^  '^'!         ,, 
for  more  persons  than  one,  the  engagement  is  understood  to  be  on   tr  .     '{* 
behalf  of  those  persons  collectively  and  jointly,  and  in  case  of  the  *^ "/ '^ -r*.^^'- 
death  of  any  of  them  it  will  not  continue  on  behalf  of  the  survivors."  1 
Chitty's  Contracts  (11th  Am.  Ed.)  767;  Fell  on  Suretyship,  520. 

The  doctrine  that,  whenever  a  surety  becomes  bound  for  the  per- 
formance of  more  than  one  person,  his  obligation  does  not  extend 
beyondLthe  death  or  retirement  of  any  of  those  for  whom  he  has  en- 
gagedto  be  answerable,  is  established  by  an  almost  unbroken  line  of 
decisions,  both  English  and  American,  reaching  back  for  three  quarters 
of  a  century.  And  this  rule  is  applied  as  well  to  the  parties  to  whom 
the  surety  is  bound,  the  obligees,  as  to  those  for  whom  he  is  bound, 
the  principal  obligors. 

The  reason  upon  which  the  doctrine  rests,  when  applied  in  a  case  like 
the  one  before  us,  is  well  expressed  by  Lord  Mansfield  in  the  case  of 


.'iOC  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

Weston  V.  Barton,  4  Taunton,  673,  wherein,  after  a  review  of  all  the 
preceding  cases,  he  says :  "It  is  very  probable  that  sureties  may  be 
induced  to  enter  into  such  a  security  by  a  confidence  which  they  re- 
pose in  the  integrity,  diligence,  caution  and  accuracy  of  one  or  two  of 
the  partners.  In  the  nature  of  things  there  cannot  be  a  partnership 
consisting  of  several  persons  in  which  there  are  not  some  possessed  of 
those  qualities  in  a  greater  degree  than  the  rest,  and  it  may  be  that  the 
partner  dying  or  going  out  may  be  the  very  one  on  whom  the  surety 
most  relied.  It  would  be,  therefore,  very  unreasonable  to  hold  the 
surety  to  his  contract  after  such  a  change." 

The  leading  cases  in  which  this  doctrine  is  enunciated  are:  Uni- 
versity of  Cambridge  v.  Baldwin,  5  j\I.  &  W.  585 ;  Simpson  v.  Cook, 
1  Bing.  452  ;  Cremer  v.  Higginson,  1  Mason,  337,  Fed.  Cas.  No.  3,383  ; 
Myers  v.  Edge,  7  Term  R.  (Durnford  &  East)  254;  Strange  v.  Lee, 
3  East,  484;  Weston  v.  Barton,  supra;  Penoyer  v.  Watson,  16  Johns. 
(N.  Y.)  100;  Smith  v.  Montgomery,  3  Tex.  203. 

The  only  exceptions  to  the  doctrine  of  these  decisions  are:  First, 
where  the  language  of  the  obligation  expressly  limits  the  liability,  or 
extends  it  to  survivors,  or  to  any  or  either  of  the  obligees  or  princi- 
pals, whether  associated  together  or  otherwise;  and,  second,  where 
the  parties  for  or  to  whom  the  sureties  are  bound  are  descriDed  as  a 
class,  company,  bank,  or  the  like,  and  not  to  the  members  or  partners 
nominatim,  so  as  to  plainly  imply  that  the  security  is  given  to  or  for 
the  class  or  body  as  such  regardless  of  changes  in  the  integral  parts. 
Barclay  v.  Lucas,  1  Term  Rep.  291.  There  is  nothing  in  the  language 
of  the  bond  to  take  this  case  out  of  the  operation  of  the  general  rule. 

As  a  general  rule  such  defense  should  be  pleaded  specially  and  on 
behalf  of  the  sureties  alone;  but,  as  we  have  shown,  under  the  plea 
of  nil  debet  as  it  stood  in  this  case,  the  defense  might  be  made  the 
ground  of  a  proper  motion. 

The  death  of  Goddard  appeared  in  the  evidence  of  the  plaintiff,  as 
well  as  upon  the  face  of  the  declaration,  and  it  was  not,  therefore, 
necessary  for  the  defendants  to  introduce  proof  of  the  fact.  Such 
being  the  case,  the  motion  of  the  defendants  for  a  new  trial  should 
have  been  granted  on  the  ground  that  the  verdict  was  against  Ihe 
evidence. 
y  A  question,  however,  is  made  as  to  whether  the  pleas  interposed 
were  on  behalf  of  the  sureties  alone,  or  on  behalf  of  all  the  defendants. 

The  record  shows  that  the  sureties,  Niemeyer  and  Getz,  only,  were 
served  with  process ;  that  as  to  the  defendant  Gargan  the  return  was 
non  est  inventus.  The  "defendants  served"  appeared  by  G.  W.  Miller, 
Esq.,  as  attorney.  The  rule  to  plead  was  on  the  "defendants  served." 
The  pleas  filed  were  on  behalf  of  "the  defendants."  These  pleas  are 
to  be  taken  as  the  pleas  of  the  defendants  served,  and  not  of  all  the  de- 
fendants named  to  the  action.  Boilvin  v.  Edwards,  4  GHman  (111.) 
119;  Chester  v.  Miller,  13  Cal.  558;  Violet  v.  Waters,  1  J.  J.  Marsh. 


/ 


Ch.  3)  PERFORMANCE   IMPOSSIBLE — DEATH   OF  PRINCIPAL.  397 

(Ky.)  303;  Hubbard  v.  Dubois,  37  Vt.  94,  86  Am.  Dec.  690;  Freeman 
on  Judgments,  §  155. 

The  record  should  distinctly  show  the  service  of  process  on  defend- 
ants, or  their  voluntary  appearance.  It  ought  not  to  be  left  to  inference 
or  conjecture.  McCall  v.  Lesher,  2  Gilman  (111.)  47;  Clemson  v.  State 
Bank,  1  Scam.  (111.)  45. 

At  a  subsequent  term  of  the  court — the  third  term  after  that  to 
which  suit  was  brought  and  the  process  returned — Gargan  makes  an 
affidavit  in  support  of  a  motion  for  continuance  on  behalf  of  "the  de- 
fendants," and  names  himself  as  "a,  witness  and  a  party."  This,  how- 
ever, in  no  wise  necessarily  connects  him  with  the  pleas  which  had  two 
terms  previously  been  filed  on  behalf  of  the  defendants  served,  nor  does 
it  prove  that  he  had  appeared  to  the  action.  He  might  well  be  a  wit- 
ness on  behalf  of  the  sureties,  and  yet  not  have  either  appeared  or 
pleaded  to  the  action.  To  say  that  he  had  done  either  is  to  indulge  in 
conjecture. 

The  question  raised  by  want  of  service  of  process,  or  upon  doubtful 
appearance,  is  a  jurisdictional  question,  affecting,  necessarily,  the  valid- 
ity of  the  judgment,  and,  therefore,  such  service  or  appearance  cannot   ' 
be  open  to  doubt  or  conjecture,  but  must  be  made  conclusively  to 
appear. 

The  pleas,  therefore,  must  be  held  to  be  the  pleas  of  the  sureties 
alone,  and  their  defense  clearly  available  under  the  plea  of  nil  debet, 
which  was  made  to  stand  as  the  general  issue.  y 

The  verdict,  being  in  part  for  damages  accruing  on  alleged  breaches 
after  the  death  of  Goddard,  was  to  that  extent  unauthorized  by  the 
evidence,  and  the  motion  for  new  trial  should  have  been  granted.     ""*      ^  ,      ^        . 

Gargan  not  having  been  served  with  process,  and  not  having  ap-  /w.    .  .i,  ^jA*^' 
peared  to  the  action,  nor  pleaded  therein,  the  judgment  was  erroneous  \Jo'' 
as  Jo  hhn  also. 

This  error  with  respect  to  the  judgment  against  Gargan  would  in 
itself  be  sufficient  to  reverse  the  judgment,  without  reference  to  errors 
relating  to  the  case  of  the  sureties. 

The  judgment  being  entire,  if  reversed  as  to  one,  must  be  re- 
versedjis  to  all.  Arnold  v.  Sandford,  14  Johns.  (N.  Y.)  424;  Richards 
v.  Walton,  12  Johns.  (N.  Y.)  434;  Boyce  v.  Watson,  3  J.  J.  Marsh. 
(Ky.)  498;  Gaylord  v.  Payne,  4  Conn.  190;  Mumford  v.  Overseers, 
etc.,  2  Rand.  (Va.)  313. 

And  this  is  the  case,  although  the  error  relates  only  to  one.  Powell 
on  Appellate  Proc.  285. 

The  judgment  of  the  district  court  will  therefore  be  reversed. 

Thatcher,  C.  T.  I  agree  that  the  court  below  erred  in  entering  a 
joint  judgment  against  Gargan,  Niemeyer  and  Getz,  as  the  record, 
properly  construed,  shows  that  only  Niemeyer  and  Getz  appeared  and 
pleaded  to  the  action,  and  for  this  error,  I  think,  the  judgment  should 


398  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

be  reversed.  In  this  view  Brother  Elbert  concurs.  As  to  the  liabiUty 
of  the  sureties  for  breaches  of  the  building  contract,  occurrmg"  subse- 
quent to  the  death  of  Goddard,  no  opinion  is  at  present  expressed. 


BANK  OF  WASHINGTON  v.  BARRINGTON  et  al. 

(Supreme  Court  of  Pennsylvania,  1S30.    2  Pen.  &  W.  27.) 

Gibson,  C.  J."  The  conclusion  at  which  a  majority  of  the  court  has 
arrived  enables  me  to  dismiss  all  the  reasons  for  a  new  trial  but  one, 
with  a  passing  remark — that  they  have  not  been  sustained.  The 
point  on  which  tlie  cause  is  to  be  decided,  and  which  was  reserved  at 
the  trial,  not  only  for  its  difficulty,  but  its  importance  both  in  prin- 
ciple and  amount,  arises  out  of  the  following  facts:  The  bank  was 
chartered  in  1813,  and  its  utmost  duration  limited  to  the  1st  of^April, 
182_5.  The  bond  on  which  suit  is  brought  was  executed  in  1844-,  with 
condition  underwritten  that  Barrington  should  "well  and  truly  jperform 
the  duties  of  cashier."  By  the  act  of  incorporation,  the  president  and 
directors  were  required  to  pay  annually  to  the  treasurer  of  the  common- 
wealth G  per  cent,  of  the  whole  amount  of  the  dividends,  on  faUure  of 
which  for  a  ^ecified  period  the  charter  was  thenceforth  to  become 
"absoIutel^TnuU  and  void  and  of  no  effect  whatever,"  and__tlje  Bank  to 
be  "dissolved,  unlawful,  and  unincorporated,"  except  inasmuch  as  cor- 
porate capacity  should  be  necessary  to  the  enforcement  of  contracts 
made  by  it,  or  with  it,  before  the  period  of  its  delinquency.  By  force 
of  this  provision,  the  charter  became  forfeited  in  the  beginning  of 
January,  1818,  and  by  an  act  passed  the  2d  of  February  ensuing  was 
"revived  and  continued  in  as  full  force  and  ample  a  manner  as^ifno 
forfeiture  had  taken  place."  The  directors  did  not  order  new  secjjrities 
to  be  given  by  the  officers,  and  nearly  all  the  defaults  of  the  cashier 

were  subsequent  to  the  act  of  restoration.  ~~ 

X  Whatever  may  have  been  the  constitutional  power  of  the  Legislature 
to  restore  the  defendant's  obligation  without  their  consent,  it  certainly 
was  not  invoked.  Provision  was  made  for  notes  or  bonds  discounted  or 
received  subsequently  to  the  forfeiture;  but  everything  else  was  left 
as  it  had  been  found,  and  the  point  is  therefore  to  be  decided  on  the 
principles  of  the  common  law. 

The  rule  that  the  liability  of  a  surety  is  commensurate  in  duration 
with  the  commission  of  his  principal  is  well  settled  in  United' States  v. 
Kirkpatrick,  9  Wheat.  7i;0,  6  L.  Ed.  1D9,  and  United  States  v.  Van- 
zandt,  11  Wheat.  184,  6  L.  Ed.  448.  The  only  apparent  exception  is  the 
case  of  a  direction  to  the  proper  officer  to  take  a  new  .security  by  a  given 
day,  which,  in  United  States  v.  XichoU,  12  Wheat.  509,  6  L.  Ed.  709, 

8  The  statement  of  facts  and  arguments  of  counsel  have  been  omitted,  and 
the  opinion  Blightly  abridged. 


Cil.  3)  PERFORMANCE  IMPOSSIBLE — DEATH  OF  PRINCIPAL.  399 

was  held  not  to  discharge  the  old  one.  But  there  the  continuance 
of  the  old  security  till  it  should  be  actually  superseded  by  the  new  one 
was  in  perfect  consistence  with  the  original  limitations  of  the  contract ; 
here  the  question  is  whether,  by  one  of  its  limitations,  the  security  had 
not  expired. 

By  the  constitution  of  this  corporation,  its  existence  was  subject  to 
be  terminated  alike  by  forfeiture  of  the  charter  and  efflux  of  time ;  and 
for  the  benefit  of  each  of  these  as  limitations  of  the  term  of  their 
liability  the  sureties  had  stipulated,  not  indeed  in  terms,  but  tacitly  and 
by  irresistible  implication  from  the  nature  of  the  contract.  They  had 
treated  on  the  basis  of  corporate  existence  as  it  then  stood,  and  in 
reference  to  all  its  incidents.  They  might  have  seen,  and  they  are 
therefore  to  be  considered  as  having  known,  that  the  bank  was  subject 
to  cease  by  the  happening  of  a  contingency,  and  that  with  it  would 
cease  their  liability.  Who  can  say  this  did  not  enter  in  their  estimate  of 
the  risk  which  they  consented  to  take  on  themselves?  They  were,  in 
effect,  insurers,  but  without  a  premium,  of  the  cashier's  ^fidelity ;  and 
they  are  entitled  to  the  benefit  of  any  termination  of  the  risk  which  may 
be  brought  within  the  letter  or  the  spirit  of  their  contract.  Their^en- 
gagement  was  without  a  consideration  beneficial  to  themselves,  and  it 
is  therefore  not  to  b&extended  beyond  its  strict  technical  import.  That 
they,  m  fact,  supposed  their  liability  to  be  commensurate  with  the 
original  charter,  does  not  admit  of  a  doubt;  for  no  one  will  pretend 
that  an  extension  of  the  charter  would  have  operated  as  a  corre- 
spondent extension  of  the  security.  Such  an  extension  might,  in  popu- 
lar language,  be  a  continuance  of  corporate  existence ;  but,  as  regards 
intervening  rights,  it  would,  in  fact  and  in  law,  be  a  new  creation. 

Assuredly  a  renewal  of  corporate  powers  extinguished  by  lapse  of 
tirng  would  not  be  a  renewal  of  the'  sureties'  bonds.  Arlington  v. 
Merricke,  2  Saund.  411.  And  why  should  the  same  principle  be  inap- 
plicable to  extinction  by  forfeiture?  It  is  the  fact  of  extinction,  and 
not  the  manner  .of  it,  which  is  material  to  the  question.  This  is  perhaps 
riol  denied;  but  the  argument  is  that  the  Legislature  might  waive  the 
forfeiture,  or  at  least  avert  it  before  the  extinction  was  complete.  Was 
it,  however,  not  complete  as  to  all  but  new  operations  ?  For  everything 
beside  the  bank  had,  in  the  words  of  the  act  of  incorporation,  be- 
come "dissolved,  unlawful,  and  unincorporated."  Nothing  was  left 
it  but  a  capacity  to  set  its  house  in  order.  But  the  extinction  of  cor- 
porate existence  may  be  complete  as  far  as  it  has  gone,  without  being 
entire ;  and  if  the  ofiice  was  gone  as  to  new  operations,  so  was  the 
liability  of  the  sureties.  So  that  to  revive  the  security  as  to  these, 
after  it  had  ceased  as  to  all  but  such  as  were  necessary  to  close  the 
business,  would  burden  the  sureties  with  responsibilities  which  had  not 
entered  into  their  stipulations,  and  bring  the  point  within  the  principle 
of  United  States  v.  Kirkpatrick,  and  the  other  cases  of  that  class. 

The  Legislature  might  doubtless  have  interfered  to  prevent  a  for- 
feiture before  one  had  actually  occurred,  like  medical  assistance  in 


400  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

the  case  of  one  whose  life  has  been  insured,  that  must  be  taken  to 
have  been  a  tacit  condition  of  the  contract.  But  it  was  as  incompetent, 
had  it  been  so  disposed,  to  divest  an  interest  which  was  fixed  by  actual 
forfeiture,  as  it  was  to  divest  an  interest  in  the  termination  of  the  risk 
by  lapse  of  time,  which  was  fixed  from  the  beginning.  As  limitations 
of  corporate  existence,  the  difference  between  expiration  and  for- 
feiture was  that  the  one  was  certain  and  the  other  contingent.  But 
when  the  latter  became  certain  by  the  happening  of  the  contingency, 
all  difference  ceased  and  the  same  rule  w-as  applicable  to  both.  The 
Legislature  might  have  waived  the  forfeiture,  had  the  performance 
of  an  act  been  necessary  to  take  advantage  of  it;  but,  unfortunately 
for  the  argument,  the  divestiture  of  the  corporate  franchise  was  con- 
summated by  the  bare  omission. 
V  So  far  the  case  seems  clear  on  principle.  But  this  construction  of  the 
contract  is  fortified  by  close  analogies  from  undoubted  authorities. 
In  Wright  v.  Russel,  2  Black.  Rep.  934,  security  for  the  faithful 
service  of  a  clerk  to  a  sole  trader  was  not  extended  to  a  subsequent 
partnership.  I  am  aware  that  the  principle  of  this  case  has  been  ques- 
tioned, and  perhaps  with  reason,  although  the  ground  of  variance  be- 
tween the  condition  and  breach  as  set  out,  on  which  it  was  ultimately 
rested,  is  admitted  to  be  a  tenable  one.  In  Barclay  v.  Lucas,  1  T.  R. 
291,  in  note,  a  bond  for  the  fidelity  of  a  son  whom  the  plaintiffs  had 
taken  into  service  in  their  counting-house  and  shop  was  held  not  to  be 
discharged  by  the  introduction  of  a  new  partner.  But  Lord  Mansfield 
put  the  case  on  a  presumption  of  intention  deducible  from  the  subject- 
matter  of  the  contract — fidelity  to  a  house,  which  might  continue  for 
generations,  by  a  succession  of  partners  under  the  same  firm,  though 
none  of  them  should  bear  the  name  of  any  of  the  original  proprietors; 
and  also  on  public  convenience,  which  required  the  security  to  be 
considered,  as  what  it  probably  was  intended  to  be,  security  to  the 
house.  Mr.  Justice  Willis  considered  it  natural,  that  the  service  was  to 
be  performed  in  the  counting-house,  and  not  to  the  plaintiff  in  par- 
ticular, and  he  thought  the  inconvenience  there  would  be  in  renewing 
the  security  with  every  change  of  the  firm  must  have  been  in  the  view 
of  the  parties,  and  was  therefore  proper  to  be  considered  in  expound- 
ing their  intention ;  and  Mr.  Justice  Buller  put  the  case  on  the  same 
ground.  But  in  Barker  v.  Barker,  1  T.  R.  2S7,  such  a  bond  was  deemed 
to  be  no  security  for  the  fidelity  of  a  clerk  retained  in  the  employment 
of  the  obligee's  executor,  who  had  continued  the  business  pursuant  to 
directions  in  the  will,  and  this  because  the  contract  was  in  its  nature 
exclusively  applicable  to  services  which  were  not  to  be  performed  to  the 
obligee,  and  not  to  his  successor,  in  perhaps  an  altered  state  of  the 
business  produced  by  his  death. 

Is  not  that,  in  principle,  the  case  at  bar,  in  which  there  has  been 
a  similar  alteration  by  the  civil  death  of  the  bank?  Had  this  corpo- 
ration, or  any  of  the  numerous  family  of  which  it  was  a  member, 
acquired  by  repeated  indulgence  an  ideal  right  to  a  remission  of  the 


Ch.  3)  PERFORMANCE  IMPOSSIBLE DEATH   OF   PRINCIPAL.  401 

forfeiture,  that,  like  the  ideal  right  to  a  renewal  of  a  church  or  cor- 
poration lease  which  has  sometimes  entered  into  the  consideration  of  a 
court  of  equity,  might  on  the  principle  of  Barclay  v.  Lucas  be  fairly 
presumed  to  have  tacitly  entered  into  the  stipulations  of  the  parties. 
But  there  had  been  no  instance  of  forfeiture  and  remission  previous  to 
the  execution  of  the  bond,  nor  has  there  been  but  one,  beside  the 
present,  since.  The  demise  and  resuscitation  of  a  bank,  under  cir- 
cumstances like  the  present,  are  of  no  ordinary  occurrence;  nor  do 
they  in  the  least  resemble  the  coming  in  or  going  out  of  a  partner, 
which  produces  no  change  in  the  identity  or  individuality  of  the  ob- 
ligee, and  which,  from  its  frequency,  must  necessarily  be  in  the  con- 
templation of  those  who  treat  in  relation  to  the  firm.  The  civil,  like 
the  natural,  death  of  the  obligee  dissolves  the  obligation,  although  the 
business  be  continued  on  the  old  footing  and  under  the  same  authority. 
The  obligation  perishes  with  the  obligee ;  and,  being  once  discharged 
or  suspended,  it  is  gone  forever.  Even  a  voluntary  suspension  of  the 
remedy  is  attended  with  the  same  consequences.  20  Edw.  IV,  17 ;  21 
Edw.  IV,  36;  Dyer,  140.  Hob.  10;  Cro.  Eliz.  150;  Cro.  Car.  375; 
Sir  W.  Jones,  345.  But  the  case  of  Dance  v.  Girdler,  1  N.  R.  34, 
is  nearer  to  the  present  than  any  of  the  preceding.  There  a  bond  to 
the  trustees  of  an  unincorporated  association  for  the  fidelity  of  one 
of  its  officers  was  determined  to  be  no  security  for  his  fidelity  after  the 
association  had  become  incorporated,  because  its  provisions  were  in- 
applicable to  a  state  of  corporate  existence,  which  it  was  thought 
could  not  have  been  in  the  contemplation  of  the  parties.  Lastly,  in 
Strange  v.  Lee,  3  East,  484,  it  was  held  that  the  death  of  even  one 
of  two  or  more  obligees,  determined  the  security.     *     *     * 

Huston,  J.,  dissented.     Ross,  J., -took  no  part,  not  having  heard 
the  argument. 

Judgment  reversed,  and  a  new  trial  granted. 
Hen.  Sue.— 26 


•i02  DEFENSES  OF  SLUETl-   AGAINST  CREDITOR.  (Part   3 

CHAPTER  IV 
PAYMENT  OR  PERFORMANCE  BY  PRINCIPAL 


BANCROFTE  v.  WILLET. 

(King's  Bench,  Easter  Term,  1624.     1  Rolle,  336,  pi.  3.) 

If  B  be  arrested  at  the  suit  of  A  and  it  is  returned  into  the  Bench, 
where  B,  and  C  as  his  bail,  become  bound  in  a  recognizance,  to  wit 
B  in  £200.,  being  the  principal  and  C,  the  bail,  in  £100.  that  B  shall 
appear  at  an  action  to  be  brought,  etc.,  according  to  the  usual  form,  and 
then  judgment  is  given  against  B  in  the  action;  and  afterwards  a 
scire  facias  is  brought  against  B,  and  C  for  their  several  recognizances, 
who  plead  the  release  of  A  to  B,  the  principal  of  all  debts,  duties,  judg- 
ments, executions  and  demands :  It  is  a  good  plea  as  well  for  B  the 
principal  as  for  C  the  bail,  because  it  discharges  the  debt,  and  judgrnent, 
and  the  bail  can  well  plead  a  satisfaction  of  the  judgment,  and  the  re- 
lease is  a  satisfaction.    Adjiid.ged  on  a  demurrer.^ 


MERRIMACK  BANK  v.  PARKER  et  al. 
(Supreme  Court  of  Massachusetts,  1828.     7  Pick.  88.) 

This  was  an  action  on  a  promissory  note,  dated  August  2,  1823, 
by  which  Parker,  as  principal,  and  the  other  defendants,  as  sureties, 
jointly  and  severally  promised  to  pay  the  Merrimack  Bank,  or  order, 
$600  in  60  days  and  grace.    The  writ  is  dated  June  28,  1826. 

Parker  was  defaulted.  The  other  defendants  pleaded  the  general 
issue. 

At  the  trial  before  Wilde,  J.,  the  counsel  for  the  plaintiffs  stated 
that  the  action  was  commenced  and  prosecuted  for  the  benefit  of 
Francis  Kidder,  of  Andover. 

The_defense  set  up  was  that  the  note  had  been  fully  paid  to  the  Lank. 
From  the  deposition  of  the  cashier  of  the  bank  (taken  December  6, 
1826)  it  appeared  that  more  than  half  of  the  principal  of  the  note,  with 
interest,  had  been  paid  at  the  bank  prior  to  June  2,  1825,  on  which  day 
the  balance  due  on  the  note  was  paid,  and  according  to  the  witness' 
recollection,  not  by  the  principal  promisor,  but  by  some  other  person, 
whom  he  did  not  recollect,  and  that  the  note  was  then  taken  away; 
that  in  the  summer  of  1826,  the  note  was  brought  to  the  witness,  he 

1  Accord:  Year  Book.  33  Edw.  I  (Rolls  Ed.)  86. 

Pefforniance  of  a  parol  contract  by  the  principal  Is  a  defense  for  the  sure- 
^    Lewis  V.  Hoare,  44  Law  Times  Reports  (N.  S.)  66  (ISSl). 


Ch.  4)  PAYMENT  OR   PERFORMANCE  BY   PRINCIPAL.  403 

was  not  certain  by  whom,  but  thought  it  was  one  Kidder  of  Andover, 
who  requested  him  to  indorse  it  without  recourse  to  the  bank,  which 
the  witness  did,  without  consulting  the  directors  and  without  their 
knowledge;  and  that  the  bank,  to  his  knowledge,  had  never  been 
authorized  by  any  one  to  bring  a  suit  on  the  note  in  the  name  of  the 
corporation,  unless  his  indorsing  the  note  had  that  effect. 

The  counsel  for  the  plaintiffs  then  gave  in  evidence  a  writing,  signed 
by  the  directors  of  the  bank,  dated  December  1,  1827,  authorizing 
Francis  Kidder  to  prosecute  this  suit  for  his  own  use  and  benefit.  On 
this  evidence  it  was  contended  that  the  plaintiffs  were  entitled  to  a 
verdict  for  the  benefit  of  Kidder  as  a  bona  fide  holder  of  the  note. 

But  the  judge,  thinking  the  action  not  maintainable  on  the  evidence,, 
ordered  q^jinji-siut^vith  leave,  etc.^ 

Parker,  C7j\  The  only  Tegal  inference  which  can  be  drawn  from 
the  facts  reported  in  this  case  is  that  the  note  on  which  the  action  is 
brought  was  paid  at  the  bank  by  the  principal  promisor,  whose  duty 
it_was  to  pay  it;  so  that  it  became  functus  officio,  and  incapable"  of 
transfer  or  being  in  any  way  the  ground  of  action.  It  is  possible  it 
was  paid  by  Kidder,  for  whose  use  this  action  was  brought,  but  there 
is  no  evidence  that  it  was  so ;  and,  if  so  in  fact,  the  presumption,  with- 
out any  evidence  to  the  contrary,  is  that  he  paid  it  as  the  agent  of  the 
principal  promisor.  How  otherwise  should  he  have  contented  him- 
self with  merel}^  taking  possession  of  the  note  and  keeping  it  a  year, 
without  any  notice  or  call  upon  the  promisors  standing  as  sureties,  or 
without  any  attempt  to  furnish  himself  with  any  evidence  of  transfer 
from  the  bank  ? 

The  cases  cited  in  support  of  the  action  are  altogether  of  a  different 
character.  They  show  an  actual  or  equitable  assignment  from  the 
payee  to  the  holders,  or  a  payment  by  some  party  to  the  note  who  stood 
prior  in  contract  to  the  party  on  whom  he  calls.  The  law  aids  such 
transfers  or  assignments,  but  will  not  assist  one  who  has  paid  the 
debt  of  another,  and  taken  up  the  security,  in  his  claim  upon  other 
parties  to  the  note,  after  the  failure  of  him  on  whose  credit  it  was 
paid.  Such  is  the  appearance  of  this  transaction.  If_JCidder  paid  the 
balance  of  the  note  with  his  own  money,  it  was  undoubtedly  at  the 
request  of  Parker  and  for  his  benefit,  and  probably  for  the  very  pur- 
pose- of  discharging  his  sureties.  The  plaintiff  lay  by  a  year,  when, 
Parkerjiaying  failed,  he  attempts  to  revive  the  note  under  color  of 
authority  from  the  bank. 
^  Motion  To  take  off  non-suit  overruled.' 

2  The  arguments  of  counsel  are  omitted. 

3  Accord:  Lozier  v.  Graves.  91  Iowa.  482,  59  N.  W.  28.5  (1894). 

In  Hiller  v.  Howell,  74  Ga.  177  (1884),  the  court  said:  "We  have  been  un- 
able to  find  any  authority  that  would  release  a  surety,  because  an  incomplete 
tenrtFT,  matTe  by  Ms  principal,  had  been  rejected  by  the  creditor.  The  cases, 
as_we  take  it,  are  the  other  way,  and  this  for  very  obvious  reasons.  The 
STu-ety  eugajred  that  his  principal  sJiould  perform  all  the  terms  and  discharge 
all  the  obligations  of  his  contract,  not  a  part  of  them  only ;    that  he  should 


40i  DEFENSES  OF  SUKETY  AGAINST  CREDITOR.  (Part   3 

JOHNSON  V.  MILLS  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1852.    10  Cusli.  503.) 

r  Metcalf,  J.*  A  ne\vjrial  must  be  ordered,  in  consequence  of  the 
')j^  J  instructions  that  were  given  to  the  jury.  They  should  have  beeiT  in- 
/structed,  we  think,  ias  follows:  If  Mills  carried  the  money  to  the 
plaintiff,  and  would  have  paid  it  to  him,  on  his  requiring  payment,  but 
the  plaintitf  thereupon  made  an  agreement  with  him,  without  consent 
or  knowledge  of  his  sureties,  that  he  might  keep  back  the  money  for 
a  time,  and  pay  his  own  debts  with  it,  and  if  he  did  so,  then  the  silf5- 
ties  had  a  good  defense.  And  we  are  of  opinion  that  the  jury  would 
have  been  warranted  in  finding  all  these  facts  on  Mills'  testimony. 
At  least,  it  was  for  them  to  decide  what  inferences  of  fact  might  or 
might  not  be  properly  deduced  from  that  testimony. 

The  argument  for  the  plaintiff  is  that  he  did  not  give  time  to  Mills 
by  an  obligatory  agreement  which  deprived  him  of  the  power  of  im- 
mediately suing  on  the  bond  (Orme  v.  Young,  Holt,  N.  P.  84);  nor 
by  an  agreement  for  the  breach  of  which  Mills  would  have  had  a  rem- 
edy either  in  law  or  equity  (Greely  v.  Dow,  2  Mete.  176) ;  and  there- 
fore the  sureties  are  not  discharged  (Pitman  on  Prin.  &  Surety,  167 
et  seq.).  But  we  think  this  doctrine  is  not  applicable  to  the  present 
case.  No  time  for  the  payment  of  the  collected  taxes  was  mentioned 
in  the  condition  of  the  bond ;  so  that  the  agreement  of  the  plaintiff 
with  Mills  was  not,  in  strictness,  an  agreement  to  extend  the  time  of 
payment.  Tt  \v.ns,  in  effect,  a  lending  of  money  to  Mills,  to  be  used 
for  his  own  purposes,  for  the  payment  of  which  the  sureties  on  the 
bond  did  not  undertake.  Whether  such  an  agreement  between,  the 
treasurer  and  collector  would  have  exonerated  the  sureties  if  the  bond 
had  been  given  to  the  town,  as  it  ought  to  have  been,  instead  of  the 
treasurer,  it  is  not  necessary  to  inquire.  "^" 

New  trial  in  this  court." 

make  a  complete  tender,  and  not  a  mere  semblance  of  one.  If  he  failed  in  his 
duty  in  this  respect,  no  title  to  the  articles  passed  to  the  creditor.  It  re- 
mained in  the  principal  debtor,  and  the  articles  were  at  his  risk.  The  credit- 
or, in  refusing,  has  not  increased  the  risk  or  liability  of  the  surety.  He  has 
only  availed  himself  of  rights  under  the  law  in  reference  to  which  the  con- 
tract was  made,  and  the  surety  cannot  impute  to  him  his  own  want  ot  vigil- 
ance in  looking  after  the  performance  of  the  contract  on  the  part  of  his  prin- 
cipal. As  to  the  insufficiency  of  an  uncertain  or  partial  tender,  see  Fridge  v. 
State.  Use  of  Kirk,  3  Gill  &  J.  (Md.)  103.  20  Am.  Dec.  463.  What  was  said 
obiter  by  Bleckley,  J.,  in  Bonner  v.  Nelson,  57  Ga.  437,  is  not  in  conflict  with, 
but  in  accordance  with,  the  views  here  expressed." 

■«  The  statement  of  facts  Is  omitted. 

8  Accord:  Spurgeon  v.  Smitha,  114  Ind.  453.  17  N.  E.  105  (1888),  repudi- 
ating expressly  the  contrary  doctrine  of  Clark  v.  Sickler,  64  N.  Y.  231,  21 
Am.  Rep.  GOG  (187G)  :  Josljm  v.  Eastman,  4G  Vt.  258  (1873).  See  Brandt's  ad- 
verse criticism  of  Clark  v.  Sickler,  in  Brandt  on  Suretyship,  p.  714,  note  19; 


Ch.  4)  PAYMENT  OR  PERFORMANCE   BY   PRINCIPAL.  405 

RUBLE  V.  NORMAN. 
(Court  of  Appeals  of  Kentucky,  1871.     7  Bush,  582.) 

Judge  Peters  delivered  the  opinion  of  the  court. 

Appellant  in  his  answer,  to  which  a  demurrer  was  sustained,  al-'  jaa^v 
legestEatT^TT^Morton  was  the  principal  obligor  in  the  note  sued 
on,  and  that  he  was  surety,  which  fact  appellee  knew  when  the  note 
w5s~e'xecuted ;  that  about  the  12th  of  August,  1868,  appellee  made  a 
written  contract  with  said  Morton,  whereby  he  purchased  sixty  well- 
fatted  hogs  from  Morton,  which  he  then  owned,  to  be  received  between 
the  8th  and  10th  of  December,  1868,  for  which  appellee  was  to  pay 
the  market  price,  and  the  note  sued  upon,  on  the  delivery  of  the  hogs, 
was  to  be  delivered  up  by  appellee  as  paid,  and  received  by  Morton  as 
paTfpay.for  the  hogs;  that  he  (appellant)  was  instrumental  in  pro- 
curing  sald'sale  to  be  made,  in  order  to  secure  the  payment  of  said  note 
and  to  relieve  himself  from  his  responsibility  therefor ;  that  appellee 
and  Morton  subsequently  changed  the  place  of  the  delivery  of  said 
hogs  to  Louisville,  and  the  time  to  the  2.5th  of  December,  1868,  with- 
out appellant's  knowledge,  but  that  at  the  time  and  place  last  agreed 
upon  Morton  did  deliver  said  hogs  to  appellee,  and  after  having,  re- 
ceived them  he  permitted  Morton  to  sell  them  and  to  retain  the  price, 
which  was  $1,200,  except  $425,  which  Morton  paid  over  to  appellee, 
aiT3  said  $  125  was  credited  on  said  note ;  that  said  hogs  were  of  value 
greatly  more  than  sufficient  to  pay  said  note,  and  that  appellee  per- 
mitted Morton  to  withhold  the  money  received  for  them,  or  so  much 
thereof  as  was  necessary  to  discharge  said  note,  without  his  knowledge 
or  consent;  and  therefore  insists  he  is  released  from  any  obligation  to 
pay  said  note,  Morton  being  insolvent. 

Whether  t^he  demurrer  was  properly  sustained  tothe  answer  is  the 
onlvguestion  presented  by  this  appeal.  ' 

Weare  not  aware  that  this  question  has  heretofore  been  adjudicated 
by  this  court.  In  Miller  v.  Stewart,  9  Wheat.  680,  6  L.  Ed.  189,  the 
Supreme  Court  of  the  United  States  held  that  the  surety  is  discharged, 
not  only  by  payment  of  the  debt,  or  the  release  of  the  principal,  but 
by  any  material  change  in  the  relations  between  the  principal  and  the 
party  to  whom  he  owes  the  debt,  and  that  the  surety  cannot  be  held 
bound  in  such  case  by  showing  that  the  change  was  not  injurious  to 
him ;    for  he  had  a  right  to  judge  for  himself  of  the  circumstances. 

Curiae  v.  Packard,  29  Cal.  194  (ISe.'i) ;  Appleton  v,  Donaldson,  3  Pa.  381 
(1846)  ;    Mitchell  v.  Roberts  (G.  C.)  17  Fed.  776  (1,883). 

But  nil  iilTer  not  a  legal  tender  works  no  discharge.  Bonner  v.  Nelson,  57 
Ga.  433  ilSTO)  :    Liebbrandt  v.  Myron  Lodge.  Gl  III.  81  (1871). 

LjJifissLise.  a  tender  made  by  the  surety,  if  not  accepted,  discharges  him. 
O'Conor  v.  .Slorse.  112  "Cal.  31,  44  Pac.  305,  53  Am.  St.  Rep.  1.55  (1896) ;  Hayes 
V.  .Tosephi,  20  Cal.  .535  (1864). 

On  dutj  of  creditor,  receiving  money  from  principal,  to  apply  to  indebt- 
edness~in  relief  of  surety,  rather  than  to  other  indebtedness,  see  note,  18 
H.~XirR.  399. 


i06  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

under  which  he  was  willing  to  be  liable,  and  to  stand  upon  the  very 
terms  of  his  contract.  In  2  Parsons  on  Contracts,  IS,  it  is  said:  "Any- 
thing that  operates  as  a  novation  discharges  the  surety;  so  if  a  new 
note  be  given  in  discharge  of  a  former  one."  A  fortiori,  it  would  seem 
that  if  property  of  value  more  than  sufficient  to  pay  the  debt  be  deliv- 
ered to  the  creditor  in  discharge  thereof,  and  he  afterward  permitted 
the  principal  debtor  to  sell  the  propert}'  and  retain  the  price,  the 
surety  will  be  discharged  ;  for  he  thereby  contracts  a  new  debt  withjiis 
principal  debtor,  to  which  the  surety  is  no  party,  and  he  cannot  hold 
him  bound  for  the  former  debt,  because  it  has  been  satisfied. 

Taking,  therefore,  the  allegations  of  the  answers  to  be  true,  as  must 
be  done  in  adjudicating  on  the  demurrer  to  it,  they  constitute  a  good 
defense  to  the  action. 

Wherefore  the  judgment  is  reversed,  and  the  cause  is  remanded, 
with  directions  to  overrule  the  demurrer  to  the  answer  and  for  fur- 
ther proceedings  consistent  with  this  opinion.' 


DIRECTOR  OF  PUBLIC  WORKS  v.  LEWIS  et  al. 

(High  Court  of  Orange  River  Colony,  1908.     Orange  River  High  Court  Re- 
ports, 1908,  p.  14.) 

The  plaintiff  sued  the  defendants  as  sureties  and  co-principal  debtors 
on  three  promissory  notes.  The  two  latter  defendants  appeared  in 
person  and  urged  that  two  of  the  notes  were  not  yet  due,  and  that  the 
third  should  have  been  sued  upon  in  the  magistrate's  court,  as  the 
amount  was  within  his  jurisdiction. 

The  principal  debtor  on  all  three  notes  was  insolvent. 

IMaasdorp,  C.  J.  On  the  point  raised  by  the  plaintiff  the  court  is  of 
opinion  that  the  contention  cannot  be  upheld.  Sureties  for  a  debt 
payable  upon  a  fixed  date  only  become  liable  if  upon  that  date  the 
debt  remains  unpaid.  They  only  bind  themselves  to  make  payment  on 
that  date.  In  the  decisions  quoted  by  counsel  the  debt  was  made  sub- 
ject to  a  certain  period  of  notice.  All  that  was  decided  in  those  cases 
was  that,  if  the  principal  became  insolvent,  he  was  not  entitled  to  the 
stipulated  notice,  because  the  time  originally  allowed  him  was  based  on 
his  credit,  which  had  disappeared  through  his  insolvency.     His  credit 

«  If  the  creditor  has  received  a  worthless  check  of  the  principal,  andjQOti- 
fies  the  surety  of  its  non-payment,  the  latter  is  not  discharged.  Hogan  v. 
Kaiser,  113  Mo.  App.  711,  88  S.  W.  1128  (1905). 

Payment  by  forging  paper  in  the  surety's  name  is  no  discharge  of  the 
surety.     See  note,  14  II.  L.  R.  548. 

If  the  creditor  is  afterwards  compelled  to  restore  to  the  assignee  in_Miik- 
ruptcy  a"^pl[yment  made  by  the  debtor  and  afterwards  avoided  by  bankrujitcy, 
the  surety  is  not  discharged.  Swarts  v.  Fourth,  etc..  Bank,  117  Fed.  1,  54  O. 
C.  A.  .387  (1902).  Unless  the  creditor  has  reasonable  ground  to  believe  that 
the  principal  was  insolvent  and  that  the  payment  was  made  in  fraud  Of  tSe 
bankrupt  act    Northern  Bank  v.  Cooke,  13  Bush,  340  (1877). 


Ch.  4)  PAYMENT-  OR  PERFORMANCE  BY  PRINCIPAL.  407 

was  supposed  to  be  good  for  the  period  of  notice  allowed  by  the  agree- 
ment. When  he  became  insolvent,  his  credit  was  gone.  In  this  case 
the  sureties  are  only  liable  from  a  particular  day.  It  is  not  a  question 
of  notice,  nor  of  the  solvency  of  the  principal  debtor.  The  defendants 
are  "right  in  their  contention  that  as  to  two  of  the  notes  the  period 
has  not  arrived  and  they  are  not  liable.  Provisional  sentence  is  granted 
on  the  third  note  with  magistrate's  court  costs. 
Fawkes,  J.,  concurred. 


408  DEFENSES  OF  SURETY  AGAINST  CREDITOB.  (Part   3 

CHAPTER  V 
RELEASE  OF  PRINCIPAL 


Ex  parte  GLENDINNING. 

In  re  RENTON. 

(Court  of  Chancery,  at  Ldncoln's  Inn,  1819.     Buck,  Bankr.  Cas.  517.) 

This  was  an  appeal  from  the  decision  of  the  late  Vice  Chancellor, 
who  had  ordered  the  petitioner's  proof  for  £350.  to  be  expunged.  The 
petitioner  was  the  indorsee  and  holder  of  a  bill  of  exchange  iov  ISoO., 
dated  Febuary  27,  1815,  and  accepted  by  the  bankrupt  for  tHe  accom- 
modation of  the  drawer.  The  petitioner,  in  his  examination  before 
the  commissioners,  deposed  that  some  time  previous  to  his  receiving 
the  said  bill  for  £350.  from  one  Rowe,  the  drawer,  Rowe  informed  the 
petitioner  that  the  bankrupt  had  promised  to  lend  him  £350.  for  three 
years,  but  was  not  then  able  conveniently  to  do  so,  but  had  ojft'ered  to 
lend  him  his  acceptance  for  £350.  at  six  months,  and  asked  the  peti- 
tioner whether  he  would  give  the  bankrupt  as  much  cash  as  he  might 
want  out  of  it,  and  put  the  rest  to  his  account.  To  which  the  peti- 
tioner agreed,  whereupon  an  arrangement  took  place  between  the  pe- 
titioner and  the  drawer,  and  the  drawer  indorsed  the  bill  to  the  peti- 
tioner. The  petitioner  further  deposed  that,  when  the  bill  became 
due,  it  was  dishonored ;  that  on  the  18th  of  November,  1815,  he  proved 
it  under  the  bankrupt's  commission,  and  that  previously  to  his  proof 
he  had  arrested  Rowe,  as  the  drawer  and  indorser  of  the  bill ;  that 
he  had  been  informed  by  his  attorney,  and  believed,  that  a  cognovit 
was  taken  in  the  action  from  Rowe ;  and  that  afterwards  the  petitioner 
had  been  applied  to  by  Rowe  to  come  in  as  a  creditor  under  ah  assigji- 
ment  of  his  effects,  and  which  the  petitioner  had  accordingly  executed 
in  the  month  of  October  then  last.  The  petitioner  admitted  that  he 
had  not  previously  obtained  the  consent  of  the  bankrupt  or  of  the  as- 
signees for  that  purpose. 

It  ajso  appeared  that  the  petitioner  had  given  the  indulgence  tqj^e 
drawer  upon  an  understanding  that  he  reserved  the  full  benefit  oi  his 
proof  against  the  bankrupt's  estate,  but  such  benefit  was  not  reserved 
by  the  trust  deed.^ 

The  Lord  Chancellor.  I  perfectly  remember  when  it  was  for  the 
first  time  laid  down  in  the  courts  of  law  that,  where  there  was  an  ac- 
ceptor without  effects,  notice  of  the  dishonor  of  the  bill  need  not  be 
given  to  the  drawer.  This  rule  being  once  established,  there  naturally 
sprung  out  of  it  a  new  doctrine  as  to  the  respective  liabilities  of  the 

1  The  arguments  of  counsel  are  omitted. 


Ch.  5)  RELEASE   OF  PRINCIPAL.  409 

drawer  and  acceptor  in  cases  where  the  indorsee  had  notice  that  the  ac- 
ceptance was  given  merely  for  the  purpose  of  accommodating  the  draw- 
er. And  the  cases  go  the  full  length  of  determining  that,  as  between 
the  drawerTnd  acceptor  and  indorsee  with  notice,  the  drawer  should 
be  considered  as  the  principal;  and  if  the  indorsee  give  time  to  the 
drawer,  that  shall  discharge  "the  acceptor.  These  cases  were  shaken  by 
the~autTiority  of  Sir  James  Mansfield,  which  in  this  and  in  every  other 
court  is  entitled  to  be  received  with  the  greatest  respect.  But  I  ob- 
serve in  the  printed  report  of  the  case  that  not  one  of  the  numerous 
decisions  of  this  court  were  called  to  that  judge's  attention.  Now  the 
practice  is  quite  familiar  in  this  court,  where  the  indorsee,  with  notice 
of  the  accommodation  transaction,  has  recovered  upon  the  acceptance,  to 
allow  the  acceptor  to  prove  for  the  amount  under  the  drawer's  com- 
mission. I  think  this  equity  naturally  grew  out  of  the  doctrine  of  not 
requiring  notice  to  be  given  when  the  acceptor  had  no  effects.  Al- 
though no  man  more  than  myself  laments  the  introduction  of  that  doc- 
trine, yet  I  cannot  overturn  what  has  been  for  so  many  years  ac- 
knowledged and  acted  upon  as  part  of  the  general  mercantile  law  of 
the  country.  If  a  man  by  deed  agree  to  give  his  principal  debtor  time, 
and  in  the  deed  expressly  stipulate  for  the  reservation  of  all  his  rem- 
edies against  other  persons,  they  shall  still  remain  liable,  notwith- 
standing the  arrangement  between  their  principal  and  the  creditor ;  but 
iFi;lie  creditor  do  not  reserve  his  remedies,  the  deed  will  operate  as  a 
discharge  to  the  sureties,  which  rule  I  conceive  is  founded  upon  this 
maxim,  that  it  is  against  conscience  and  equity  that  you  should  put  per- 
sons in  a  situation  in  which  they  have  not  contracted  to  be  placed. 
It  may  be  said  the  surety  is  not  injured  by  the  creditor's  arrangement 
with  the  debtor,  and  in  many  cases  the,  compromise  may  happen  to  be 
extremely  advantageous  to  him.  But  this  is  no  answer  to  a  surety  who 
stands  upon  his  contract.  Besides,  it  is  evident  creditors  would  not 
pursue  their  actions  with  the  same  pressure  and  activity,  if  they  were 
not  urged  on  by  the  consideration  that  any  laches  on  their  part  would 
discharge  the  sureties.  Ever  since  Mr.  Richard  Burke's  Case,  the 
law  has  been  clearly  settled,  and  it  is  now  perfectly  understood,  that 
unless  the  creditor  reserve  his  remedies  he  discharges  the  surety  by 
compounding  with  the  principal,  and  the  reservation  must  be  upon  the 
facel5f  the  instrument  by  which  the  parties  make  the  compromise;  for 
evidence  cannot  be  admitted  to  explain  or  vary  the  effect  of  the  insffu- 
rnenT.~l  therefore  feel  myself  bound  to  declare,  in  conformity  to. the 
decisions  of  my  predecessors,  that  the  trust  deed  operated  as  a  dis- 
charge to  the  acceptor. 

Petition  of  appeal  dismissed,  with  costs.* 

2  The  creditor  may  release  the  principal  debtor  by  specialty,  by  accord  and 
satisfaction,  or  by  novation.  Commercial  Bank,  etc.,  v.  Jones,  [1893]  A.  C. 
3137"      ' 

Where  the  creditor  discharges  the  debtor  from  liability,  he  discharges  the 
surety  alsq^^Jmless  in  the  discharge  the  creditor  reserves  the  right  to  hold  the 


410  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

JONES  V.  WARD-. 
(Supreme  Court  of  Wisconsin,  1SS8.     71  Wis.  152,  36  N.  W.  711.) 

Lyon,  J."  Briefly  stated,  the  case,  so  far  as  there  is  any  controversy, 
is  as  follows:  The  defendant  became  surety  for  Cook's  debt  to  the 
plaintiff,  and  Cook  indemnified  him  by  executing  to  him  a  chattel 
mortgage  on  certain  property.  The  plaintiff'  released  Cook  from  lia- 
bility for  such  debt,  without  the  consent  of  the  defendant.  Afterwards 
defendant  sold  his  security  to  McArthur,  without  the  consent  of  the 
plaintiff,  for  the  consideration  (as  the  circuit  court  found)  of  $4:7o:^ 

The  only  question  in  the  case  is:  Did  the  release  of  Cook  also  re- 
lease the  defendant,  his  surety?  The  general  rule  undoubtedly  is  that 
the  release  of  the  principal  debtor,  without  the  consent  of  the  surety, 
releases  the  surety.  But  if  the  surety  is  fully  indemnified  against  Joss 
by  reason  of  having  become  such,  a  release  of  the  principal  without 
payment  of  the  debt  does  not  release  the  surety.     This  is  the  rule 

surety,  or  unless  the  surety  consents  to  the  principal's  discharge.  California 
Bank  V.  Ginty,  lOS  Cal.  148,  41  Pac.  38  (1895) ;  NevilTs  Case.  L.  R.  6  Ch.  App. 
Cas.  43  (ISTO).  In  Nevill's  Case,  the  reason  for  the  rule  in  the  case  of  several 
contracts  is  thus  stated:  Sir  G.  Mellish,  L.  J.,  said:  "It  is  clear  that,  even 
where  the  principal  debtor  is  released  by  a  formal  instrument  under  sealjMf_^ 
the  remedy  aijalnst  the  surety  is  reser\'ed  the  surety  can  be  sued.  The.  rea- 
son why  a  simple  release  of  the  principal  debtor  discharges  the  surety  is  that 
it  would  be  a  fraud  on  the  principal  debtor  to  profess  to  relea.se  him,  and 
then  to  sue  the  surety,  who  in  turn  would  sue  him ;  but,  where  the  bargain 
is  that  the  creditor  is  to  retain  his  remedy  apiinst  the  surety,  there  is  no 
fraud  on  the  principal  debtor,  and  the  court  will  give  effect  to  the  intention 
of  the  parties  by  construing  the  release  as  a  covenant  not  to  sue  the  principal^ 
debtor." 

A  reservation  of  remedy  was  also  effectual  to  prevent  a  discharge  of  the 
surety  in  Kearsley  v.  Cole,  16  M.  &  W.  127  (1846) ;  Owen  v.  Homan,  4  H.  L. 
Cas.  907  (18.J3).  obiter. 

"In  Solly  V.  Forbes,  cited  and  approved  by  Wilde.  C.  J.,  in  Thompson  v. 
Lack,  3  Com.  B.  551.  it  was  authoritatively  decided  that  a  release  of  a  joint 
debtor  or  surety  might  l)e  qualified  and  prevented  from  operating  a  release 
of  a  co-debtor  or  surety.  And  Patterson,  J.,  in  North  v.  Waliefield,  13  Q.  B. 
541,  said:  'Now  the  deed  contained  an  express  clause  that  the  release  to  God- 
dard  should  not  operate  to  discharge  any  one  jointly  or  otherwise  liable  to 
plaintiff  for  the  same  debts.  It  Is  plain,  therefore,  that  it  did  not  release  the 
defendant.  The  reason  why  a  release  to  one  debtor  releases  all  jointly  liable 
is,  unless  it  be  held  to  do  so,  the  co-debtor,  after  paying  the  debt,  might  sue 
him  who  was  released  for  contribution,  and  so  in  effect  he  would  not  be  re- 
leased; but  that  reason  does  not  apply  when  the  debtor  released  agrees  to 
such  a  qualification  of  the  release  as  will  leave  hhn  liable  to  the  rights  of  the 
co-debtor.'  "  McKlnstry,  J.,  In  Northern  Insurance  Company  v.  Potter.  63 
Cal.  138  (l&S.-^). 

"It  is  undoubtedly  true  that,  where  several  persons  are  liable  Jointly,  or 
jointly  and  severally,  a  release  of  one  is  a  release  of  all.  This  principle 
is  entirely  independent  of  any  doctrine  peculiar  to  the  law  of  principal 
and  surety."  Per  Stirling,  J.,  in  Re  Wolmershausen,  62  Law  Times  (N  S> 
541  (ISIX)).  ^    ■     •' 

The  release  of  one  co-surety  will  in  like  manner  discharge  his  co-suretv  by 
destroying  the  latter's  equity  of  contribution.  Mercantile  Bank  etc  v  Tav- 
lor.  [1803]  L.  R.  App.  Cas.  317.  .        •.     .       j 

3  Only  the  opinion  of  the  court  has  been  reprinted. 


Ch.  5)  RELEASE  OF  PRINCIPAL.  411 

laid  down  in  Fay  v.  Tower,  58  Wis.  286,  16  N.  W.  558,  as  applied  to 
a  case  in  which  an  unauthorized  extension  of  credit  had  been  given  to 
the  principal.  Manifestly  the  same  rule  should  be  applied  where  the 
surety  is  absolutely  released  from  the  debt.  The  rule  is  founded  upon 
a  very  plain  principle  of  justice.  To  illustrate:  A.  becomes  security 
for  B.  to  C.  for  the  payment  of  $1,000,  B.  puts  property  into  the 
hands  of  A.,  worth  $1,000,  to  indemnify  him  against  loss  because  of 
the  obligation  thus  assumed  by  him.  C.  releases  B.,  the  principal  debt- 
or, from  all  liability  on  account  of  the  debt,  but  receives  no  payment 
thereon.  A.,  the  surety,  then  sells  the  pledged  property  for  $1,000 
and  retains  the  proceeds.  It  is  entirely  reasonable  and  just  that,  not- 
withstanding the  release  of  the  principal  debtor,  C.  should  have  his 
remeHy^  against  the  surety  for  the  amount  realized  by  him  in  the  sale 
of  thg_jiLedgied  property.  Such,"we  think,  is  the  law.  It  seems  to  us 
that  we  have  here  just  such  a  case. 

By  ths  Court.    The  judgment  of  the  circuit  court  is  affirmed. 


412  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   Z 

CHAPTER  VI 
SET-OFF  OR  COUNTER-CLAIM  OF  PRINCIPAL 


^ 


WATERMAN  v.  CLARK  et  al. 
(Supreme  Court  of  Illinois,  1875.     70  111.  428.) 

Appeal  from  the  Circuit  Court  of  Hancock  County;  Hon.  Joseph 
Sibley,  Judge,  Presiding. 

Mr.  Justice  Sheldon  delivered  the  opinion  of  the  court. 

This  was  an  action  upon  a  promissory  note,  of  which  the  following 
is  a  copy,  to  wit: 

"$124.49.  Warsaw,  111.,  Feb.  16,  1870. 

"Three  months  after  date,  we,  or  either  of  us,  promise  to  pay  to 
the  order  of  A.  M.  Waterman  $124.49,  for  value  received,  and  with  in- 
terest at  the  rate  of  ten  per  cent,  per  annum  from  date. 

"A.   J.   Clark. 
"Wm.  N.  McCall." 

I      The  error  assigned  is  the  overruling  of  a  demurrer  to  defendants' 
^Ciov/  '^fourth  plea.  ^ 

The  plea,  in  substance,  was  that  Waterman,  the  plaintiff,  on  the 
1st  day  of  December,  1869,  owned  and  was  running  a  distillery,  and 
took  certain  cattle  and  hogs  of  defendant  Clark  to  take  care  of,  feed 
and  fatten,  at  plaintiff's  distillery,  at  a  certain  price  per  head  per 
month ;  that  after  plaintiff  so  having  the  stock  for  three  months,  Clark, 
finding  that  they  were  not  being  fattened,  but  had  been  and  were  be- 
ing greatly  injured  and  damaged  for  want  of  proper  care  and  food 
at  the  distillery,  demanded  a  return  of  the  stock,  which  the  plaintiff 
refused  to  deliver  to  Clark,  unless  he  would  execute  the  note  iiTsiiit ; 
and  thereupon  the  defendants,  protesting  that  there  was  no  considera- 
tion for  the  note,  and  to  prevent  further  injury  and  damage  to  the 
stock  by  plaintiff's  detention  thereof,  executed  the  note,  Clark  as  prin- 
cipal and  McCall  as  surety;  that  the  stock,  while  in  the  possession  of 
plaintiff,  were  not  taken  good  care  of,  nor  were  they  fattened,  but  were 
injured  and  damaged  by  the  negligence  of  plaintiff,  and  by  reason  of 
his  feeding  of  the  same  with  improper  and  unwholesome  food,  in'the 
sum  of  $300,  which  the  defendants  claimed  they  were  entitled  to  re- 
coup  to  the  amount  of  the  note.  ' 

X     The  objections  taken  to  the  plea  are: 
7^,^^  First.  That  the  matter,  in  respect  "to  which  the  damages  are  sought 

t'ly'        **^'  '    to  be  recouped,  does  not  arise  between  the  parties  to  the  record,  it 
n*  ^"^j  arising  between  the  plaintiff  and  one  of  the  defendants,  not  both ;  that 

r^^^  the  same  rule  should  apply  to  recoupment  as  to  set-off.     The  obiec- 


Ch.  6) 


SET-OFF  OR  COUNTER-CLAIM  OF  PRINCIPAL. 


413 


tion.  would  be  valid  if  set-off  and  recoupment  were  governed  by  the 
same  rules.  But  such  is  not  the  case.  They  depend  upon  quite  dif- 
ferent  principles.  In  the  case  of  recoupment,  a  claim  originating  in 
contract  may  be  set  up  against  one  founded  in  tort,  and  vice  versa. 
Streeter  v.  Streeter,  43  111.  157.  The  cross-demand  must  proceed 
froiii  the  same  subject-matter  as  the  plaintiff's  right  of  action,  and  the 
defendant  cannot,  as  in  the  case  of  a  set-off,  recover  any  excess  in  his 
favor.  He  uses  his  claim  in  mitigation  of  damages,  by  way  of  re- 
clucing  the  amount  of  the  recovery.  It  is  a  defense  here  against  the 
note,  to  be  availed  of  as  any  other  defense  against  the  note  itself.  We 
conceive  it  to  be  no  more  necessary  here  that  both  the  defendants 
slTouTd  have  sustained  the  damages  to  be  recouped  than,  in  case  there 
had  been  pleas  of  the  want  or  failure  of  consideration  for  the  note,  it 
would  have  been  essential  that  the  principal  and  surety  in  the  note 
should  both  have  experienced  the  loss  arising  from  the  want  or  failure 
of  consideration.  In  such  case,  the  principal  alone  would  be  the  one 
injured  by  the  want  or  failure  of  consideration,  yet  the  right  of  defense 
in  favor  of  both  would  be  undoubted.  The  surety  is  not  further  bound 
than  the  principal,  and  is  entitled  to  the  same  defense. 

It  is  sufficient  for  recoupment  that  the  counter-claims  arise  out  of 
the  same  subject-matter,  and  that  they  are  susceptible  of  adjustment  in 
one  action.  Stow  v.  Yarwood,  14  111.  424.  We  perceive  no  reason' 
why,  in  an  action  on  a  promissory  note  given  by  principal  and  surety 
on  a  contract  of  the  principal,  it  is  not  competent  to  recoup  the  dam- 
ages of  the  principal  growing  out  of  the  contract  to  the  same  extent 
as  if  the  note  had  been  given  by  the  principal,  and  he  alone  were  sued. 
In  the  case  of  McHardy  v.  Wadsworth,  8  Mich,  350,  the  precise  ques- 
tion here  raised  was  adjudged  in  favor  of  the  right  of  recoupment,  and 
that  decision  meets  our  full  concurrence. 

Second.  Th^  second  objection  is  .that  the  plea  sets  up,  by  way  of 
bar  to  a  recovery  on  the  note,  matters  of  which  the  party  had  full 
knowledge  when  the  note  was  executed. 

We  do  not  consider  that  the  mere  giving  of  the  note  for  the  feed 
of  the  stock  should  be  held  a  bar  to  Clark's  claim  for  damages  caused 
to  the  stock  by  reason  of  the  manner  in  which  they  had  been  fed,  al- 
though he  was  aware  of  the  damage  at  the  time.  We  can  assign  to 
it  no  higher  effect  than  as  an  admission  of  the  amount  due,  and  evi- 
dence, but  not  conclusive,  of  a  settlement  or  waiver  of  any  claim  for 
damages. 

Third.  The  third  and  last  objection  is  that  recoupment  is  a  defense 
under  the  general  issue.  This  was  not  assigned  as  cause  of  demurrer. 
Our  statute  requires  the  defense  of  the  want  or  failure  of  considera- 
tion of  a  promissory  note  to  be  specially  pleaded;  in  view  whereof 
we  regard  the  claim  of  recoupment  as  being  properly  set  up  by  plea, 
thereby  apprising  the  plaintiff  in  advance  of  trial  of  the  matter  of  de- 
fense to  the  note. 


41i  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   S 

We  perceive  no  error  in  overruling  the  demurrer,  and  the  judgment 
is  afRrmed. 
Judgment  affirmed.* 


GRAFF,  to  Use  of  MOSES,  v.  KAHN. 
(Appellate  Ck)urt  of  Illinois,  1886.     18  111.  App.  485.) 

MoRAN,  J.  Plaintiffsjn. e^rror  brought  an  action  upon  an  attach- 
ment  bond  against  Kahn,  who  signed  the  bond,  claiming  special, dam- 
age. ~TIie  bond  was  given  in  a  suit  of  Benjamin  v.  Graff,  and  after 
t^suit  was  ended  and  the  attachment  quashed  Graflf  assigned  the 
bond  to  Moses  and  Newman. 

The  question  to  be  determined  arises  upon  the  defendant's  third 
plea,  which  was  as  follows:  --— . 

"(18)  Third  plea:    And  for  a  further  plea,  actio  non,  because_the 
^^^*^  supposed  writing  obligatory  in  said  amended  declaration  was  given 

and  executed  for  the  benefit  and  on  behalf  of  said  William  J.  Ben- 
jamin, therein  mentioned,  who  was  the  real  party  in  interest  in  said 
attachment  suit,  and  that  this  defendant  was  simply  a  surety  on  said 
supposed  writing  obligatory  for  the  performance  by  said  Benjamin 
of  the  conditions  of  said  writing  obligatory,  and  had  no  interest  there- 
in or  in  said  attachment  suit. 

"(19)  And  said  defendants  further  say  that  befqre  and  at  the  time 
of  the  execution  of  said  supposed  writing  obligatory  in  said  amended 
declaration  mentioned,  and  before  and  at  the  commencement  of  this 
suit,  the.  said  plaintiff  was  and  still  is  indebted  to  the  said  ^enjamin 
in  the  sum  of  $096,  for  goods  sold,  and  for  which  said  Benjamin  re- 
covered a  judgment  against  said  Graff  on  September  16,  188-i,  and 
the  costs  of  suit,  which  judgment  remains  unsatisfied;  that  said  Graff 
is,  and  at  the  commencement  of  this  suit  and  for  a  long  time  prior 
thereto  has  been,  utterly  insolvent;  which  said  sums  of  money  exceed 
the  damages  by  reason  of  said  supposed  breach,  etc.,  and  said  defend- 
ant is  ready  and  willing,  and  hereby  offers  to  set  oft'  and  allow  to  the 
plaintiff  any  damages  occasioned  by  the  supposed  breach  in  said  decla- 
ration mentioned,  etc." 

JTg  this  plea  plaintiff  demurred,  the  demurrer  was  overruled,  and, 
plaintiff  electing  to  stand  by  demurrer,  there  was  judgment  for  defend- 
ant. The  overruling  of  the  demurrer  is  assigned  for  error. 
\  The  plea  presents  the  question  whether  a  surety,  when  sued  alone, 
upon  a  joint  and  several  undertaking,  can  set  off  against  the  plaTntiff 
a  Halm  due  from  the  plaintiff  to  his  principal,  without  showing  that 
the  claim  has  been  assigned  to  him  by  the  principal,  alleging  that  he 
has  the  concurrence  and  assent  of  the  principal  in  so  setting  off  the 
claim. 

*  Accord:  Aultman,  etc.,  Co.  v.  Hefner  et  al.,  67  Tex.  54,  2  S.  W.  861  (1886)^ 
breach  of  warranty. 


Ch.  6)  SET-OFF  OR  COUNTER-CLAIM  OF  PRINCIPAL.  415 

It  is  settled  in  this  state  that  the  right  of  set-off  is  not  Hmited  to  pT-'f'^'^i  r 
cases  of  demands  between  all  the  parties  to  the  suit.    It  exists  where    .^.t,  v/\r^'-i  ov- 
thereare  mutual  debts  between  the  real  parties  in  interest.    In  Himrod   ^r>^  U-^:.  -  •■  «-4 
et  al.  V.  Baugh,  85  111.  435,  it  was  held  that  in  a  suit  against  a  party 
and  his  sureties  a  debt  or  demand  due  from  the  plaintiff  to  the  prin- 
cipal defendant,  he  being  the  real  party  in  interest,  may  be  set  off. 
After  citing  a  number  of  authorities  which,  the  court  state,  recognize 
an  exception  under  such  circumstances  to  the  general  rule  that  joint 
and  separate  debts  cannot  be  set  off  against  each  other,  the  court  say : 
"It  seems  to  be  in  consonance  with  the  equitable  principles  which  so 
largely  govern  the  relations  of  principal  and  surety,  and  we  are  struck 
with  the  fitness  of  allowing  whatever,  not  merely  personal,  would  be 
matter  of  defense  for  the  principal  debtor,  were  he  sued  alone,  to  be 
admitted  as  a  defense  in  favor  of  the  principal  and  surety,  when  they 
are  sued  together." 

The  same  rule  was  applied  in  Engs  v.  Matson,  11  111.  App.  639,  and 
in  Hayes  et  al.  v.  Cooper,  14  111.  App.  490.    In  all  these  cases,  as  well 
as  in  all  the  cases  cited  in  the  opinion  of  Mr.  Justice  Sheldon  in  Him- 
rod V.  Baugh,  the  principal  was  a  party  defendant,  with  the  sureties,  «y     j       yd\  t^v^ 
and  joined  with  them  in  the  plea  of  set-off.    Ther^_isjiothing^  in  those  A        T       '   x. 
case^_frqrnj\vhjch.iL.can  be  implied  that  a  surety,  when  sued  alone,    '^f^^'V'^^^^ 
may^ without  the  assent  of  the  principal,  set  off"  a  debt  due  the  prin-    '  '^r-i-jjh.ch^-^ 
ci^al  from  the  plaintiff  in  the  suit,  to  discharge  him,  the  surety,  from    '^^^-/'•'  ^-^-•^) 
liis^liability.     On  principle  it  is  difficult  to  concede  such  right  to  the  '     ' 

surety.  It  is  the  right  of  the  principal  to  elect  for  himself  whether 
he  will  discharge  a  claim  which  he  holds  against  the  obligee  in  the 
bond  by  offsetting  it  against  his  liability  to  such  obligee.  If  the  surety 
has  the  right  to  set  off  such  a  claim  without  the  concurrence  of  the 
principal,  then  he  has  the  right  to  set  off  a  claim  that  is  larger  as  well 
as  one  that  is  less  than  the  penalty  in  the  bond,  or  the  amount  of  dam- 
ages claimed,  and  thus  he  might  sacrifice  his  principal's  right  of  action 
for  $1,000,  in  discharging  a  liability  against  him  of  $100  or  less. 

There  could  be  no  judgment  on  the  plea  of  set-off  for  any  excess 
over~tHe^piaintiff's  claim;  for  the  surety  could  have  no  right  to  a 
judgment  in  his  name  for  such  excess,  and  the  principal  could  not 
have  a  judgment  in  his  favor  in  a  suit  where  he  was  not  a  party.  A 
legal  demand  cannot  be  spHt  up  and  made  the  basis  of  two  actions. 
Set-off  is  but  a  cross-action,  and  a  claim  which  goes  to  judgment  upon 
a  plea  of  set-off  is  as  fully  barred  as  if  the  same  claim  went  to  judg- 
ment in  a  separate  action  brought  thereon.  Forbes  v.  Jason,  6  111. 
App.  395. 

Again,  tjie  payment  of  the  claim  set  forth  in  this  plea  of  set-off,    , 
by  the  obligee  in  the  bond,  by  allowing  it  to  be  set  off'  against  his 
damages,  would  be  no  protection  to  him  in  an  action  upon  the  claim 
by  his  CI  editor,  the  principal  in  the  bond,  for  the  reason  that  no  one 
can  be  bound  by  a  judgment  to  which  he  is  neither  party  nor  privy. 


41G  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

This  question  was  considered  by  the  Court  of  Appeals  of  New  York, 
in  the  case  of  Gillespie  v.  Torrance,  25  N.  Y.  306,  83  Am.  Dec.  355. 
There  an  accommodation  indorser  sought  to  avail  himself,  in  a  suit 
upon  the  note,  of  a  breach  of  warranty  as  to  the  quality  of  the  goods 
for  which  the  note  was  given.  The  court,  after  showing  that  defense 
was  not  failure  of  consideration  for  the  note,  but  setting  up  a  counter- 
claim of  the  principal  maker  against  the  payee  of  the  note,  says :  "In 
the  case  which  was  shown  on  the  trial,  there  would  seem  to  be  a  strong 
equity  in  favor  of  the  defendant  to  have  the  note  canceled  or  reduced, 
by  applying  toward  its  satisfaction  the  damages  which  appear  to  be 
due  to  Van  Pelt  (the  principal  in  the  note)  for  the  breach  of  war- 
ranty. It  is,  however,  an  equity  in  which  Van  Pelt  is  interested  to  as 
great  and  possibly  to  a  greater  extent  than  the  defendant,  and  cannot 
be  disposed  of  without  having  him  before  the  court,  so  that  his  rights, 
as  well  as  those  of  the  defendant,  may  be  protected."  The  claim  sought 
to  be  set  up  by  the  surety  in  that  case  was  more  strictly  in  the  nature 
of  a  recoupment  than  of  a  set-off.  It  would  seem  to  go  more  toward 
a  reduction  of  the  liability  on  the  note,  by  showing  a  failure  to  per- 
form the  undertaking  which  was  the  consideration  of  the  note.  Such 
a  defense  by  the  surety  presents  a  stronger  basis  than  does  an  attempt 
to  use  a  distinct  claim  of  his  principal  as  a  set-off. 

In  the  case  of  La  Farge  v.  Halsey,  1  Bosw.  N.  Y.  171,  where  the 
sureties  on  a  lease  claimed  the  benefit  in  and  sought  to  set  off,  in  a 
suit  against  them  for  rent  due,  a  claim  of  the  lessee  against  the  lessor 
for  damages,  the  court  said:  "If,  by  reason  of  any  fact  stated  as 
part  of  this  defense,  Laura  Keene  (the  principal  in  the  lease)  might 
have  set  up  a  counter-claim  or  recoupment,  these  defendants  cannot. 
She  has  assigned  no  such  claim  to  them,  and  without  that  they  have 
no  right  to  use  what  is  in  her  a  distinct  cause  of  action,  nor  to  use 
any  part  of  it  for  their  own  benefit.  If  they  are  compelled  to  pay 
the  rent,  they  must  seek  reimbursement  from  her,  and  she  will  have 
her  recourse  to  the  plaintiff  for  any  damages  she  has  sustained.  That 
claim  for  damages  these  defendants  have  no  right  to  diminish  nor 
impair;  and  if  she  were  to  prosecute  such  claim,  nothing  done  or 
proved  by  these  defendants  could  be  permitted  to  diminish  her  recov- 
ery. 

In  Winston  v.  Metcalf,  6  Ala.  756,  the  surety  on  a  note  was  allowed 
to  set  off  the  claim  of  his  principal  against  the  payee  of  the  note ; 
but  the  plea  of  set-off  expressly  alleged  that  it  was  with  the  concur- 
rence and  assent  of  the  principal,  and  the  note  which  constituted  the 
set-off  was  in  the  plea  offered  to  be  produced  in  court.  The  court  said : 
"The  principal  debtor  is  liable  to  indemnify  his  surety  whenever  the 
latter  pays  the  debt;  and  when  the  former  has  procured  a  valid  set- 
off, we  perceive  no  sound  reasons  why  the  surety  should  not  be  per- 
mitted, with  his  consent  and  concurrence,  to  enforce  it  in  the  same 
manner  as  if  the  suit  was  against  both  jointly.    The  case  of  Lyon  v. 


Ch.  6)  SET-OFF   OR   COUNTER-CLAIM   OF   PRINCIPAL.  417 

State  Bank  [1  Stew.  442]  does  not  assert  a  principle  different  from 
that  now  held ;  for  there  no  assent  of  the  principal  debtor  was  shown 
that  the  money  due  to  him  by  the  bank,  and  held  in  deposit,  should  be 
applied  in  discharge  or  as  a  set-off  of  the  debt." 

In  B.  &  O.  R.  R.  Co.  v.  Bitner,  15  W.  Va.  455,  36  Am.  Rep.  820, 
the  precise  question  here  arising  was  decided.  A  surety,  who  was  sued 
alone,  pleaded  as  set-off  a  claim  of  his  principal  for  wages  due  him 
for  services  rendered  to  the  plaintiff  in  the  suit  on  the  bond.  The  plea 
was  held  bad;  the  court  saying:  "It  is  true  this  court  did  decide  in 
the  case  of  B.  &  O.  Railroad  Co.  v.  Jameson,  13  W.  Va.  833,  31  Am. 
Rep.  775,  that  in  a  suit  of  this  character  on  a  bond,  like  the  one  sued 
on  in  this  case,  the  principal  in  the  bond,  when  sued,  could  plead  as  a 
set-off  his  services  rendered  as  an  agent  of  the  plaintiff.  But  this  by 
no  means  establishes  that  the  surety,  when  sued  alone  on  a  joint  and 
several  obligation,  can  plead  as  a  set-off  any  demand  due  from  the 
plaintiff  to  a  person  not  a  party  to  the  suit,  even  though  that  person 
stands  in  the  relation  of  principal  to  the  defendant  as  a  surety."  See, 
also,  Springer  v.  Dwyer,  50  N.  Y,  19;  Sheldon  on  Subrogation,  § 
101,  and  cases  cited  in  notes;  Brandt  on  Suretyship  and  Guaranty,  § 
203. 

On  j)rinciple  and  authority,  therefore,  we  think  it  clear  that,  where    ,  .-  .  ^y 

a  surety  on  a  note,  bond  or  other  obligation  is  si^ed  alone,  he  can  plead  / 
as  ^set-off  a  demand  due  to  his  principal  onl}^  where  he  shows  that 
the  demand  has  been  assigned  to  him,  \)r_that  he  makes  the  set-oft'  I 
with  the  concurrence  and  consent  of  his  principal,  and  such  concur- 
rence  and  consent  must  be  evidenced  in  such  manner  as  to  bind  the 
principal.  The  plea  of  set-off  of  defendant  Kahn  was  defective,  and 
for  the  error  in  overruling  plaintiff's  demurrer  to  said  plea  the  case 
must  be  reversed  and  remanded. 

Reversed  and  remanded.' 


LASHER,  Respondent,  v.  WILLIAMSON  et  al.,  Appellants.        ^^^^  fe  f  1 3  / 

(Court  of  Appeals  of  New  York,  1874.    55  N.  T.  619.) 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  Second  Judicial  Department,  affirming  a  judgment  in  favor  of 
plaintiff  entered  upon  the  decision  of  the  court  upon  trial  without  a 
•juryT 

.8  Contra:  Bronaugh  v.  Neal,  1  Rob.  (La.)  23  (1841). 

WJieoL  the  priacipal  and  the  surety  are  co-defendants,  and  the  principal 
pleads  as  a  set-off  a  collateral  debt,  the  surety  is.  of  course,  relieved  to  the 
extent  of  the  set-off.  Hollister  v.  Davis,  54  Pa.  508  (1867).  Brandt  (section 
259)  says  that  "the  weight  of  authority  is  that  he  may  so  avail  himself  of 
such  set-off."  But  this  statement  is  too  general  to  be  accepted,  without  regard 
to  local  statutes  as  to  set-off. 

Hen.  Sub. — ^27 


418  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

This  action  was  brought  against  defendants,  as  sureties  of  one  Ber- 
nard  Gibbs,  to  recover  rent  alleged  to  be  due  upon  a  lease  af  certain 
premises  from  plaintiff  to  said  Gibbs. 

The  facts  appear  sufficiently  in  the  opinion.' 

Johnson,  J,  The  defendants  and  appellants  were  sureties  for  one 
Gibbs,  to  whom  the  plaintiff  had  executed  a  lease  under  seal  of  cer- 
tain premises,  and  they  had  by  an  instrument  under  seal  covenanted 
that  Gibbs  should  pay  the  rent,  and  that  if  he  should  be  in  default  they 
would  pay  the  deficiency.  In  answer  to  the  plaintiff's  action  for  the 
unpaid  rent,  the  defendants  gave  evidence  tending  to  slTow"that,  as 
part  of  the  arrangement  between  Gibbs  and  the  plaintiff,  tlieTatte'r 
had  verbally  agreed  with  Gibbs  to  furnish  to  him  during  the  peTtdd  of 
the  lease  a  certain  quantity  of  property  to  be  stored  upon  the  described 
premises  at  an  agreed  price,  and  that  he  had  furnished  only  a  part 
of  the  quantity  promised,  and  failed  to  furnish  the  residue.  Assum- 
ing, in  favor  of  the  appellants,  that  no  objection  to  this  proof  can  be 
sustained  on  the  ground  that  it  is  supported  only  by  unwritten  evi- 
dence, I  am  yet  of  opinion  that  it  gives  them  no  defense  or  counter- 
claim available  in  this  action.  It  was  the  promise  to  furnish  the  stor- 
age which  may  be  regarded  as  forming  part  of  the  consideration  for 
the  agreement  of  .Gibbs.  The, breach  of  that  promise __gave_liim  a 
cause  of  action  against  the  plaintiff,  but  this  cause  of  action  in  favor 
of  Gibbs  cannot  be  available  to  the  appellants.  It  belongs  to  Gibbs  and 
not  to  them.  The  case  falls  within  the  principle  of  Gillespie  v.  Tor- 
rance, 25  N.  Y.  306,  82  Am.  Dec.  355. 

The  non-performance  or  partial  performance  of  Lasher's  engagement 
to  Gibbs  is  not  to  be  regarded  as  a  failure  of  consideration,  but  as 
an  independent  cause  of  action,  which  Gibbs,  and  he  only,  may  assert. 
It.  is  in  his  election  to  determine  whether  it  shall  be  used  defensively, 
or  whether  he  will  bring  his  own  action  for  the  damages,  or  w-hether 
he  will  forego  his  claim  altogether.  The  defendants  have  no  control 
over  him  in  this  respect,  and  cannot  borrow  and  avail  themselves  of 
his  rights. 

The  judgment  must  be  affirmed.    All  concur. 

Judgment  affirmed.^ 


BANKS  v.  PII^E  et  al. 

(Supreme  Court  of  Maine,  1839.     15  Me.  2G8.) 

This  was  an  action  on  a  note  of  hand,  and  came  before  the  court 

on  a  statement  of  facts.    The  note  was  made  to  the  plaintiff',  or  her 

order,  by  Dominicus  Pike,  as  principal,  and  by  the  other  defendant 

«  The  arguments  of  counsel  are  omitted. 

"  Accord:  B.  &  O.  R.  R.  v.  Bitner,  15  W.  Va.  455,  36  Am.  Rep.  820  (1870), 
where  a  station  agent's  surety  was  not  permitted  to  set  off  the  claim  of  his 
pi-iiicipal  for  services  in  an  action  on  a  bond  to  account  for  moneys  received 
as  such  agent 


Ch.  6)  SET-OFF   OR   COUNTER-CLAIM   OF   PRINCIPAL.  419 

as  surety.  D.  Pike  filed  in  set-off  his  own  individual  account  against 
the  _glaintiff,  claiming  an  amount  exceeding  the  note.  The  question 
submitted  was  whether  the  defendants  were  entitled  to  the  set-off. 

"Fnirfield  ^^  Haines,   fnr  plaintiffs 

At  common  law  there  was  no  set-off  allowed  of  unconnected  claims. 
Each  party  was  driven  to  his  action.  The  law  of  set-oft*  before  judg'- 
ment  is  regulated  entirely  by  statute.  St.  1821,  c.  59,  §  19,  speaks 
only  of  demands  between  the  parties  to  the  suit ;  and  by  this  is  intended 
the  identical  parties  to  the  action — a  mutuality  of  demands.  The  stat- 
ute also  provides  that  in  such  case  the  defendant  shall  have  judgment 
for  any  balance  found  in  his  favor,  in  the  same  manner  as  if  he  had 
brought  his  action  therefor.  The  consequence  would  be  that  if  this 
set-off  be  allowed  that  one  of  the  defendants  would  recover  a  sum  of 
money  against  the  plaintiff,  when  she  was  never  indebted  to  him. 
Walker  v.  Leighton,  11  Mass.  140;  Sherman  v.  Crosby,  11  Johns. 
(N.  Y.)  70;  Palmer  v.  Green,  6  Conn.  14;  Ross  v.  Knight,  4  N.H. 
236;  Osborn  V.  Etheridge,  13  Wend.  (N.  Y.)  339.8    *    *    * 

Weston,  C.  J.  The  provisions  of  the  law  in  respect  to  accounts  in 
offs.et  (St.  1821,  c.  59,  §  19)  cannot  be  carried  out,  unless  the  parties 
having  cross-demands  are  identical.  The  party  defendant  is  to  re- 
cover the  balance,  if  his  demand  proves  to  be  greater  than  that  of 
the  plaintiff,  in  the  same  manner  as  if  he  had  brought  an  action  there- 
for. One  of  the  defendants  has  no  interest  in  the  account  filed  here, 
which  overbalances  the  note  sued;  and  there  would  be  no  propriety 
in_rendering  judgment  for  that  balance  in  favor  of  both  defendants. 
This  is  admitted ;  and  the  counsel  for  the  defendants  claim,  there- 
fore, the  allowance  of  the  account  only  to  the  amount  of  the  note.  But 
the  manifest  intention  of  the  statute  was  to  make  an  end  of  the  whole 
matter,  and  not  to  split  up  the  account,  and  leave  the  balance  open  to 
future  litigation.  This  case  is  precisely  like  that  of  Walker  v.  Leigh- 
ton  et  al.,  cited  in  the  argument,  where  the  offset,  under  a  similar  stat- 
ute in  Massachusetts,  was  disallowed.  Th_e  claim  of  offset  is  not  sus- 
tained ;  and,  upon  the  facts  agreed,  there  must  be  judgmenFIor'the 
plajfltiff. 


ARMSTRONG  v.  WARNER  et  al. 
(Supreme  Court  of  Ohio,  1892.    49  Ohio  St.  376,  31  N.  E.  877,  17  L.  R.  A.  4GG.) 

Error  to  the  Superior  Court  of  Cincinnati. 

The  original  action  was  brought  in  the  Superior  Court  of  Cincinnati, 
by  Hulbert  H.,  Warner,  doing  business  as  H.  H.  Warner  &  Co.,  against 
David  Armstrong,  receiver  of  the  Fidelity  National  Bank  of  Cincin- 
nati, William  J.  M.  Gordon,  and  David  M.  Hyman,  trustee  for  the 
benefit  of  Gordon's  creditors. 

«  Part  of  the  arguments  of  counsel  are  omitted. 


420  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

The  object  of  the  suit  was  to  establish  certain  set-offs  against  ob- 
iigations  which  the  bank  held  against  Warjier.  ^'JUpon  the  "trial7~at 
special  term,  the  plaintifi  obtained  judgment  allowing  the  set-offs, 
[y hich  was  affirmed  at  general  term ;  i^nd  to  reverse  those'j udgments 
the  present  proceeding  iji  error  is  prosecuted  by  Armstrong,  the  re- 
ceiver of  the  bank.  A  statement  of  the  facts  necessary  to  a  proper 
understanding  of  the  questions  in  the  case  will  be  found  in  the  opin- 
ion." 

Williams,  J.    The  general  ground  upon  which  the  reversal  of  the 
judgments  below  is  sought,  and  the  only  one  advanced  by  counsel  in 
the  argument,  is  that  the  facts  established  by  the  evidence  do  not  en- 
Jbv  ^jtitle  the  plaintiff  to  the  set-offs  allowed  him.    The  evidence  is  embodied 
/in  a  bill  of  exceptions  which  was  properly  taken;   and  there  appears 
to  be  neither  substantial  conflict  in  the  evidence  nor  material  contro- 
versy about  the  facts  of  the  case.    The  facts  are  substantially  as  fol- 
lows : 
-  The  plaintiff,  Warner,  was  indebted  in  the  sum  of  $4,007  82,  oa-^ 

N.1  ^"-"  ^-  drafT  drawn  by  him  February  19,  1887,  on  the  defendant  Gordon,  and 

accepted  by  the  latter  for  Warner's  accommodation,  payable  four 
months  after  date,  at  the  American  Exchange  National  Bank,  New 
York.  On  the  ISth  of  June,  1887,  being  a  few  days  before  the,_D,ia- 
turity  of  the  draft,  Warner  drew  his  check  on  the  Bank  of  Monroe, 
of  Rochester,  N.  Y.,  where  he  had  funds,  for  $4,067.82,  the  precise 
amount  of  the  draft,  and  forwarded  the  same  to  Gordon,  to  enable 
him  to  meet  the  draft  at  its  maturity.  The  check  was  received  by  Gor- 
don, in  Cincinnati,  and  on  the  afternoon  of  June  20,  1887,  was  pre- 
sented by  him  at  the  counter  of  the  Fidelity  National  Bank  of  that 
city,  which  declined  to  cash  it,  but  carried  the  amount  to  the  credit  of 
Gordon  on  his  deposit  account  with  the  bank,  upon  the  agreement  that 
Gordon  should  accept  New  York  exchange  to  the  amount  of  $3,200, 
and  the  balance  should  remain  to  his  credit  and  not  be  immediately 
drawn  out.  Thereupon  the  Fidelity  National  Bank,  on  Gordon's  check, 
issued  Its  draft  to  him  on  the  First  National  Bank  of  New  York  City, 
for  $3,200,  leaving  a  balance  of  $867.82  of  the  Warner  check  stand- 
ing to  the  credit  of  Gordon.  The  Fidelity  Bank  had  no  funds  m  the 
First  National  Bank  of  New  York  City,  and,  when  the  draft  for  $3,200 
was  presented,  payment  was  on  that  account  refused;  and  the-draft 
has  since  remained  in  the  hands  of  Gordon  and  the  trustee  for  the 
benefit  of  his  creditors.  At  the  time  the  Fidelity  Bank  received  the 
Warner  check,  and  issued  the  draft  for  $3,200,  it  was  insolvent,  \iiiBich 
fact  was  known  to  the  managing  officers  of  the  bank,  and  to  those  who 
transacted  the  business  with  Gordon,  but  was  unknown  to  him.  On 
the  same  day,  and  soon  after  the  business  with  Gordon  was  completed, 
the  bank  closed  its  doors,  ceased  to  do  business,  and  passed  into  the 

»  The  arguments  of  counsel  and  a  part  of  the  opinion  of  the  court,  on  an- 
other point,  are  omitted. 


^■^      Tr6^&^u<^. 


Ch.  6)  SET-OFF  OR   COUNTER-CLAIM  OF  PRINCIPAL.  421 

hands  of  a  bank  examiner.  A  few  days  afterwards  Armstrong  was 
appointed  receiver.  WanLer^-npoa_learning  of  the  failure  of  the.hank, 
stopped  the  payment  of  his  check,  which  Gordon  had  deposited  with 
it  as  before  stated,  and  the  check  came  to  Armstrong's  possession  upon 
his  appointment  as  receiver,  in  which  capacity  it  is  now  held  by  him. 
Gorjjon.  who  was  in  fact  the  agent  of  Warner  in  the  transaction  re- 
ferred to  with  the  Fidelity  Bank,  became  insolvent  shortly  after  the 
failure  of  that  bank,  and  made  an  assignment  of  his  property  in  trust 
for. the  benefit  of  his  creditors;  and  the  trustee,  having  custody  of 
the  draft  for  $3,200,  was  made  a  party  to  the  action  below.  One  of 
the  objects  of  the  plaintiff's  action  was  to  have  the  liability  of  the 
bank  to  him  on  that  draft,  issued  for  his  benefit,  set  off  against  his 
liabilityuto . the  bank  on  the~^check  for  $4,067.82,  which  Gordon  de- 
posited with  the  bank,  under  the  agreement  already  stated.  \ 

TTie' additional  facts  peculiar  to  the  other  set-off  claimed  are,  in 
substance,  these: 

On  the  21st  of  February,  1887,  Warner  accepted  a  draft  drawn  on  -<^^' 
him  by  Gordon,  for  the  latter's  accommodation,  for  the  sum  of  $4,- 
249.26,  payable  to  the  order  of  Gordon,  four  months  after  date.  This 
acceptance  the  Fidelity  Bank  discounted  for  Gordon,  and  carried  the 
amount  to  the  credit  of  his  deposit  account.  On  its  maturity  the  ac- 
ceptance was  protested  for  non-payment,  and  Gordon's  liability  made 
absolute.  The  draft  passed  into  the  hands  of  Armstrong,  upon  his 
appointment  as  receiver,  and  is  still  held  by  him.  At  the  time  of  the 
failure  of  the  bank,  and  the  appointment  of  the  receiver,  there  was  a 
balance  due  Gordon,  on  his  deposit  account,  of  $1,190.57,  which  the 
plaintiff"  seeks  to  have  set  off  against  the  draft.  '^  ^-      /  k.c 

The  trial  court  adjudged  that  the  plaintiff  was  entitled  to  have  the  '  '-''-'^''■^^^'l 
set;:affa^o\Yed,  but  required,  as  a  condition  to  the  entry  of  judgment, 
that  he  pay  the  balance  remaining  due  on  his  obligations  in  the  hands 
of  the  receiver,  which,  the  record  shows,  was  deposited  with  the  clerk, 
and  judgment  was  accordingly  entered.  Tlie_plaintiff  in  error  resisted 
the  set-offs,  as  stated  by  his  counsel  in  their  briefs"!  " 

"First — Upon  the~gF6und  that,  Warner's  liabilities  to  the  bank  not 
being  due  at  the  date  of  its  failure  (June  21st),  the  legal  or  statutory 
right  of  offset  did  not  exist;  nor  did  the  necessary  conditions  exist 
for  their  allowance  as  equitable  set-off's. 

"Second — That  even  if  they  were  allowable  as  equitable  set-offs,  yet,, 
being  asserted  against  the  assets  of  a  national  bank  in  the  hands  of  a. 
receiver,  they  could  not  be  allowed  without  violating  section  5242  of  the 
Revised  Statutes  of  the  United  States." 

And  it  is  upon  these  specific  grounds  that  counsel  contend  the  judg- 
ments below  should  be  reversed.  We  will  consider  them  in  the  order 
stated ;  and,  while  the  set-offs  allowed  do  not  both  stand  upon  pre- 
cisely the  same  footing,  they  may,  for  convenience,  be  considered  to- 
gether. 


422  DEFENSES  OF  SURETY   AGAINST   CREDITOR.  (Part   3 

1.  It  is  undoubtedly  true  that  under  the  statute  cross-demands  are 
not  "deemed  compensated,  so  far  as  they  equal  each  other,"  unless 
they  have  existed  under  such  circumstances  that,  if  the  holder  of  one 
of  the  demands  had  brought  an  action  upon  it  against  the  holder  of  the 
other,  the  latter  could  have  set  up  his  demand  by  way  of  set-off  or 
counter-claim ;  and  as  a  general  rule,  to  entitle  a  set-off  to  be  made  at 
law,  a  present  right  of  action  must  exist  in  favor  of  the  holder  of 
each  demand  against  the  other,  at  the  same  time ;  and  consequently 
the  -assignment  of  one  of  tlie  demands  before  it  becomes  due  will  in 
general  defeat  the  set-off.  This  was  held  in  Fuller  v.  Steiglitz,  27 
Ohio  St.  355,  22  Am.  Rep.  312,  where  there  were  no  equitable  con- 
siderations for  applying  the  principle  of  compensation  to  cross-de- 
mands. But,  "if  an  insolvent  holder  of  a  claim  not  yet  matured  as- 
signs the  same  before  maturity,  and  the  debtor  at  the  time  of  the 
transfer  holds  a  similar  claim  against  the  assignor,  which  is  then  due 
and  payable,  his  right  of  set-off  against  the  assignee,  when  the  lat- 
ter's  cause  of  action  arises,  is  preserved  and  protected."  Pomeroy 
on  Remedies,  §  163.  This  rule,  it  is  said,  is  based  upon  considera- 
tions of  equity,  and  is  adopted  to  prevent  one  party  from  losing  his  own 
demand  on  account  of  the  insolvency  of  his  immediate  debtor,  and 
from  being  at  the  same  time  compelled  to  pay  the  debt  originally  owing 
by  himself  to  the  insolvent  assignor.  It  can,  of  course,  have  no  proper 
application  when  the  thing  transferred  is  commercial  paper,  and  the 
assignee  becomes  the  bona  fide  holder  thereof  for  value. 

The  rule  was  approved  and  applied  in  the  case  of  Bank  v.  Heming- 
ray,  34  Ohio  St.  381,  where  the  balance  due  a  co-partnership  on  its 
deposit  account  with  a  banking  house  which  had  become  insolvent  was 
set  off  against  the  individual  notes  executed  by  one  of  the  co-partners 
to  the  bank,  notwithstanding  the  notes  had  been  transferred  before 
their  maturity  to  the  assignee  of  the  bank  for  the  benefit  of  its  cred- 
itors. Under  this  rule,  the  fact  that  Warner's  liability  to  the  Fidelity 
Bank  had  not  matured  when  it  failed,  either  on  the  check  drawa-iy 
him^n  the  Rochester  Bank  for  $4,067.82,  or  on  his  acceptance  of  tlie 
Gordon  draft  for  $4,249.26,  did  not,  of  itself,  defeat  his  right  to  the 
set-offs  which  were  awarded  him  by  the  judgment  below,  unless  the 
position  of  the  receiver,  with  respect  to  his  rights  against  those  in- 
debted to  the  bank,  is  a  more  favorable  one  than  that  of  an  assignee 
in  insolvency;  and  that  it  is  not  is  well  settled.  The  receiver  is  not 
a  bona  fide  holder  for  value  of  the  assets  of  the  bank,  in  the  sense  that 
its  commercial  paper  in  his  hands  is  protected  against  defenses  which 
might  have  been  set  up  against  the  bank.  He  succeeded  only  to  the 
rights  of  the  bank  at  the  time  of  its  failure;  and  a  set-off  available 
against  the  bank  at  that  time  is  equally  available  against  him.  Hade 
v.  McVay.  31  Ohio  St.  231,  and  cases  cited  on  page  238. 
y  The  remedy  of  set-off  has  been  much  enlarged  in  equity,  and  is 
there  administered  in  cases  where,  under  the  strict  rules  at  law,  it 


IVflA-fl-^  C-/'-'-- 


Ch.  6)  SET-OFF   OR   COUNTER-CLAIM   OF   PRINCIPAL.  423 

would  not  he  avaUaVylp.  Thus,  at_law^_a_JQiiit_jd£inand  cannot  be  set 
ofif  against  a  several  one,  nor  a  several  demand  against  a  joint  one; 
buf  equity  adopts  a  different  rule  where,  on  account  of  the  insolvency 
of  one  of  the  parties,  the  other  is  in  danger  of  losing  his  claim.  Sarchet 
V.  Sarchet,  2  Ohio,  320;  Baker  v,  Kinsey,  41  Ohio  St.  403.  And, 
generally,  equity  will  enforce  the  right  of  set-off,  by  decreeing  the 
compensation  of  mutual  demands,  so  far  as  they  equal  each  other, 
where  they  have  grown  out  of  the  same  or  connected  transactions,  or 
the~oiTe~tTar  formed,  in  whole  or  in  part,  the  consideration  of  the  other, 
amir  the  party  against  whom  the  set-off  is  asserted  is  insolvent.  These 
equitable  grounds,  for  the  allowance  of  the  set-offs  claimed  by  the 
plaintiff  are  present  in  the  case  under  consideration.  The  fund  against 
which  the  check  on  the  Rochester  Bank  was  drawn  was  the  property 
of  the  plaintiff;  and  the  check  was  put  in  the  hands  of  Gordon  to 
meet  the  maturing  obligation  of  the  plaintiff.  In  transferring  the 
check  to  the  Fidelity  Bank,  and  obtaining  from  it  the  draft  for  $3,200 
on  the  First  National  Bank  of  New  York,  Gordon  was  the  agent  of 
the  plaintiff,  and  the  transaction  was  for  the  latter's  benefit.  The" check 
wai'deposited  upon  the  agreement  that  the  draft  should  be  issued  for 
the  specified  sum,  and  the  deposit  and  draft  were  each  the  considera- 
tion for  the  other.  It  is  not  to  be  supposed  that  the  transaction  would 
have  occurred,  if  the  plaintiff  or  his  agent  had  known,  at  the  time, 
of  the  bank's  insolvency.  No  funds  were  in  the  hands  of  the  drawee 
at  the  time  the  draft  was  issued,  nor  was  any  provided  with  which  to 
meet  it  on  presentation;  and  therefore  presentment  and  protest  were 
not  required  in  order  to  fix  the  liability  of  the  drawer.  The  failure 
of  the  bank  to  provide  the  requisite  fund  to  meet  the  draft  made  it 
necessary,  for  the  plaintiff's  protection,  to  stop  the  payment  of  the 
check ;  and  thus  the  liability  of  the  plaintiff  to  the  bank  on  the  check, 
which  the  receiver  seeks  to  enforce  against  him,  arose  from  the  bank's 
breach  of  its  obligation,  incurred  as  the  consideration,  in  part,  of  the 
deposit  of  the  check.  There  is  nothing  lacking  here  that  is  essential  to 
a  complete  equitable  right  of  set-off.  ,it^  aa. 

And  the  same  is  true  as  to  the  other  set-off  allowed.  The  draft 
drawn  by  Gordon  on  Warner  for  $4,249.26  was  accepted  by  the  lat- 
ter solely  for  the  accommodation  and  benefit  of  the  former.  They 
are  each  liable  thereon,  it  is  true ;  but  their  relation  to  each  other  is 
that  of  principal  and  surety.  If  an  action  were  brought  by  the  bank 
agamst  Gordon  as  the  drawer  of  the  draft,  he  would  be  entitled  to  set 
oft  agaiiisf  his  liability  the  balance  standing  to  his  credit  on  his  de- 
posit account  with  the  bank;  and,  he  being  insolvent,  his  surety  has 
the'nght  to  have  the  set-off  allowe3^  against  his  liability,  which  is  but 
a  mode  of  compelling  the  application  of  the  principal's  property  to  the 
payment  of  his  own  debt,  for  the  relief  of  his  surety.  The  objection 
made  to  this  set-off,  on  the  ground  that  the  liability  on  the  draft  had 
not  matured  when  the  bank  failed,  has  already  been  disposed  of;   for, 


424  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

in  that  respect,  it  does  not  differ  from  the  one  previously  consider- 
ed.   *    *    * 

We  find  no  error  in  the  record,  and  the  judgment  is  affirmed.^" 

10  Similarly  tiie  surety,  when  sued  alone  in  jurisdictions  wtiere  equitable  de- 
fenses are  ijonuitfed,  may  aval!  himself  of  those  equitable  set-offs  which  arise 
out  of  the  same  transaction  and  to  which  the  principal  would  be  himself  eiT- 
titled.    Bechervalse  v.  Lewis,  L.  R,  7  C.  P.  372  (1872). 


Ch.  7)  DUTY   OF  CREDITOR  TO  PURSUE  PRINCIPAL.  425 


CHAPTER  VII 

DUTY  OF  CREDITOR  OR  PROMISEE  TO  PURSUE  PRINCI- 
PAL BEFORE  SUING  SURETY  OR  GUARANTOR 


MOUSSA  V.  LOTERIJMAN  &  CO. 

(High  Court  of  the  South  African  Republic,  1894.    1  Reports  of  the  High  Court 
of  the  South  African  Republic,  32C.) 

This  was  an  appeal  from  the  Judicial  Commissioner  of  Johannes- 
burg. The  respondents  had  sold  goods  to  a  certain  Ibraim  to  an  amount 
of  il7.  19s.  ydTTtofpayment  of  which  amount  the  appellant  had  bound 
himselt  as  surety.  Ibraim  failed  to  meet  his  obligation,  and  the  re- 
spondents, ascertaining  that  he  had  gone  abroad,  sued  the  appellant 
as__surety  for  payment  of  the  amount.  The  appellant  raised  the  de- 
fense that  the  respondents,  plaintiffs  in  the  first  instance,  should  have 
excussed  the  principal  debtor  before  seeking  recourse  against  him  as 
surety,  and  produced  evidence  to  show  that  at  the  time  summons  was 
issued,  and  even  afterwards,  the  principal  debtor  was  traveling  about 
in  the  state  as  a  hawker.  Judgment  was  given  against  the  appellant, 
who  now  appealed.^ 

Ameshoff,  J.,  in  giving  the  judgment  of  the  court  dismissing  the 
appeal,  said  that  it  was  unnecessary  to  decide  the  question  as  to  the 
onus  of  proving  absence  from  the  country,  inasmuch  as  the  principal 
debtor  could  not  be  found  by  the  creditor,  and  the  latter  might  there- 
fore rightly  conclude  that  he  was  abroad.^ 

1  The  arguments  of  counsel  are  omitted. 

2  The  principal  case  is  under  the  civil  law,  as  to  which,  on  the  subject  of 
exjcussion,  a  valuable  note  will  be  found  in  Meig's  Tennessee  Reports,  p.  173. 
InJJie  law  of  England  the  beneficium  excussionis  does  not  exist.  But  the  eq- 
uity of  exoneration  entitles  the  surety  by  application  to  a  court  of  equity  to 
oiy&in  in  a  modilled  form  the  beneficium  excussionis.  (See  The  Equity  of  Ex- 
oneration, Part  II,  Chapter  I.)  Such  application  to  equity  must,  however,  be 
made  before  the  surety  is  sued  at'  law;  otherwise,  it  is  too  late.  Hays  v. 
WaTdTTTohn.  Ch.  (N.  T.)  123,  8  Am.  Dec.  554  (1819).  And  this  equity  cannot 
be  then  employed  as  a  plea  at  law.  Circumstances  of  a  peculiar  character  (e. 
g.,  as  in  Hays  v.  Ward,  supra,  the  usurious  character  of  the  security  taken  by 
the  creditor)  may  justify  a  court  of  equity  in  granting  an  injunction  against 
an  action  commenced  at  law  until  the  creditor  shall  exhaust  the  questionable 
secur i ty — r en dered  so  hy  his  own  illegal  act. 

—In  American  jurisdictions  the  beneficium  excussionis  has  made  its  appear- 
ance in  the  case  of  so-called  guaranties  of  collection  as  contrasted  with  guar- 
anties of  payment  (suretyships);  thejatter  following  the  law  of  England  and 
affording  no  beneficium  excussionis,  but  the  former  requiring  the  creditor  to 
ffrit-exhaust  his  remedy  against  the  principal. 

A  so-called  guaranty  of  collection  or  guaranty  cannot  be  enforced  in  some 
Jurisdictions  in  the  United  States  against  the  guarantor  without  excussion  of 


426  .  DEFENSES  OF  SUUETY   AGAINST  CREDITOR.  (^Part   3 


CHAPTER  VIII 

TRANSACTIONS  OF  CREDITOR  OR  PROMISEE  WITH  PRIN- 
CIPAL. GIVING  RISE  TO  EQUITABLE  RIGHTS  OF 
SURETY  SUBSEQUENTLY  RECOGNIZED 
BY  COURTS  OF  LAW 


SECTION  1.— EXTENSION  OF  TIME  TO  PRINCIPAL 


REES  V.  BERRINGTON. 
(ITfgh  Court  of  Chancery,  1795.    2  Ves.  Jr.  540.) 

Thomas,  Daniel,  and  Richard  Blachford  carried  on  business  as  lace- 
men  in  partnership  till  the  death  of  Thomas.  On  taking  the  accounts 
a  balance  of  i2,972.  3s.  5d.  appeared  to  be  due  from  the  partnership 
to  Robert  Pope  Blachford,  as  administrator  of  Thomas,  to  secure 
which  sum  and  £4GG.  13s.  4d.,  agreed  to  be  secured  to  Robert  Pope 
Blachford,  as  Thomas'  share  of  the  debts  due  to  the  partnership.^^ 
joint  and  several  bond,  dated  September  31,  1787,  was  executed  by 
the^sufvTvTng  partners,  and  by  James  Rees  as  surety,  with  condition 
to  "be  void  on  payment  of  the  said  sums  with  interest  by  instalments 
upon  the  31st  of  December,  1789,  and  the  31st  of  December,  1790. 
In^the  beginning  of  September,  1790,  Robert  Pope  Blachford  died. 
L'pon  the  2Tth  of  September,  1790,  the  whole  of  the  money  and  in- 
terest secured  by  the  bond  remaining  unpaid,  James  McKenzie,  un- 
der the  authority  and  on  behalf  of  the  executors  of  Robert  Pope  Blach- 
ford, came  to  an  arrangement  with  Daniel  and  Richard  Blachford  con- 
cerning the  money  due  on  the  bond  and  interest ;  and  for  the  first  in- 
s-tajment  due  on  the  bond  took  thejr  prouiissoiy  notes"paya5Ie~on  the 
21st  oTAprTI,  SlsTbf  July,  and  21st  of  October,  1791,  and  the  21st 
of  January  and  the  21st  of  April,  1792;  and  for  the  second  instalment 
to  become  due  upon  the  bond,  took  threejOther_promissory  notes'  pay- 

the  principal  or  evidence  that  e.xcussion  would  be  useless.  Button  v.  Pyle,  195 
r.i.  S.  45  Atl.  420  (ItXX)). 

If  tlie  duty  of  e.xcussion  exists,  it  must  be  exercised  within  a  reasonable 
time  after  default:  and  if  excussion  is  unreasonably  delayed,  such  delay, 
though  followed  by  excussion,  will  discharge  the  guarantor  of  collection.  Tif- 
fany V.  Willis,  30  Hun  (N.  Y.)  2GC  (1883),  five  years  and  six  months.  See  cas- 
es in  20  Cyc.  p.  14."n>.  note  17. 

On  duty  of  excussion  of  principal  and  burden  of  proof  where  principal 
removes  from  state,  see  note,  10  H.  L.  R-  455. 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  427 

able  on  the  21st  of  July  and  21st  of  October,  1792,  and  the  21st  of 
January,  1793.  Daniel  and  Richard  Blachford  at  different  times  on 
and  before  the  18th  of  October.  1792,  paid  to  the  executors  of  Rob- 
ert Pope  Blachford,  or  to  McKenzie  on  their  behalf,  the  first  three  of 
the  first  set  of  notes,  and  the  interest  due  upon  them ;  and  about  the 
20th  of  October,  1792,  by  a  new  arrangement  all  the  remauTingTiotes 
w'efe~"exchanged~for  four  other  notes,  dated  October  22,  1792,  and 
payable  on  the  2Dth  of  May,  2oth  of  June,  2oth  of  September,  and 
25th  of  December,  1793.  About  the  7th  of  December,  1792,  a  com- 
mission of  bankruptcy  issued  against  Daniel  and  Richard  Blachford; 
and  the  executors  of  Robert  Pope  Blachford  proved  under  that  com- 
mission a  debt  of  £2,327.  14s.  lid.  by  virtue  of  the  bond  and  the  four 
notes  dated  October  22,  1792.  Rees  was  captain  of  an  East  India  ship, 
and  left  England  in  April,  1788,  returned  in  August,  1789,  sailed  again 
in  April,  1791,  and  returned  again  in  July,  1792.  In  August,1792, 
he  had  in  his  hands  the  sum  of  £3,000.  received  by  him  in.  India  for 
Daniel  and  Richard  Blachford;  and  no  communication  having  taken 
place  between  him  and  the  executors  of  Robert  Pope  Blachford  re- 
specting their  transactions  with  Daniel  and  Richard,  he  in  November, 
1792,  paid  over  that  sum  to  the  Blachfords.  After  the  bankruptcy  thel  /^ 
executors  brought  an  action  against  Rees  for  £2,400.  as  remaining  due  \  ^^^ 
on  the  blDnd,  upon  which  he  filed  a  bill  for  an  injunction.^ 

Xord  Chancellor  [Loughborough].    Percival  never  could  be  a  sure-    h^.^yj^ii^J-e- 
ty,  whether  that  case  is  right  or  wrong.     He  should  have  taken  up 
his  bond,  if  he  went  out  of  the  trade. 

The  form  of  the  security  forces  these  cases  into  equity ;  but  take 
it  out  of  that  form,  and  suppose,  in  this  instance,  that  the  plaintiff 
was  a  surety  by  a  proper  bond  at  law  as  surety ;  what  is  the  conse- 
quence? Where  a  man  is  surety  at  law  for  the  debt  of  another,  pay- 
able at  a  given  day,  if  the  obligee  defeats  the  condition  of  the  bond, 
he  discharges  the  security.  When  they  are  bound  jointly  and  severally, 
the  surety  cannot  aver  by  pleading  that  he  is  bound  as  surety :  but  if 
he  could  establish  that  at  law,  the  principle  at  law  is  that  he  has  an 
interest  in  the  condition;  and  if  the  period  is  extended,  that  totally 
defeats  the  condition ;  and  the  consequence  is  the  surety  is  released 
from  his  engagement.  Suppose  a  bond  payable  in  six  months,  with  a 
surety ;  he  does  not  become  bound  to  answer  the  engagement  at  twelve 
months,  where  it  was  to  be  at  six.  The  principle  is  a  legal  principle. 
In  this  court  they  all  appear  principalsT^JUt  establish  the  fact  that  he 
is  surety,  he  is  surety  to  a  definite,  not  an  indefinite,  engagement.  Here 
upon  the  second  instalment  the  defendants  have  extended  time  before 
that  instalment  became  due.  If  the  time  is  extended  after  it  becomes 
due,  that  makes  a  difference  at  law ;  for  then  the  bond  has  been  once 
forfeited.  It  is  perfectly  plain,  from  the  nature  of  the  engagement, 
that  the  plaintiff  became  security  that  the  debt  should  be  paid  at  two 

1  The  arguments  of  counsel  are  omittecL 


428  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

periods.  One  has  elapsed.  The  obligee  thinks  fit  totally  to  cliange 
the  nature  of  the  security  and  the  credit.  He  takes  notes,  gives  a 
farther  time  of  payment,  and  repeats  the  same  thing  as  to  the  second 
instalment,  which  was  not  then  due;  and,  doing  this,  he  does  this 
material  injury  to  the  surety:  He  has  a  right  the  day  after  the  bond -is 
due  to  come  here  andlnsist  upon  its  being  put  in  suit.  The  obligee  has 
suspended  that,  till  the  time  contained  in  the  notes  runs  out.  There- 
fore he  has  disabled  himself  to  do  that  equity  to  the  surety  which  lie 
has  a  right  to  demand.  If  the  application  was  proved,  it  is  a  duty  to 
comply  with  it. 
^  y~-  The  defendants  have  put  it  out  of  their  power  to  perform  that  which 
V"*'  the  nature  of  the  relation  between  the  surety  and  the  person,  with 
whom  he  is  bound,  requires.  It  is  a  breach  of  the  obligation  in  con- 
science and  honesty ;  and  it  is  not  too  much  to  say  of  that  obligation 
in  point  of  law.  I  cannot  try  the  cause  by  inquiring  what  mischief -it 
might  have  done;  for  that  would  go  into  a  vast  variety  of  speculation, 
upon  which  no'  sound  principle  could  be  built.  But  it  is  plain  here, 
if  the  plaintiff  had  been  informed  of  these  transactions  and  the  situa- 
tion of  the  debtors,  their  difficulties  and  delay  in  performing  the  prior 
engagement,  he  never  would  have  been  so  foolish  as  to  have  parted 
with  the  money  in  November,  1792 ;  and  the  money  in  his  hands  was 
a  full  security.  I  do  not  ground  much  upon  it ;  for  the  case  wouJd  be 
the  same  if  those  circumstances  had  not  come  out  clearly  in  evidence. 
7" This  produces  no  inconvenience  to  any  one;  for  it  only  amounts  to 
this :  That  there  shall  be  no  transaction  with  the  principal  debtor,  with- 
out acquainting  the  person  who  has  a  great  interest  in  it.  See  Perfect 
v.  Musgrave,  6  Pri.  111.  The  surety  only  engages  to  make  good  the 
deficiency.  It  is  the  clearest  and  most  evident  equity  not  to  carry  on 
any  transaction  without  the  privity  of  him,  who  must  necessarily  have 
a  concern  in  every  transaction  with  the  principal  debtor.  You  cannot 
keep  him  bound,  and  transact  his  affairs  (for  they  are  as  much  his  as 
your  own)  without  consulting  him.  You  must  let  him  judge  whether 
he  will  give  that  indulgence  contrary  to  the  nature  of  his  engagement. 
The  authorities  fully  warrant  me  in  this ;  though  I  should  have  grant- 
ed the  injunction  even  without  that  strong  authority  before  Lord  Thur- 
low,  which  is  rather  less  favorable  for  the  surety.  There  the  creditor, 
being  called  upon,  did  put  the  bond  in  suit.  If  he  had  proceeded,  the 
consequence  would  have  been  only  that  he  would  have  had  the  person 
in  custody.  It  would  have  been  no  payment.  Thinking  that  by  leav- 
ing the  debtor  at  large  and  taking  a  judgment  against  him,  which  af- 
fected all  his  property,  he  pursued  a  better  mode,  using  his  discretion 
and  acting  upon  his  own  account,  he  thought  it  better  to  give  stay  of 
execution  than  to  have  confounded  the  aflfairs  of  the  man  by  destroy- 
ing his  credit  and  holding  him  in  prison  ;  but  he  did  it  without  con- 
sulting the  surety,  and  therefore  Lord  Thurlow  held,  and  very  rightly, 
that  the  surety  was  discharged.  The  transaction  in  this  case  was  much 
more  mischievous.    After  circumstances  of  communication,  that  show- 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  429 

ed  great  embarrassment,  great  difficulty,  and  great  distress,  indul- 
gence was  from  time  to  time  given  under  circumstances  apparently 
very  hazardous,  without  any  communication  with  this  man,  who  had 
so  great  an  interest,  and  who  in  the  interval  had  given  up  the  fund, 
which  probably  was  the  inducement  to  him  to  be  the  security.^ 


BOULTBEE  v.  STUBBS. 

(High  Court  of  Cliancery,  1811.    18  Ves.  19.) 

Thomas  Boultbee,  being  called  upon  by  the  defendant,  who  was  his 
banker,  for  security,  procured  his  brother,  Charles  Boultbee,  as  surety 
to  join  him  in  a  bond  for  ilO,000.  with  a  stipulation  that  Charles,  the 
surety,  was  only  to  be  liable  to  the  extent  of  £6,000.,  if  uporTthe  ac- 
count that  amount  should  be  due.  Upon  a  subsequent  settlement  of 
the  account,  the  balance  due  to  the  banker  appearing  to  be  £9,500., 
Thomas  Boultbee  gave  him  a  mortgage  for  £4,000.  It  was  agreed 
between  them  that  the  residue  should  be  paid  by  instalments; , and  a 
warrant  of  attorney  was  given  to  confess  judgment  for  the  balance, 
but  expressly  without  prejudice  to  any  security  Stubbs  now  holds 
for  the  said  sum7~or~"any""part  thereof.  The  surety,  being  after- 
wards sued,  filed  the  bill,  and  moved  for  an  injunction.^ 

Lord  Chancellor  [Eldon].  The  law  of  this  case  is  perfectly  clear. 
The  circumstances  upon  the  face  of  the  bond  are  these :  ^ 

The  defendant,  a  banker,  unwilling  to  give  Thomas  Boultbee  credit  to  '^-  ^ 
the  amount  he  wished  upon  his  own  personal  security,  or  upon  the 
credit  and  security  of  the  different  bills  and  notes  which  he  should  pay 
into  the  bank  in  the  course  of  his  dealing,  required  a  bond  for  £10,000. 
from  him,  and  from  his  brother,  as  surety,  under  which  the  surety  was 
to  be  liable  only  to  the  extent  of  £6,000.,  if  upon  the  account  that 

2  In  Skip  V.  Huey,  Wilcox  &  Edwards,  3  Atk.  91  (1744),  Lord  Hardwicke 
said:  "What  is  ttie  rule?  He  who  trusts  most  shall  lose  most.  If  Skip  had 
refused,  Edwards  "imgEt  have  arrested  Huey  upon  the  note  whicH  he  had  giv- 
en Edwards  by  way  of  indemnity  against  the  bond." 

Accord:  Nisbet  v.  Smith,  2  Bro.  C.  C.  579  (1789);    Bolton  v.  Salmon,  [1891]       ^ 
L.  R.  2  Ch.  48 ;  Wright  v.  Simpson,  6  Ves.  Jr.  715  (1802).  '  ^^ 

See  "Specialty  Contracts  and  Equitable  Defenses,"  by  Professor  Ames  In 
9  H.  L.  R,  p.  56. 

See  note  to  Ewin  v.  Lancaster,  6  B.  &  S.  571  (1865),  in  2  Ames'  Cases  on 
Bills  &  Notes,  83. 

Similarly  the  extension  before  maturity  of  a  debt  due  by  bond,  where  the 
creditor  accepts  the  note  of  the  principal  and  others  to  mature  after  maturity 
of  the  bond.  Brown  v.  ISIason,  55  App.  Div.  .395,  66  N.  Y.  Supp.  917  (1900),  af- 
firmed lir  170  N.  Y.  584.  03  N.  E.  1115  (1902). 

But  the  acceptance  of  a  note  to  which  the  surety's  name  is  forged  as  joint 
maker  in  renewal  of  the  original  note  is  not  a  binding  extension.  Lovinger  v. 
First  Nat  Bank,  etc.,  81  Ind.  354  (1882). 

«  The  arguments  of  counsel  are  omitted. 


430  DEFENSES   OF  SURETY   AGAINST   CREDITOR.  (Part    3 

amount  should  be  due.  On  the  settlement  of  accounts  a  balance  of 
i9,500.  appearing  to  be  due,  it  is  clear  that,  if  Thomas  Boultbee,  the 
principal  debtor,  had  given  a  mortgage  for  £3,500.,  that  security  might 
have  been  given  and  taken,  without  prejudice  to  the  bond;  but  a  n>€>rt- 
gage  was  given  for  £4,000.,  reducing  the  debt  therefore  below  £6,000., 
and  as  to  the  residue  of  the  debt  it  was  provided  that  it  should  be  paid 
by  certain  instalments,  fixed  by  the  instrument. 
\  The  consequence  of  this  transaction  in  equity  is  that,  the  surety 
continuing  liable  for  the  sum  of  £5,500.,  remaining  due  upon  the 
settlement  of  accounts,  and  the  creditor  agreeing  with  the  principal 
debtor  to  postpone  his  remedy,  changing  his  immediate  right  to  sue  to" 
a  right  to  call  for  certain  instalments,  the  effect  of  that  agreement  is 
that  in  equity  the  right  against  the  surety  is  gone.  It  is  in  vain  to  say 
the  indulgence  to  the  principal  by  taking  the  mortgage,  and  giving  time, 
may  be  for  the  benefit  of  the  surety.  It  js^in  most  cases  for  the  ad- 
vantage of  the  surety ;  but  the  law  takes  so  little  notice  of  that  cir- 
cumstance  that,  if  the  acceptor  of  a  bill  becomes  bankrupt,  the  holder 
must  give  notice  to  the  drawer,  as  another  person  has  no  right  to  judge 
what  are  his  remedies,  and  the  original  implied  contract  being  that, 
as  far  as  the  nature  of  the  original  security  will  admit,  the  surety, 
paying  the  debt,  shall  stand  in  the  place  of  the  creditor. 
^.  The  cases  that  have  been  alluded  to,  and  there  is  a  great  variety  of 
them,  are  those  of  a  creditor  entering  into  a  composition  with  the 
person  liable  in  the  first  instance,  with  a  stipulation  that  it  shall  not 
'^-i  '^w>AJ'.^  prejudice  his  remedies  against  others,  who  are  liable  as  sureties.  The 
'*-  :.;:;  ordinary  case  is  that  of  compositions  upon  bills.  The  answer  given 
is  that  by  the  agreement,  reserving  the  creditor's  remedy  against 
sureties,  the  situation  of  the  surety  is  not  varied  ;  and  this  doctrine  has 
been  held  at  law  as  well  as  here.  But  I  agree  that  a  stipulation  of  that 
kind  is  in  many  cases  so  very  absurd  that  it  must  be  seen  plainly; 
and  the  true  question  is  whether  these  words  in  the  warrant  of  at- 
torney, "without  prejudice  to  any  security,"  mean  that  this  bond  was  to 
be  saved  against  the  surety,  the  demand  upon  which  was  intended  to  be 
arranged  by  that  very  transaction,  or  whether  the  meaning  of  those 
words  is  not  that,  the  principal  debtor  being  in  the  habit  of  giving 
securities  to  the  creditor  from  time  to  time,  this  transaction  should 
liquidate  the  matter  of  the  bond,  but  should  not  prejudice  the  banker's 
right  as  to  other  securities  in  his  hands.  If  that  is  the  meaning  of  this 
transaction,  it  puts  an  end  to  the  right  against  the  surety.  If,  on  the 
other  hand,  the  object  was  to  give  as  extensive  a  remedy  as  was  given 
in  Mr.  Burke's  Case  [cited  by  the  Lord  Chancellor,  ante,  6  Ves.  809, 
Ex  parte  Gifford],  then  that  case  and  many  others  must  govern  this. 

My  opinion  is  that  it  was  not  intended  to  save  this  bond  among  other 
securities,  the  saving  of  which  securities  will  give  a  reasonable'Tnter- 
pretation  to  these  words  in  the  warrant  of  attorney. 

1811,  January  23.  Thejnotion  to  dissolve  the  injunction  was  re- 
newed. '  


Ch.  8)  TRANSACTIONS   OF  CREDITOR  WITH  PRINCIPAL.  431 

Lord  Chancellor  [Eldon].  This  question  is  now  presented  to  me 
in  quite  a  new  point  of  view.  Upon  the  Former  occasion'it  was  argued 
asif  the"imme3iate  right  of  action  against  Thomas  Boultbee,  the  prin- 
cipal debtor,  was  gone.  It  is  clear  that,_if  he  might  have  been  forth- 
with  sued,  and  execution  had  against  him  aTtlie  fruit  of  that  suit,  the 
surety  is  not  injured;  and,  on  the  other  hand,  that  in  general,  if  time 
is  given  to  the  principal,  the  surety  is  discharged.  The  objection  to  the/ 
reserve  of  remedy  against  the  surety  consists  in  the  interest  the  prin-  '' 
cipal  has  that  the  surety  shall  not  be  applied  to.  It  is  said  that  the-*' 
principal  cannot  by  contract  deprive  himself  of  the  benefit  derived  from 
that  forbearance;  and  there  certainly  have  been  decisions  that,  if  time 
is  given  to  the  principal,  reserving  the  right  to  go  against  the  surety, 
the  principal  cannot  raise  the  objection  upon  his  right  to  time  as  against 
the  surety,  as  there  is  the  contract  of  the  principal,  arising  out  of  the 
contract  for  reserve  against  the  surety,  that  the  latter,  if  the  creditor 
goes  against  him,  shall  not  be  deprived  of  the  benefit  of  the  contract 
as  against  the  principal.  That  was  Burke's  Case,  as  to  which  I  will 
look  at  the  note  I  have.  If  the  contract  for  reserve  against  the  surety 
prevents  his  remedy  against  the  principal,  that  contract  for  reserve  will 
not  do;  but  the  question  is  whether  it  does  in  law  deprive  the  surety 
of  that  benefit.  It  may  in  many  cases  be  a  very  rational  provision  that 
the  principal  shall  have  time,  provided  he  can  have  it  without  prej- 
udice to  the  benefit  of  the  remedy  against  the  security,  which,  though 
worth  nothing  at  present,  may  in  a  year's  time  be  very  valuable ;  and 
the  creditor  may  very  reasonably  mean  to  secure  the  benefit  of  that 
contingency. 

1811,  April  11.    The  Lord  Chancellor  granted  the  injunction.* 

*  The  giving  of  a  definite  extension  of  time,  "that  is,  if  time  is  given  hy  vir- 
tue of  positive  contract  between  the  creditor  and  the  principal,  not  where  the 
creditor  is  merely  inactive,"  discbarges  the  surety,  "and  *  *  *  for  this 
reason,  Because  the  creditor  by  so  giving  time  to  the  principal  has  put  it  out 
of_the  pow^"er  ^f  the  surety  to  consider  whether  he  will  have  recourse  to  his 
remedy  a.calnst  the  principal  or  not,  and  because  he  in  fact  cannot  have  the 
same  remedy  against  the  principal  as  he  would  have  bad  under  the  original 
c(mrract."  Per  Lord  Eldon,  in  Samuel!  v.  Howarth,  3  ^ler.  272  (1S17),  Ames' 
Gas.  i53.  I 

The-ieason  for  the  rule  is  thus  further  shown  by  Lord  Eldon  to  depend  di^  j 
rejtly_axpoiL_tIie  doctrine  of  the  equity  of  exoneration:  "And  with  respect  to 
principal  and  surety  in  a  bond,  where  the  creditor  enters  into  an  agreement 
or  binding  contract  with  the  principal  debtor  to  give  him  further  time  without 
the  concurrence  of  the  surety,  the  surety  is  discbargetl.  as  the  creditor  by  his 
new  contract  destroys  the  benefit  which  the  surety  had  under  the  foniicr  con- 
tract, as  he  puts  it  out  of  his  own  power  to  make  good  his  engagement  to  en- 
force immediate  payment  from  the  principal,  when  the  sun^y  would  have  a 
right  to  require  him  to  do  so."  Lord  Eldon,  in  Governor  and  Company  of  the 
Bank  of  Ireland  et  al.  v.  Beresford  et  al.,  6  Dow.  23S  (1818). 

In  Forbes  v.  Sheppard,  08  X.  G.  111.  3  R.  E.  817  (1887).  is  anjnstance  wtiere 
the  creditor  violated  the  binding  agreement  to  extend  the  time  and  sued  on 
tEe"vefy  day  the  obligation  matured.  It  was  held  that  the  surety  was  never- 
theless discharged. 

The  doctrine  of  the  principal  case  Is  equally  applicable  to  cases  of  surety- 
ship arising  after  the  incurring  of  the  original  debt.    A  guarantor,  who  was 


432  DEFENSES   OF  SURETY  AGAINST  CREDITOR.  (Part   3 


McLEMORE,  Plaintiff  in  Error,  v.  POWELL  et  al.,  Defendants  in 

Error. 

(Supreme  Court  of  tbe  United  States.  1S27.    12  Wheat.  554,  6  L.  Ed.  726.) 

Mr.  Justice  Story  delivered  the  opinion  of  the  court. 

This  is  a  writ  of  error  to  the  Circuit  Court  of  the  United  States  for 
the  District  of  West  Tennessee. 

The  original  action  _wasassumpsit.  brought  by  Powell,  Fosters  &  Co., 
as  holders  of  a  bill  of~excBan*e  drawn  by  one  Thomas  Fletcher,  in 
]\ray,  1819,  at  Nashville,  upon  Messrs.  McNeil,  Fisk  &  Rutherford,  at 
New  Orleans,  payable  to  Thomas  Read,  or  order,  for  two  thousand 
dollars,  in  sixty  days  after  date,  and  by  him  indorsed  to  the  defendant, 
John  C.  McLemore,  and  by  him  to  the  plaintiff^.  The  bill,  upon 
presentment  for  acceptance,  was  dishonored,  and  due  notice  of  the 
dishonor  was  given  to  the  defendant. 

At  the  trial,  upon  the  general  issue,  Thomas  Fletcher,  the  drawer, 
was,  under  a  release  from  the  defendant,  McLemore,  examined  as  a 
witness,  and,  among  other  things,  testified  that,  in  the  month  of  October 
following  the  dishonor  of  the  bill,  "one  of  the  plaintiffs  applied  to  him 
at  Nashville  for  the  money  on  the  bill,  and  threatened  to  sue  im- 
mediately if  an  arrangement  was  not  made  to  pay  the  bill..  The  witness 
then  proposed  to  the  plaintiff,  if  he  would  indulge  him  four  or  five 
weeks,  he  would  himself,  to  a  certainty,  pay  th?  bill.  To  this  the  plain- 
tiff agreed,  and  told  the  witness  he  was  going  to  Louisville,  Kentucky, 
and  would  return  by  Nashville  about  the  expiration  of  that  time,  and 
would  receive  said  payment.  Since  said  time  the  witness  has  never  seen 
said  plaintiff'."  The  witness  farther  testified  that  the  defendant  was 
an  accommodation  indorser  for  him  on  the  bill ;  that  the  plaintiff  told 
him  that  the  bill  would  be  left  with  a  Mr,  Washington  at  Nashville ; 
that  he  expected  he  would  himself  be  at  that  place  at  the  time  agreed 
on,  but  that,  if  he  did  not  come,  he  would  give  the  instructions  to  Mr. 
Washington,  by  letter,  what  to  do  if  the  witness  did  not  pay  at  the 
expiration  of  the  time  agreed  on.    It  did  not  appear  that  any  consider- 

bound  in  consideration  of  forbearance  to  tbe  principal  (no  time  being  named), 
was  beld  discharged  by  an  agreement  between  principal  and  creditor  for  two 
months'  extension  in  consideration  of  the  receipt  of  a  horse.  Deming  v.  Nor- 
ton. Kirby  (Conn.)  397  (178S). 

Tbe  surety  may.  of  course,  agree  at  the  time  of  entering  into  the  agreeniegt, 
or  sul>stx]uentiy.  that  the  payment  may  be  extended  until  he  gives  notice, to 
the  contrary.  Hut  such  an  agreement  implies  that  all  parties  to  the  paper^as 
tojvhora  he  might  have  recourse  as  co-sureties  or  principals  shall  execute  the 
exFension  paper.  Hence,  though  an  indorser  for  accommodation  signs  sii7h 
an  agi-eement,  he  will  be  discharged  if  a  co-maicer  of  the  note  be  dischargSJT 
by  a  binding  extension.  T'niontown  Bank  v.  Mackey,  140  U.  S.  220,  11  Stip. 
Ct.  \«^i4.  P,r>  L.  Ed.  485  nS91). 

Where,  in  i)oint  of  fact,  no  extra  time  could  have  been  gained  by  the  debtor 
under  the  agreement,  the  surety  Is  not  discharged.  Price  v.  Edmunds,  10  B.  & 
0.  578  n?«0). 

On  extension  of  time  of  payment  indefinitely  as  a  discharge  of  surety,  sea 
note,  10  H.  L.  R.  455. 


Ch.  8)  TRANSACTIONS   OF  CREDITOR  WITH   PRINCIPAL.  433 

ation  was  paid  or  stipulated  for  this  delay ;  and  no  suit  was  commenced 
until  after  this  period  had  elapsed.  The  District  Judge  insinuated  the 
jury  that  if  they  believed  the  conversation  above  stated  amounted  to 
no  more  than  an  agreement  that  a  suit  should  not  be  brought  for  four 
or  five  weeks,  and  that  no  premium  or  consideration  was  given  or  paid, 
or  to  be  paid  by  Fletcher,  the  indorsers  were  not  discharged ;  that  an 
agreement  for  giving  day  must  be  an  obligatory  contract  for  a  con- 
sideration which  ties  up  the  hands  of  a  creditor,  and  disables  him  from 
suing,  thereby  affecting  the  interests  and  rights  of  the  indorsers ;  that 
the  indorser  has  a  right  to  require  and  demand  of  the  creditor  to  bring 
suit  against  the  drawer,  and,  if  he  has  disabled  himself  from  bringing 
a  suit  by  a  contract  for  a  consideration,  he  has  thereby  released  the 
indorser;  and  that,  if  the  jury  were  satisfied,  from  the  testimony,  that 
time  was  given  for  a  valuable  consideration  paid,  or  to  be  paid,  or  that 
a  new  security  was  taken  by  the  holder,  that  the  indorser  was  dis- 
charged and  absolved  from  all  the  obligations  of  the  indorsement. 

Under  this  instruction,  the  jury  found  a  verdict  for  the  plaintiffs, 
VI pen  whlcTi  there  was  judgment  given  in  their  favor.  A  bill  of  ex- 
ceptions was  taken  to  the  charge  of  the  court;  and  the  present  writ 
af'error  is  brought  for  the  purpose  of  ascertaining  its  legal  correctness.    \ 

It  is  unnecessary  to  give  any  opinion  upon  that  part  of  the  charge    >C..  ^     K^f  «*»*- 
whichj"espects  the  right  of  rai  indorser  to  require  the  holder  to  com-   .    ;^j.,^^ri*^^^ ''' 
mence  a  suit  against  the  d.rawer.     In  general,  the  indorser,  by  paying  ,^^  >^:ta.^•.'^^.»^ 
the  bill,  has  a  complete  power  to  reinstate  himself  in  the  possession  and 
ownership  of  the  bill,  and  thus  to  entitle  himself  to  a  personal  remedy 
on  the  instrument  against  all  antecedent  parties.     Thesam^  re^ison, 
therefore,  does  not  exist,  as  may  in  common  cases  of  surety ship,^. to 
coinpel'flie" creditor  to  active  diligence  by  suit  against  the  principal. 
WitTiout  expressing  any  opinion  on  this  point,  it  is  sufficient  to  say 
that  the  error,  if  any,  was  favorable  to  the  defendant,  and,  therefore, 
it  can  form  no  subject  of  complaint  on  his  part.  V  ^^4tJU  '> 

The  case  then  resolves  itself  into  this  question,  whether  a  mere 
agreement  with  the  drawers,  for  delay,  without  any  coniTd^e'ratiori-  for 
i^T'ancPwithout  any  communication  with,  or  assent  of,  the  indorser, 
ira  discharge  of  the  latter,  after  he  has  been  fixed  in  his  responsibility 
by^  the  refusal  of  the  drawee  and  due  notice  to  himself.  And  we  are 
all  of  the  opinion  that  it  does  not.  We  admit  the  doctrine  that  although 
the^indorser  has  received  due  notice  of  the  dishonor  of  the  bill,  yet, 
if  the  holder  afterwards  enters  into  any  new  agreement  with  the  drawer 
for  delay,  in  any  manner  changing  the  nature  of  the  original  contract, 
or  affecting  the  rights  of  the  indorser,  or  to  the  prejudice  of  the  latter, 
it  will  discharge  him.  But,  in  order  to  produce  such  a  result,  the 
agreement  must  be  one  binding  in  law  upon  the  parties,  and  have  a 
sufficient  consideration  to  support  it.  An  agreement  without  con^ 
sideration  is  utterly  void,  and  does  not  suspend  for  a  moment  the 
rights  of  any  of  the  parties.  In  the  present  case,  the  jury  have 
Hen.Sur.— 28 


434  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

found  that  there  was  no  consideration  for  the  promise  to  delay  a 
suit,  and,  consequently,  the  plaintiffs  were  at  liberty  immediately  to 
have  enforced  their  remedies  against  all  the  parties.  It  was  correctly 
said  by  Lord  Eldon,  in  English  v.  Darley,  2  Bos.  &  Pull.  61,  that  ^s 
long  as  the  holder  is  passive,  all  his  remedies  remain";  and^  \vp.  add, 
that  he  is  not  bound  to  active  diligence.  But,  if  the  holder  enters  into 
a  valid  contract  for  delay,  he  thereby  suspends  his  own  remedy  on  the 
bill  for  the  stipulated  period ;  and  if  the  indorser  were  to  pay  the  bill, 
he  could  only  be  subrogated  to  the  rights  of  the  holder,  and  the  drawer 
could  or  might  have  the  same  equities  against  him  as  against  the  holder 
himself.  If,  therefore,  such  a  contract  be  entered  into  without  his  as- 
sent, it  is  to  his  prejudice,  and  discharges  him. 
.     ,  /\     The  cases  proceed  upon  the  distinction  here  pointed  out^  and  con- 

^^*<<»rtl  clusively  settle  the  present  question.     In  Walwyn  v.  St.  Quintin,  1  Bos. 

&  Pull.  652,  where  the  action  was  by  indorsees  against  the  drawer  of  a 
bill,  it  appeared  that  after  the  bill  had  become  due,  and  been  protested 
for  non-payment,  though  no  notice  had  been  given  to  the  drawer,  he 
having  no  effects  in  the  hands  of  the  acceptor,  the  plaintiffs  received 
part  of  the  money  on  account  from  the  indorser;  and  to  an  applica- 
tion from  the  acceptor,  stating  that  it  was  probable  he  should  be  able 
to  pay  at  a  future  period,  they  returned  for  answer  that  they  would 
not  press  him.  The  court  held  it  no  discharge,  and  Lord  Chief  Jus- 
tice Eyre,  in  delivering  the  opinion  of  the  court,  said  that  if  this  for- 
bearance to  sue  the  acceptor  had  taken  place  before  noticing  and  pro- 
testing for  non-payment,  so  that  the  bill  had  not  been  demanded  when 
due,  it  was  clear  the  drawer  would  have  been  discharged,  for  it  would 
be  giving  a  new  credit  to  the  acceptor ;  but  that,  after  protest  for  non- 
payment and  notice  to  the  drawer,  or  an  equivalent  to  notice,  a  right 
to  sue  the  drawer  had  attached,  and  the  holder  was  not  bound  to  sue  the 
acceptor.    He  might  forbear  to  sue  him. 

The  same  doctrine  was  held  in  Arundel  Bank  v.  Goble,  reported  in  a 
note  to  Chitty  on  Bills.  Chitty  (Ed.  1821)  379,  note  "c."  There  the 
acceptor  applied  for  time,  and  the  holders  assented  to  it,  but  said  they 
should  expect  interest.  It  was  contended  that  this  was  a  discharge 
of  the  drawer ;  but  the  court  held  otherwise,  because  the  agreement 
of  the  plaintiffs  to  wait  was  without  consideration,  and  the  acceptor 
might,  notwithstanding  the  agreement,  have  been  sued  the  next  instant, 
and  that  the  understanding  that  interest  should  be  paid  by  the  acceptor 
made  no  difference.  So,  in  Badnall  v.  Samuel,  3  Price's  Exch.  Rep. 
521,  in  a  suit  by  the  holder  against  a  prior  indorser  of  a  bill  of  ex- 
change, it  was  held  that  a  treaty  for  delay  between  the  holder  and  ac- 
ceptor, upon  terms  which  were  not  finally  accepted,  did  not  discharge 
the  defendant,  although  an  actual  delay  had  taken  place  during  the 
negotiation,  because  there  was  no  binding  contract  which  precluded 
the  plaintiffs  from  suing  the  acceptor  at  any  time. 

Upon  authority,  therefore,  we  are  of  opinion  that  this  writ  of  error 
cannot  be  sustained,  and  that  the  judgment  below  was  right.     Upon 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH  PRINCIPAL.  435 

principle,  we  should  entertain  the  same  opinion,  as  we  think  the  whole 
reasoning  upon  which  the  delay  of  the  holder  to  enforce  his  rights 
against  the  drawer  is  held  to  discharge  the  indorser  after  notice  is 
founded  upon  the  notion  that  the  stipulation  for  delay  suspends  the 
present  rights  and  remedies  of  the  holder. 

The  judgment  of  the  court  below  is  therefore  affirmed,  with  costs.' 


KELLOGG  V.  OLMSTED  et  al. 
(Court  of  Appeals  of  New  York,  1862.     25  N.  T.  189.) 

Appeal  from  the  Supreme  Court.  Action  on  a  note  for  $600,  made 
by  the  defendants  and  one  John  I.  McPherson,  since  deceased,  dated 
October  1,  1855,  payable  one  year  after  date,  with  interest  semi-annu- 
ally, to  one  George  R.  D,  Covil  or  bearer. 

The  answer  admitted  the  making  and  dehvery  of  the  note  to  Covil 
and  the  transfer  of  it  to  the  plaintiff,  but  set  up  as  a  defense  that  on 
the  8th  day  of  October,  1856,  and  after  the  note  became  due,  and 
while  Covil  was  the  holder  of  the  note,  it  was  mutually  agreed,  between 
Covil  and  the  defendants,  "that  iii_consideration  that  the  defendants 
would  keep  the  principal  sum  of  the  said  note  until  the  1st  day  of 
April,  1857,  and  pay  the  same  with  interest  on  that  day,  he,  the  said 
Covil,  would  extend  the  time  of  payment  of  the  principal  of  said  note 
until  the  1st  day  of  April,  1857  ;  that  the  said  defendants  then  and  there 
assented  to  said  proposition,  and  then  and  there  agreed  to  and  with 
said  Covil,  to  keep  said  principal  sum  of  said  note  until  the  1st  day  of 
April,  1857,  and  to  pay  the  same  with  interest  on  that  day";  andjhat 
tli£_note  was  transferred  to  the  plaintiff  by  Covil,  after  the  agreement 
so  made  by  him  with  the  defendants,  and  the  plaintiff  took  the  note 
with  full  knowledge  thereof.  '~ 

/'On  the  trial  of  the  action  before  a  referee,  the  defendants  offered 
to  prove  the  defense  so  specially  set  up;  but  the  referee  ruled  out  the 
evidence,  upon  the  ground  that  the  agreement  or  matters  thus  specially 
set_ji{ila.s  a  defense,  if  proved,  would  be  no  defense.  To  this  ruling 
the  defendants  excepted.  /  "i^he  appeal  to  this  court  was  from'ihe 
judgment  of  the  Supreme  Court  in  the  Eighth  District,  affirming  the 
[^dgment  entered  on  the  report  of  the  referee. 

Sutherland,  J.  I  cannot  avoid  thinking  that  this  case  presents  an 
ingenious  attempt  on  the  part  of  the  appellants  to  avoid  the  application 

0  An  almost^ infinite  number  of  authorities  are  in  accord  with  the  principal 

case:  ■ 

^ee,  in  accord,  Towusend  v.  Riddle.  2  N.  H.  448  (1822),  post.  p.  545. 

In  Trent  Navigation  Co.  v.  Ilarley,  10  East.  33  (1808).  Ix)rd  Ellenborouffli 
said:  "The  only  question  is:  Whether  the  laches  of  the  obliRees  in  not  call- 
ing upon  the  principal  so  soon  as  they  might  have  done,  if  the  accounts  had 
liecn  proporly  examined  from  time  to  time,  he  an  estoppel  at  law  against  the 
suretits?  1  know  of  no  such  estoppel  at  law,  whatever  remedy  there  may  be 
in  equity." 


43G  DEFENSES  OF  SURETY   AGAINST   CREDITOR.  (Part    3 

of  the  well-settled  principle  that  an  agreement  by  a  creditor  to  postpone 
the  payment  of  a  debt  due  until  a  future  day  certain,  in  considera- 
tion of  no  other  or  further  consideration  than  the  agreement  of  the 
debtor  to  pay  the  debt  with  interest  on  that  day,  is  void  for  want  of 
consideration. 

It  has  been  decided  over  and  over  again,  if  the  creditor  whose  debt 
is  due  receives  part  payment  of  it,  and  in  consideration  of  such  payment 
promises  to  postpone  or  extend  the  time  of  payment  of  the  balance,  that 
such  promise  is  void  for  want  of  consideration.  Miller  v.  Holbrook, 
1  Wend.  317 ;  Gibson  v.  Renne,  19  Wend.  390 ;  Pabodie  v.  King,  12 
Johns.  426 ;  Reynolds  v.  Ward,  5  Wend.  501 ;  Fulton  v.  Matthews  & 
Wedge,  15  Johns.  433,  8  Am.  Dec.  261. 

These  cases  certainly  assume  that  a  promise  by  a  creditor,  no  part 
of  whose  debt  is  paid,  to  extend  the  time  of  payment  of  the  whole  debt 
to  a  future  day  certain,  in  consideration  of  the  promise  of  the  debtor 
to  pay  the  debt  with  interest  on  that  day,  would  be  void. 

A  creditor,  promising  to  extend  the  time  of  payment  until  a  certain 
day,  would  not  expect  or  ask  his  debtor  to  make  a  formal  express 
promise,  in  consideration  of  such  extension,  to  pay  his  debt  on  that  day, 
and  not  before  that  day,  nor  would  the  debtor,  relying  on  such  promise 
of  extension,  be  very  apt  to  make  any  such  formal  express  promise ; 
but  if  the  promise  of  extension  on  the  part  of  the  creditor  were  held 
valid,  such  a  promise  on  the  part  of  the  debtor  would  necessarily  be 
implied.  It  would  be  implied  from  his  acceptance  of  and  reliance 
■  on  the  promise  of  the  creditor.  No  court  would  ever  hold  the  promise 
on  the  part  of  the  creditor  valid  and  binding  without  holding  that  there 
was  a  correspontling  obligation  on  the  part  of  the  debtor  to  pay  at  the 
time  fixed  by  the  promise  of  extension,  and  not  to  pay  before;  that 
is,  in  the  language  of  the  defendant's  answer,  to  keep  the  money  until 
the  day  fixed  by  the  promise  of  extension.  Hence  the  cases  before  cited 
necessarily  assume  that  the  agreement,  or  mutual  agreements,  specially 
set  up  in  the  defendant's  answer  would  be  nudum  pactum  and  void,  and 
would  not  have  been  a  defense  if  proved;  for  these  cases  must  have 
been  decided  on  the  assumption,  if  the  promise  on  the  part  of  the  cred- 
itor to  extend  the  time  of  payment  was  valid,  or  should  be  held  valid, 
that  there  was  or  would  be  a  corresponding  valid  obligation  or  promise 
on  the  part  of  the  debtor,  not  only  to  pay  at  the  time  fixed  by  the  agree- 
ment of  extension,  but  also  not  to  pay  before.  These  cases,  then,  in 
effect  decide,  if  a  creditor  whose  debt  is  due,  in  consideration  of  the 
payment  of  a  part  of  it,  and  of  a  promise  on  the  part  of  his  debtor  to 
pay  the  balance  on  a  certain  future  day,  and  not  before,  promises  to 
extend  the  time  of  payment  of  such  balance  until  that  day,  that  such 
promise  is  without  consideration  and  void. 

In  this  case  the  defendants  paid  no  part  of  the  debt.  The  sole 
alleged  consideration  of  the  plaintiff's  promise  to  extend  the  time  of 
payment  of  the  whole  debt  until  the  1st  of  April,  1857,  was  a  promise, 
on  the  part  of  the  defendants,  to  pay  the  debt  with  interest  on  that  day. 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH   PRINCIPAL.  437 

and  not  before  that  day.  The  promise  on  the  part  of  the  defendants  is 
not  stated  in  the  answer  in  these  precise  words,  but  is  substantially 
this. 

But  upon  principle,  and  without  reference  to  cases,  the  counsel  for 
the  appellants  concedes  that  their  promise  to  pay  interest  was  no  con- 
sideration for  Covil  to  delay  payment,  because,  if  Covil  had  delayed 
payment  without  such  promise,  he  would  have  been  entitled  to  such 
interest ;  but  he  insists  that  their  promise  not  to  pay  the  principal 
until  the  1st  of  April,  and  then  to  pay  it,  was  a  sufificient  consideration 
for  the  promise  of  delay  on  the  part  of  Covil,  because  it  deprived  them 
of  the  right  to  pay  the  money  at  any  time,  and  secured  to  Covil  the 
right  to  compel  the  defendants  to  keep  the  money  until  the  1st  of 
April.  This,  I  tliink,  is  fanciful.  The  appellants  were  to  pay  only  -s 
legal  interest  for  the  use  of  the  money.  The  rate  of  interest,  or  value  ^ 
of  the  use  of  money,  being  fixed  by  law,  the  law  cannot  hold  the  delay 
of  pa}'ment  to  be  either  a  disadvantage  to  the  debtor  or  an  advantage  to 
the  creditor;  the  one  paying,  and  the  other  receiving,  the  legal  rate 
of  interest  for  the  use  of  the  money  only.  The  law  cannot  hold  it 
to  be  a  disadvantage  to  a  man  to  agree  to  keep  the  money  of  another 
for  a  time  certain,  for  the  use  of  which  he  is  only  to  pay  the  rate  of 
interest  fixed  by  the  law. 

My  conclusion  is  that  the  judgment  of  the  Supreme  Court  should  be 
afBrmed,  with  costs. 

Wright,  Gould,  Allen,  and  Smith,  JJ.,  concurred.* 

Judgment  affirmed.^ 


WAKEFIELD  BANK  v.  TRUESDELL. 

(Supreme  Court  of  New  York,  1864.     55  Barb.  602.) 

C^^Appeal  by  the  plaintiff  from\^  judgment  entered  upon  the  report  of  a 
referee. 

On  the  23d  of  February,  1855,  the  Beaver  Manufacturing  Company, 
by  jts  treasurer,  made  its  promissory  note  for  $2,500  (without  interest), 
to  the  order  of  John  Thompson,  payable  at  the  Wakefield  Bank,,aUia> 
months  after  date.  The  note  was  indorsed  by  the  payee.  The  payment 
^S  jointly  and  ^severally  guaranteed  by  die  defendant  and  several 
otTierSj  afiB^n  the  28th  day  of  February  the  note  was  discounted  by 
the  plaintiff,  for  the  accommodation  of  the  maker,  and  the  proceeds 
pTacecTto  the  credit  of  Thompson,  who  was  an  agent  of  the  company, 

6  The  dissenting  opinion  of  Davles,  J.,  has  been  omitted.  Denio,  C.  J.,  also 
dissented. 

7  Accord:  Campbell  v.  Daly,  2o  Leg.  Int.  124  (1S6S),  Supreme  Court  of 
PeuTl5yT\-ania ;  Fanning  v.  Murphy,  120  Wis.  538,  105  N.  W.  105(5.  4  L.  R.  A. 
(N.  S.)  666,  110  Am.  St  Rep.  946  (1906) ;  Wilson  v.  Powers,  130  Mass.  127 
(1881). 

See  fn  sps  rnntrfl  under  note  to  Dodgson  v.  Henderson,  post,  p.  464. 


438  DEFENSES  OP  SURETY   AGAINST  CREDITOR.  (Part    3 

On  the  24th  of  August,  1855,  John  Thompson  paid  to  the  cashier 
of  the  plaintiff,  with  the  funds  of  the  maker,  the  interest  on  the  note 
up  to  the  2Gth  day  of  February,  18^50,  which  payment  was  made  without 
the  knowledge  or  assent  of  the  defendant.  The  payment  was  madeand 
received  specifically  for  interest,  and  the  cashier  indorsed  upon  tlfe  note 
the  words,  "Int.  paid  to  Feby.  26th,  1856 ;"  but  no  express  agreement 
was  made  to  wait  for  the  payment  of  the  principal  till  that  time,  or 
any  agreement  other  than  what  is  to  be  implied  from  the  transaction  as 
above  stated. 

The  referee  found,  on  this  point,  that  the  plaintiff,  without  the 
knowledge  or  assent  of  the  defendant,  did  extend  the  time  of  payment 
upon  the  note  for  six  months,  and  gave  the  maker  time  for  its  pay- 
ment until  the  26th  day  of  February,  1856,  and  that  the  defendant  was 
thereby  discharged  from  his  liability  as  surety,  and  ordered  judgment 
for  the  defendant.  ' 

,:<ri-  ,    Foster,  J.     In  the  view  I  take  of  this  case,  it  is  unnecessary  to 

present  an  analysis  of  the  authorities  cited  by  the  counsel,  as  to  which 
.  there  is  some  real  and  more  seeming  conflict.  Those  cited  by  the  counsel 

"'  for  the  plaintiff  hold,  in  cases  somewhat  analogous  to  this,  that  the  pay- 

ment of  interest  did  not  extend  the  time  of  payment  of  the  note.  Free- 
man's Bank  v.  Rollins,  13  Me.  207;  Crosby  v.  Wyatt,  23  Me.  162; 
Oxford  Bank  v.  Lewis,  8  Pick.  (Mass.)  458  ;  Blackstone  Bank  v.  Hill, 
10  Pick.  (Mass.)  129;  Agricultural  Bank  v.  Bishop,  6  Gray  (Mass.) 
317 ;  Lime  Rock  Bank  v.  Mallett,  34  Me.  547,  56  Am.  Dec.  673 ;  4 
Hurlston  &  Norman,  861.  While  those  cited  by  the  counsel  for  the 
defendant  hold  that  the  receipt  of  interest  in  advance  upon  a  note 
from  the  maker  for  a  definite  period,  if  the  right  to  sue  is  not  expressly 
reserved,  suspends  the  right  of  action  for  that  time,  and  discharges  the 
surety.  Crosby  v,  Wyatt,  10  N.  H.  318 ;  New  Hampshire  Savings 
Bank  v.  Ela,  11  N.  H.  335;  Robertson  v.  Stark,  15  N.  H.  110;  Ken- 
ningham  v.  Bedford,  1  B.  Mon.  (Ky.)  325;  1  Young  &  CoUyer,  420- 
423;  Burge  on  Suretyship,  206. 
y  The  real  c[uestion  is,  what  was  the  intention  of  Thompson  when  he 
paid  the  interest,  on  the  24th  of  August,  in  behalf  of  the  makers? 
and  what  was  the  intent  of  the  cashier  when  he  received  the  interest, 
and  indorsed  it  on  the  note?  and  how  did  they  understand  the  inten- 
tions of  each  other? 

The  cashier  and  Thompson  both  testify  that  there  was  no  express 
agreement  to  wait;  but  can  any  one  doubt  that  Thompson,  when  he 
applied  to  the  cashier  to  pay  the  interest,  desired  to  have  the  time  of 
payment  extended  for  six  months?  or  that  the  cashier  understood  that 
to  be  his  object?  or  that  Thompson  would  not  have  paid  the  interest 
for  six  months,  except  upon  the  understanding  that  the  plaintiff  was 
to  wait  for  that  time  for  the  payment  of  the  principal?  I  am  clearly 
of  the  opinion  that  such  was  his  desire,  and  that  the  cashier  must  have 
so  understood  him.  If  so,  he  was  called  upon  to  speak,  if  he  did  not 
mean  to  assent  to  the  known  desire  of  Thompson.     He  should  have 


Ch.  8)  TRANSACTIONS  OP  CREDITOR  WITH  PRINCIPAL.  439 

declined  to  receive  the  interest  at  all,  or  have  informed  Thompson  that 
he  should  reserve  the  right  to  collect  the  note  at  any  time.  He,  how- 
ever, took  the  money  and  indorsed  it  as  interest  on  the  note ;  not  as 
principal,  nor  generally,  but  as  interest  up  to  the  2Gth  of  February, 
185G.  And  is  it  not  clear  that  he  intended  to  wait  till  that  time  for 
the  principal,  that  he  meant  to  have  Thompson  understand  that  he 
would  so  wait,  and  that  Thompson  did  so  understand  him?  It  seem^ 
to~me"tlrere  can  be  no  doubt  that  they  so  understood  each  other;  and, 
ifso^it  has  all  the  binding  force  of  an  express  agreement  to  wait. 
Neither  of  them  would,  upon  any  other  supposition,  have  acted  as  they 
did.  And  the  bank  and  makers  permitted  the  note  to  run  during  the 
six  months,  without  payment,  or  attempt  to  collect  it.  V 

But  it  is  claimed  that  the  cashier  had  no  authority  to  receive  the 
interest  and  to  contract  to  extend  the  time  of  payment.  I  do  not  consid- 
er the  question  entitled  to  a  discussion.  The  cashier  is  the  financial  of- 
ficer of  the  bank,  and  his  agreements  in  behalf  of  his  principal,  in  all 
matters  relating  to  its  business  of  discounting  and  banking,  are  binding 
upon  it,  to  the  same  extent  as  if  made  by  a  resolution  of  the  board  of 
directors. 

The  judgment  should  be  affirmed.* 


BILLINGTON  v.  WAGONER  et  al. 

(Court  of  Appeals  of  New  York,  18G5.    33  N.  Y.  31.) 

Davies,  J.  This  action  is^brought  to  recover  the  amount  of  a  prom- 
issory  note,  made  by  the  defendants,  payable  to  the  plaintiff  or  bearer; 
the  defendant  James  Wagoner  being  the  principal  in  the  note,  and 
the  other  defendants  his  sureties.  It  appeared  upon  the  trial  that  after 
the  note  became  due,  about  December  1,  1857,  it  was  agreed  between 
the  plaintiff  and  James  Wagoner,  the  principal,  in  consideration  .that 
he,  \\'a,u,uner,  would  deliver  to  the  plaintiff  a  certain  fat  hog  of  the 
value  of  $11.2.5,  and  would  release  the  plaintiff  from  the  paymcnrof 
two  bushels  of  potatoes,  theretofore  sold  and  delivered  by  the  de- 
fendant to  him,  the  value  of  which  is  not  stated,  that  tlie  plaintiff  would 
wait  for  and  postpone  the  payment  of  said  note  until  tlie  fall  of.  the 
year  1858.  This  action  was  commenced  in  April,  1858.  The  rnnnsel 
for  the  plaintiff  asked  the  court  to  charge  tb£.4uE.):t'hlat  if  they  should 
find  that  the  agreement  set  forth  in  the  answer  had  been  proved,  and 
that  such  an  agreement  had  in  fact  been  made  between  the  parties,  yet 
such  an  agreement  would  be  usurious  and  void,  and  did  not  constitute 
a  valid  defense  to  the  action,  but  that  the  plaintiff  would,  notwithstand- 
ing, be  entitled  to  a  verdict  for  the  amount  due  on  the  note  set  forth 

8  Accord:   Siebeneck  v.  Anchor  Savinsrs  Rank.  Ill  Pa.  187.  2  Atl.  48r)  (ISSt'O. 
C!oDtraT  Semble.  Davis  v.  Graham,  20  Iowa.  514  (1870) ;    Ilaydeuville  Bauk 
V.  Pai-sons,  138  Mass.  53  (1884),  post,  p.  4r..1,  and  note. 


440  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

in  the  complaint.    The  judge  declined  so  to  charg-e  the^  jury,  and  the 
I    counsel  for  the  plaintiff  then  and  there  excepted. 

1        The  judge  charged  the  jury  that,  if  they  believed  that  the  agreement 

\   set  ilp  in  the  answer  had  been  proven,  it  v^ould  be  a  valid  defense,  and 

the  defendants  would  be  entitled  to  a  verdict,  tQ_which  the  counsel 

for  the  plaintiff  then  and  there  excepted.     The  jury  found  a  verdict 

^^''\    \  iox  the  defendants,  and  the  court  directed  the  exceptions  to  be  heard 

/  in  the  first  instance  at  the  General  Term,  which,  on   such  hearing, 

/  rendered  a  judgment  for  the  defendants,  and  the  plaintiff  now  appeals 

'    to  this  court. 

»*fv4f,»syAfcO^'        ^*^  ^^  incontrovertibly  settled  by  abundant  authority  that  the  giving 

'^♦»A»«L,|jL  '  '     of  time  to  the  principal,  without  the  consent  of  the  surety,  discharges 

^'      and  releases  the  latter.    Gahn  v.  Niemcewicz,  11  Wend.  312  ;  Chester  v. 

Kingston  Bank,  16  N.  Y.  336;  Smith  v.  Townsend,  25  N.  Y.  479. 

The  doctrine  on  this  subject  is  clearly  laid  down  in  Rees  v.  Ber- 
rington,  2  Ves.  Jr.  540,  by  the  Lord  Chancellor,  and  that  case  has 
frequently  received  the  approval  of  the  courts  of  this  state.  He  said: 
"There  shall  be  no  transaction  with  the  principal  debtor,  without  ac- 
quainting the  person  who  has  a  part  interest  in  it.  The  surety  only 
engages  to  make  good  the  deficiency.  It  is  the  clearest  and  most 
evident  equity  not  to  carry  on  any  transaction  without  the  privity  of 
him,  who  must  necessarily  have  a  concern  in  every  transaction  with 
the  principal  debtor.  You  cannot  keep  him  bound  and  transact  his 
affairs  ( for  they  are  as  much  his  as  your  own)  without  consulting  him. 
You  must  let  him  judge  whether  he  will  give  that  indulgence  con- 
trary to  the  nature  of  his  engagement."  In  Ludlow  v.  Simond,  2 
Caines,  Cas.  57,  2  Am.  Dec.  291,  Kent,  C.  J.,  said:  "It  is  a  well-settled 
rule,  both  at  law  and  in  equity,  that  a  surety  is  not  to  be  held  beyond 
the  precise  terms  of  his  contract,  and  the  creditor  has  no  right  to  in- 
crease his  risk  without  his  consent,  and  cannot  therefore  vary  the 
original  contract,  for  that  might  vary  the  risk." 

In  Hubbly  v.  Brown,  16  Johns.  70,  the  Supreme  Court  held  the  in- 
dorser  of  the  note  discharged,  when  the  holder,  in  consideration  of  a 
premium  paid  to  him  by  the  maker,  after  the  note  became  due,  agreed 
to  wait  ninety  days  longer,  without  suing  upon  the  note.  The  indorsers 
were  regarded  as  sureties  for  the  maker,  and  therefore  entitled  to  all 
the  rights  of  sureties.  This  case  is  quoted  approvingly  in  Reynolds  v. 
Ward,  5  Wend.  501,  where  it  was  held  that  an  agreement  without 
consideration  by  a  creditor  with  the  principal  debtor,  enlarging  the 
time  of  payment,  does  not  discharge  the  surety  to  such  note.  But 
the  doctrine  of  Hubbly  v.  Brown  is  fully  conceded,  and  the  whole 
ground  of  the  decision  is  that  the  agreement  was  without  consideration, 
and  therefore  the  holder  of  the  note  was  not  estopped  by  it  from  pro- 
ceeding forthwith,  or  at  any  time,  to  prosecute  upon  it.  The  reason 
given  for  the  rule  that  the  delay  discharges  the  surety  is  that  by  virtue 
of  the  agreement,  assuming  it  to  be  valid  and  binding,  the,  holder  is 
precluded,  during  the  extended   time,   from  proceeding  against  the 


Ch.  8)  TRANSACTIONS  OF  CREDITOR   WITH   PRINCIPAL.  441 

maker  or  principal  debtor.  It  is  the  right  of  the  surety  to  discharge 
himself  at  any  time  by  payment  to  the  holder  or  creditor,  and  be  sub- 
rogated to  his  right  to  enforce  immediate  payment  against  the  primary 
or  original  debtor.  This  right  would  be  utterly  defeated  if  the  creditor 
could  give  time  to  the  principal  debtor  without  the  consent  of  the 

I  do  not  understand  this  doctrine  is  controverted  on  the  part  of  the  ^-^  ^ f^-'^'**' 
plaintiff,  but  conceded  by  the  position  taken,  that  the  agreement  made 
by  him  with  the  principal  debtor  was  void,  and  therefore  the  case  is 
brought  within  the  principle  of  that  laid  down  in  Reynolds  v.  Ward, 
supra.  The  agreement  is  claimed  by  him  to  be  void  on  the  ground  that 
it  was  usurious,  and  that  can  only  be  affirmed  on  the  assumption  that 
it  violated  the  statute  against  usury.  '^  ,    . 

But,  assuming  that  the  agreement,  made  by  the  plaintiff  with  the  fcu>^'r^^'i'*^ 
principal  debtor,  was  usurious,  and  therefore,  in  the  language  of  the  -  •^■-•c-t*, 
statute,  void;  can  the  plaintiff  interpose  that  objection?  The  defend- 
ants claim  it  to  be  a  valid  and  binding  agreement.  They  are  estopped 
from  ever  hereafter  setting  up  that  it  was  void;  and,  assummg  it  to  be 
valid,  the  consequences  resulting  therefrom  are  the  discharge  of  the 
sureties  and  the  postponement  of  the  plaintiff's  right  of  action  against 
the  principal  debtor,  until  the  expiration  of  the  postponed  time  of  pay- 
ment. Although  the  statute  uses  the  language  that  any  usurious  not(% 
contract,  etc.,  shall  be  void,  yet  it  is  not  always  so  regarded,  as  it  is 
in  the  power  of  the  party  who  can  avail  himself  of  that  defense  to 
waive  it.  He  may  waive  the  usury  and  provide  for  the  payment  of  the 
money  actually  lent,  with  the  legal  interest  thereon,  and  such  liability 
furnishes  a  good  consideration  for  a  direction  to  assignees  to  pay  that 
money  out  of  an  assigned  estate,  and  those  who  come  in  as  cestui  que 
trust  cannot  object  to  the  legality  of  the  assignment  and  the  validity  of 
the  trust  therein  contained.    Pratt  v.  Adams,  7  Paige,  639. 

Bqt.this  defense  or  objection  to  the  contract,  that  it  is  void  on  account 
of  usury,  can  only  be  alleged  or  set  up  by  the  party  bound  by.  the 
original  contract  to  pay  the  sum  borrowed,  or  his  sureties,  heirs,  dev- 
isees, or  personal  representatives.  Post  v.  Bank  of  Utica,  7  Hill, 
391;  Mechanics'  Bank  v.  Edwards,  1  Barb.  271.  And  I  entirely  con- 
cur in  the  views  expressed  by  Barlow,  Senator,  in  Post  v.  Bank  of 
Utica,  supra,  when  he  says :  "I  concede  that  remedial  statutes  are  to  be 
construed  liberally ;  but  I  cannot  concede  that  a  statute  is  remedial, 
which  creates  not  only  a  forfeiture  of  the  money  lent,  but  renders  the 
party  violating  its  provisions  guilty  of  a  misdemeanor,  and  punishable 
by  fine  and  imprisonment.  On  the  contrary,  it  appears  to  me  that  such 
a  statute  is  penal  in  its  character,  and  subject  to  a  strict  construction." 
It  is  certainly  a  novel  position  that  the  usurer  can  come  into  court  and 
claim  that  he  had  violated  the  statute,  and  that  he  should  be  subjected 
to  its  pains  and  penalties.  Principle  and  authority  alike  condemn  such 
a' procedure.  The  precise  point  under  consideration  arose  in  La  Farge 
v.  Herter,  4  Barb.  346,  when  the  court,  by  Gridley,  J.,  says:   "It  does 


442  DEFENSES  OP  SURETY   AGAINST  CREDITOR.  (Part   3 

'**.J|-  Y  not  lie  in  the  mouth  of  La  Farge  to  set  up  his  own  illegal  conduct,  and 
to  allege  that  his  own  bond  and  mortgage  are  void  for  usury,  and  elect 
to  treat  them  void  for  that  reason.  It  is  the  victim  of  the  usury,  and 
not  the  usurer  himself,  that  can  set  up  against  a  contract  that  it  is 
usurious  and  void." 

This  case  came  before  this  court  in  9  N.  Y.  241,  and  the  judgment 
of  the  Supreme  Court  was  affirmed.  On  this  point  the  court,  by  Rug- 
gles,  C.  J.,  said :  "The  taking  of  usury  is  a  misdemeanor  by  statute,  and 
the  agreement  to  take  it  is,  in  the  eye  and  in  the  language  of  the  law, 
corrupt.  The  parties,  however,  do  not  stand  in  pari  delicto.  It  is 
oppression  on  the  one  side  and  submission  on  the  other.  The  bor-» 
rower,  therefore,  may  set  up  usury  for  the  purpose  of  avoiding  a  con- 
tract tainted  with  it ;  but  the  lender  cannot."  And  this  precise  ques- 
tion arose  and  was  decided  in  a  case  in  South  Carolina,  and  which 
is  approved  of  in  La  Farge  v.  Herter.  It  is  the  case  of  Miller  v.  Kerr, 
1  Bailey,  4.  It  was  an  action  of  debt  on  bond.  The  defense  was  that 
the  defendant  had  conveyed  certain  lands  to  the  plaintiff  in  satisfac- 
tion of  the  bond  debt.  The  plaintiff's  answer  to  the  defense  was  that 
the  lands  were  conveyed  in  pursuance  of  a  corrupt  and  usurious  agree- 
ment, by  which  the  lands  were  to  be  reconveyed  to  the  defendant  on 
payment  by  him  of  the  bond  debt,  with  14  instead  of  7  per  cent,  in- 
terest thereon,  within  two  years;  that  the  conveyance  of  the  lands, 
being  made  on  an  usurious  contract,  was  void,  and  the  bond  therefore 
unsatisfied.  Johnson,  J.,  in  delivering  the  opinion  of  the  court,  said : 
"It  is  a  clear  and  well-established  rule  of  law  that  no  one  can  take  ad- 
vantage of  his  own  wrong.  He  who  violates  a  law  comes  with  a  bad 
grace  to  ask  to  be  restored  to  rights  which  he  has  surrendered  by  his 
illegal  act ;  and  for  this  reason  he  who  pays  money  on  an  illegal  con- 
sideration cannot  maintain  an  action  to  recover  it  back.  And- what  is 
the  case  here?  The  defendant  was  indebted  to  the  plaintiff  by  bond. 
The  plaintiff  accepted  lands  in  payment,  and  he  now  asks  to  be  re- 
leased from  his  last  contract,  and  to  be  restored  to  his  rights  on  the 
bond,  upon  the  ground  that  knowingly  and  wilfully,  and  in  violation 
of  the  statute  against  usury,  he  has  annulled  the  debt  due  on  the  bond. 
According  to  the  rule,  he  cannot  be  permitted  to  do  so."  This  court 
said  that  this  case  appears  to  have  been  decided  upon  a  sound  prin- 
ciple, and  it  could  not  be  distinguished  from  that  of  La  Farge  v.  Her- 
ter, then  under  consideration,  and  that  all  the  proofs  offered  in  the 
latter  case  to  show  the  bond  and  mortgage  void  for  usury  were  right- 
fully excluded  by  the  judge  at  the  circuit. 

It  is  seldom  that  a  case  so  directly  in  point  with  that  now  under 
consideration  is  met  with  as  that  of  Miller  v.  Kerr,  supra.  There,  as 
here,  the  plaintiff  asks  the  court  to  release  him  from  his  agreement, 
the  last  contract  made  by  him  with  the  principal  debtor,  upon  the 
ground  that  he  knowingly  and  wilfully,  in  violation  of  the  statute 
against  usury,  made  the  agreement  to  give  the  principal  debtor  time 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH   PRINCIPAL,  443 

for  the  payment  of  his  debts.  He  asks  the  court  to  convict  him  of  a 
crime,  that  he  may  maintain  his  action  against  the  principal  debtor 
before  the  time  has  expired  which  he  gave  him  by  this  agreement  for 
the  payment  of  the  debt,  and  that  he  may  retain  the  Habihty  of  the 
sureties,  notwithstanding  such  extension  without  their  assent,  on  the 
ground  that  the  agreement  was  a  criminal  act,  illegal  and  void.  In 
my  opinion,  the  aid  of  the  court  cannot  be  invoked  for  such  a  purpose. 
Neither  has  the  distinction  alluded  to  by  Ruggles,  C.  J.,  in  La  Farge 
v.  Herter,  any  just  application  to  the  facts  of  this  case,  namely,  that 
although  a  party  to  a  fraud  is  estopped  from  setting  up,  for  his  own 
advantage,  the  fraud,  yet,  if  his  opponent  alleges  and  proves  it,  as  a 
part  of  his  own  case,  the  guilty  party  will  tiicn  be  entitled  to  the  ben- 
efit, while  he  incurs  the  disadvantage  resulting  from  such  a  state  of 
things,  citing  Broom's  Legal  Maxims,  322. 

In  this  case  the  defendants  neither  set  up  nor  proved  any  usurious 
agreement.  That  contained  in  their  answer,  for  aught  that  appears 
thereby,  was  a  valid  and  lawful  agreement,  and  it  is  the  plaintiff  who 
comes  in  with  facts  to  show  that  it  was  usurious  and  void.  If  the 
defendants  had  set  forth  facts  in  their  answer,  and  claimed  that  the  ', 
agreement  was  void  for  usury,  then  the  principle  involved  might  have 
been  relevant.    Upon  the  facts  of  this  case  it  is  not. 

If  the  case  of  Vilas  v.  Jones,  1  N.  Y.  274,  can  be  held  as  laying  down 
a  different  doctrine,  it  must  be  regarded  as  overruled  by  the  subse- 
quent case  of  La  Farge  v.  Herter,  9  N.  Y.  211,  supra.  But  I  do  not 
understand  that  any  such  point  was  decided  in  Vilas  v.  Jones.  The 
doctrine  is  stated  as  being  the  opinions  of  Bronson,  J.,  and  Jewett,  C. 
J.,  that  an  agreement  made  by  a  creditor  with  the  principal  debtor,  to 
forbear  the  payment  of  the  debt  in  consideration  of  an  usurious  pre- 
mium paid  for  such  forbearance,  is  void,  and  therefore  cannot  operate 
to  discharge  the  action.  Two  authorities  only  are  referred  to  by  Judge 
Bronson,  one  of  which  (Tudor  v.  Goodloe,  1  B.  Mon.  322)  held  that 
an  agreement  by  the  creditor  to  extend  the  time  for  payment  on  a 
promise  to  pay  an  usurious  rate  of  interest  for  the  forbearance  did  not 
discharge  the  surety,  for  the  reason  that,  as  the  promise  of  the  debtor 
to  pay  the  usury  was  void,  there  was  no  consideration  for  the  promise 
of  the  creditor  to  forbear,  and  consequently  no  binding  contract  on 
his  part  for  time.  The  other  case,  that  of  Kenningham  v.  Bedford,  Id. 
325,  was  a  later  case,  and  identical  in  principle  with  that  now  under 
consideration.  There,  as  here,  the  usury  was  paid  at  the  time  the  cred- 
itor promised  to  forbear,  and  the  court  held  that  the  surety  was  dis- 
charged ;  that,  although  the  contract  was  void  as  to  the  debtor,  it  was 
valid  as  to  the  creditor,  and,  if  he  should  sue  before  the  expiration 
of  the  stipulated  forbearance,  the  other  party  might  have  an  action 
for  damages.  This  decision  is  in  harmony  with  the  principles  of  La 
Farge  v.  Herter  and  the  other  cases  in  our  courts  already  adverted 
to. 


444  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   S 

I  am  satisfied  that  it  expresses  correctly  the  law,  and  it  follows  that 
the  judgment  appealed  from  should  be  affirmed,  with  costs. 

Brown,  Porter,  and  Potter,  JJ.,  and  Denio,  C.  J.,  concurred  in 
this  opinion.* 


LAXTON  V.  PEAT. 
(At  Nisi  Prius,  In  King's  Bench,  1809.    2  Camp.  185.) 

Action_by  the  indorsee  against  the  acceptor  of  a^hilLc 

The  bill  was  drawn  by  one  Hunt,  and  accepted  for  his  accommoda- 
tion by  the  defendant.    The  plaintiff  gave  value  for  it7 but  Jiad^notice 
of  the  circumstances  of  its  original  formation.    When  it  became  due, 
he  received  part  payment  from  Hunt,  and  gave  hrnf^me  to  pay  the 
^remainder,  without  the  concurrence  of  the  defendant. 

N.  G.  Clarke,  for  the  plaintiflF,  contended  that  the  defendant  was 
still  liable  for  such  part  of  the  sum  mentioned  in  the  bill  as  remained 
unpaid.  Although  the  drawer  might  be  discharged  by  the  holder's 
giving  time  to  the  acceptor,  it  had  been  decided  that  nothing  would 
discharge  the  acceptor  but  satisfaction  of  the  bill,  or  an  absolute  re- 
nunciation of  all  claim  upon  him  in  respect  of  it. 
'^  Lord  EiJ.KXBOROUGH.  This  being  an  accommodation  bill  within  the 
knowledge  of  all  the  parties,  the  acceptor  can  only  be  considered  a 
surety  for  the  drawer;  and  in  the  case  of  simple  contracts  the  surety 
is  discharged  by  time  being  given,  without  his  concurrence,  to  the 
principal.  The  defendant's  remedy  over  is  materially  affected  by  the 
new  agreement  into  which  the  plaintiff  entered  with  the  drawer  after 
the  bill  was  due.  The  case  is  exactly  the  same  as  if  the  bill  had  been 
drawn  by  the  defendant,  and  accepted  by  Hunt  in  consideration  Q,f  a 
debt  due.  According  to  many  authorities,  the  defendant,  upon  that 
supposition,  would  have  been  discharged  by  the  time  given  to  Hunt; 
and  the  principle  of  these  authorities  applies  with  equal  strength  to 
the  facts  actually  given  in  evidence. 

Plaintiff  non-suited.^" 

»  The  dissenting  opinion  of  Davis,  J.,  has  been  omitted. 

10  In  Kerrisou  v.  Cooke,  3  Camp.  3G2  (1813),  Gil'bs,  J.,  lamentiugly  said: 
"I  am  sorrj-  the  term  'accommodation  bill'  ever  found  its  way  into  the  law, 
or  that  parties  were  allowed  to  get  rid  of  the  obligations  they  profess  to~con- 
tract  by  putting  their  names  to  negotiable  securities."  " 

Accord:    Hall  v.  Capital  Bank  of  Macon,  71  Ga.  715  (1883),  post,  p.  459 

Contra:  Walker  v.  Bank,  12  Serg.  &  R.  (Pa.)  382  (1825);  White  v.  Uop- 
klhs,  3  Watts  &  S.  (Pa.)  99,  37  Am.  Dec  542  (1841). 


Ch.  8)  TRAXSACTIONS  OF  CREDITOR  WITH  PRINCIPAL.  445 

SMITH  V.  SHELDEN  et  al. 
(Supreme  Court  of  Michigan,  1870.    35  Mich.  42,  24  Am.  Rep.  529.) 

Error  to  Wayne  Circuit. 

Copley,  C.  J.^^  The  legal  questions  in  this  case  arise  upon  the  fol- 
lowing- facts :  ^ 

Prior  to  June,  1867,  Eldad  Smith,  Isaac  Place,  and  Francis  B.  Owen    '-'"'' 
were  partners  in  trade  under  the  firm  name  of  Place,  Smith  &  Owen, 
and  as  such  became  indebted  to  defendants  in  error  in  the  sum  of  $969 
on  book  account. 

In  the  month  mentioned  the  firm  was  dissolved  by  mutual_  consent ; 
Place  purchasing-  the  assets  of  his  co-partners  and  ac^reeing  to  pay  oflf 
tlie  partnership  liabilities,  including  that  to  the  defendants  in  error. 
On  the  2d  day  of  the  following  month  Place  informed  the  defend- 
ants  in  error  of  this,  arrangement,  and  that  he  had  taken  the  assets 
and  assumed  the  liabilities  of  the  firm,  and  they,  without  the  consent 
or  knowledge  of  Smith  and  Owen,  took  from  Place  a  note  for^the 
amount  of  the  firm  indebtedness  to  them,  payable  at  one  day  with  10 
per  centum  interest.  They  did  not  agree  to  receive  this  note  in  pay- 
ment of  the  partnership  indebtedness,  but  they  kept  it  and  continued 
their  dealings  with  Place,  who  made  payments  upon  it.  The  payments, 
however,  did  not  keep  down  the  interest.  Place,  in  1872.  became  in- 
solvent and  made  an  assignment,  and  Smith  was  then  called  upon  to 
make  payment  of  the  note.  This  was  the  first  notice  he  had  that  he 
was  looked  to  for  payment.  On  Jiig_declinmg_to_niake  payment,  suit 
was  brought  on  the  original  indebtedness,  and  judgment  recovered.      X  r,^  f.  ^,..*/'a/^ 

The  position  taken  by  tlie  plaintiffs  below  .was  that,  as  they  had 
never  received  payment  of  their  bill -for  merchandise,  they  were  en- 
titled to  recover  it  of  those  who  made  the  debt ;  the  giving  of  the 
note,  which  still  remained  unpaid,  being  immaterial.  OoJ^ehalf  of 
Smith  it  was  contended  that,  by  the  arrangement  between  Place  and  his 
co-partners,  the  latte'r,  as  between  the  three,  became  the  principal  debt- 
or, and  that. from  the  time  when  the  creditors  were  informed  of  this 
arrangement  they  were  bound  to  regard  Place  as  principal  debtor  and 
Smith  and  Owen  as  sureties,  and  that  any  dealing  of  the  creditors 
with  the  principal  to  the  injury  of  the  sureties  would  have  the  effect 
to  release  them  from  liability.  And  it  is  further  contended  that  the 
taking  of  the  note  from  Place,  and  thereby  giving  him  time,  however 
short,  was  in  law  presumptively  injurious.  )( 

Upon  this  state  of  facts  the  following  questions  have  been  argued  in 
this  court : 

(1)  Was  the  note  given  by  Place  in  the  co-partnership  name  for  the 
co-partnership  indebtedness,  but  given  after  the  dissolution,  binding 
upon  Smith  and  Owen?  ^^ 

11  The  arj^iiments  of  counsel  are  omitted. 

12  The  discussion  of  this  question  has  been  omitted  from  the  opinion,  which 
holds  that  the  note  given  after  dissolution  was  not  binding. 


446  DEFENSES  OF  SURETY   AGAINST   CREDITOR.  (Part   3 

(2)  If  Smith  and  Owen  were  not  bound  by  the  note,  were  they 
entitled  to  the  rights  of  sureties?    And 

(3)  Did  the  taking  of  the  note  given  by  Place  discharge  Smith  and 
Owen  from  their  former  liability?    *     *    * 

f"  For  a  determination  of  the  question  whether  Smith  and  Owen  were 
f^i^^fe^vWf  ^  entitled  to  the  rights  of  sureties,  it  seems  only  necessary  to  point  out 
^  kftjb  /y^^^  the  relative  position  of  the  several  parties  as  regards  the  partnership 
debt.  Place,  by  the  arrangement,  had  agreed  to  pay  this  debt,  and  as 
between  himself  and  Smith  and  Owen  he  was  legally  bound  to  do  so. 
But  Smith  and  Owen  were  also  liable  to  the  creditors  equally  with 
Place,  and  the  latter  might  look  to  all  three  together.  Had  they  done 
so,  and  made  collections  from  Smith  and  Owen,  these  parties  would 
have  been  entitled  to  demand  indemnity  from  Place.  This  we  believe 
to  be  a  correct  statement  of  the  relative  rights  and  obligations  of  all. 

Now  a  surety,  as  we  understand  it,  is  a  person  who,  being  liable  to 
pay  a  debt  or  perform  an  obligation,  is  entitled,  if  it  is  enforced  against 
him,  to  be  indemnified  by  some  other  person,  who  ought  himself  to 
have  made  payment  or  performed  before  the  surety  was  compelled  to 
do  so.  It.  is  immaterial  in  what  form  the  relation  of  principal^  and 
surety  is  established,  or  whether  the  creditor  is  or  is  not  contracted 
with  in  the  two  capacities,  as  is  often  the  case  when  notes  are  given  or 
bonds  taken.  The  relation  is  fixed  by  the  arrangement  and  equities 
between  the  debtors  or  obligors,  and  may  be  known  to  the  creditor, 
or  wholly  unknown.  If  it  is  unknown  to  him,  his  rights  are  in  no 
manner  affected  by  it ;  but  if  he  knows  that  one  party  is  surety  mere- 
ly, it  is  only  just  to  require  of  him  that,  in  any  subsequent  action  he 
may  take  regarding  the  debt,  he  shall  not  lose  sight  of  the  surety's 
equities. 

That  Smith  and  Owen  were  sureties  for  Place,  and  the  latter  was 
principal  debtor  after  the  dissolution  of  the  co-partnership,  seems  to 
us  unquestionable.  It  was  then  the  duty  of  Place  to  pay  this  debt  and 
^save  them  from. being  called  upon  for  the  amount.  But  if  the  cred- 
^  itors,  having  a  right  to  proceed  against  them  all,  should  take  steps  for 
that  purpose,  the  duty  of  Place  to  indemnify,  and  the  right  of  Smith 
and  Owen  to  demand  indemnity,  were  clear.  Every  element  of  sure- 
tyship is  here  present,  as  much  as  if,  in  contracting  an  original  indebt- 
edness, the  contract  itself  had  been  made  to  show  on  its  face  that  one 
of  the  obligors  was  surety  merely.  As  already  stated,  it  is  immaterial 
how  the  fact  is  established,  or  whether  the  creditor  is  or  is  not  a  party 
to  the  arrangement  which  establishes  it. 

This  view  of  the  position  of  the  parties  indicates  clearly  the  right 
of  Smith  and  Owen  to  the  ordinary  rights  and  equities  of  sureties. 
The  cases  which  have  held  that  retiring  partners  thus  situated  are  to 
be  treated  as  sureties  merely  have  attempted  no  change  in  the  law,  but 
are  entirely  in  harmony  with  older  authorities,  which  have  only  ap- 
plied the  like  principle  to  different  states  of  facts,  where  the  relative 
position  of  the  parties  as  regards  the  debt  was  precisely  the  same.    We. 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH  PRINCIPAL.  447 

do  not  regard  them  as  working  any  innovation  whatever.  The  cases 
we  particularly  refer  to  are  Oakeley  v.  Pasheller,  4  CI.  &  Fin.  207, 
Wilson  v.  Lloyd,  L.  R.  16  Eq.  Cas.  60,  and  Alillerd  v.  Thorn,  56  N. 
Y.  402._  /   '•--  ^^.Au 

And  it  follows-as  a  necessary  result,  from  what  has  been  statctiT-that 
Smith  and  Owen^were  discharged  by  the  arrangement  mndp  by  th^ 
creditors  with  Place.  They  took  his  note  on  time,  with  knowlecl^e.that 
Place  had  become  the  principal  debtor^  and  without  the  consent  or 
knowledge  of  the  sureties.  They  thereby  endangered  the  security  of 
the  sureties,  and,  as  the  event  has  proved,  indulged  Place  until  the  ,  ^^^  j.^ 
security  became  of  no  value.  True,  they  gave  but  very  short  time  in  "  ,«  ^ , 
the  first  instance;  but,  as  was  remarked  by  the  Vice  Chancellor  in  Wil- 
son V.  Lloyd,  L.  R.  16  Eq.  Cas.  60,  71 :  "XheJengtlx-of-tim^  makes  no 
kind  of  difference."  The  time  was  the  same  in  Fellows  v.  Prentiss. 
3  Denio,  512,  45  Am.  Dec.  484,  where  the  surety  was  also  held  dis- 
charged. And  see  Okie  v.  Spencer,  2  Whart.  (Pa.)  253,  30  Am.  Dec. 
251.  But  that  indulgence  beyond  the  time  fixed  was  contemplated 
when  the  note  was  given  is  manifest  from  the  fact  that  it  was  made 
payable  with  interest.  In  a  legal  point  of  view  this  would  be  imma- 
terial ;  but  it  has  a  bearir;g  on  the  equities,  and  it  shows  that  the  cred 
itors  received  or  bargained  for  a  consideration  for  the  very  indulgence 
which  was  granted,  and  which  ended  in  the  insolvency  of  Place.  When 
they  thus  bargain  for  an  advantage  which  the  sureties  are  not  to  share 
with  them,  it  is  neither  right  nor  lawful  for  them  to  turn  over  to  the 
sureties  all  the  risks.  This  is  the  legal  view  of  such  a  transaction,  and 
in  most  cases  it  works  substantial  justice. 

The  judgment  must  be  reversed,  with  costs,  and  a  new  trial  ordered. 

The  other  Justices  concurred.^* 


DEVERS  v.  ROSS. 

(Supreme  Court  of  Appeals  of  Virgiuia,  1853.    10  Grat.  252,  60  Am.  Dec.  331.) 

This  was  a  supersedeas  to  a  judgment  of  the  Circuit  Court  of  Har- 
rison County.    The  case  is  sufficiently  stated  in  the  opinion. 

Samuels,  J.  This  was  an^ction  of  debt,  brought  on  a  single  bill 
in  the  name  of  Cyrus  Ross,~the  obligee,  for  the  use  of  Jesse  Flowers, 

18  Accord:  Colgrove  v.  Tallman,  G7  N.  T.  95,  23  Am.  Rep.  00  (ISTO).  Shu- 
llarly~tS"e  mortgagor  is  discharged  if,  after  he  conveys  the  equity  of  redemi): 
tfon  to  a  grantee  (who  assumes  the  dolit).  the  mortgagee,  knowing  of  the  ar- 
nrng^iiienrrglves  the  grantee  (now  the  principal)  a  binding  extension  of  time. 
UmonLTfelns.  Co.  v.  Ilanford.  143  U.  S.  1S7,  12  Sup.  Ct.  437.  3G  L.  Ed.  118 
(1892),  enforcing  law  of  Illinois.  Seej^ases  in  the  note  to  Overend  v.  Oriental 
Co.,  post,  p.  459.  ' 

-Contra:  iMaiTlgay  v.  Lewis,  3  Irish  Reports  (Common  Law  Series)  495  (1SG9) ; 
Rawson  V.  Taylor,  30  Ohio  St.  380.  27  Am.  Rep.  404  (1S7G) ;  Shaplelgh  Co.  v. 
Wells,  90  Tex.  110,  37  S.  W.  411,  59  Am.  St.  Rep.  7S3  (ISOG).  But  see  Zapalac 
V.  Zapp,  22  Tex.  Civ.  App.  375,  54  S.  W.  938  (1900). 


448  DEFENSES  OF  SURETY  AGAINST  CREDITOR.       ^Part  3 

against  James  P.  Wilson,  a  principal  debtor,  and  James  Devers,  his 
surety.  A  joint  plea  of  payment  was  filed  by  the  defendants,  aftd  is- 
sue made  up  thereon.  A  separate  plea  was  filed  by  Devers,  the  surety, 
alle,Q:ing-,  in  substance,  tliaTttits party  executed  the  single  bill  as  surety; 
tliaLlLhad  been  assigned  and  delivered  by  the  obligee,  Ross,  to  one 
William  Martin ;  that  "Martin,  for  the  use  of  Jesse  Flowers,  had-  in^ 
stituted  an  action  thereon  against  the  obligors ;  that  during  the  pend- 
ency of  this  action,  an  agreement  under  seal  was  made  between  Martin 
and  Wilson,  the  principal  debtor,  whereby  Wilson  agreed  to  pay  all 
costs  that  had  accrued  upon  the  suit;  and_that  Martin,  without  the 
knowledge,  privity  or  consent  of  Devers,  the  surety,  agreei  .io.  for- 
bear and  give  day  of  payment  of  said  debt  until  a  day  certain;  that 
the  costs  were  paid  and  the  suit  dismissed,  and  the  forbearance  accorded 
and  day  of  payment  given  according  to  the  terms  of  the  contract  be- 
tween Martin  and  Wilson,  but  without  the  knowledge,  privity  or  as- 
sent of  Devers,  the  surety.  A  special  replication  to  this  plea  was 
filed,  and  a  rejoinder  to  the  replication,  without  bringing  the  parties 
to  issue.  The  court,  without  noticing  the  plea  of  payment,  gave  judg- 
ment for  the  plaintiiT  as  upon  a  demurrer  to  the  rejoinder,  although 
no  demurrer  thereto  appears  in  the  record. 
y  It  was  decided  by  this  court  in  the  case  of  Ward  v.  Johnson,  6  Munf. 
6,  8  Am.  Dec.  729,  that  a  confession  of  judgment  by  the  principal,  with 
stay  of  execution  for  a  definite  time  without  the  assent  of  the  surety, 
did  not,  at  law,  discharge  the  surety  from  his  liability. 
JK^j.-fr  In  the  case  before  us,  the  assurance  of  indulgence,  it  is  alleged,  was 
^-  '  given  in  the  covenant  of  Martin,  who  had  been. the  holder  of  the  bond, 
but  who  had  brought  suit  thereon  in  the  name  of  Ross,  the  obligee, 
for  the  use  of  Flowers.  It  is  by  no  means  clear  that  Martin  had  any 
authority,  under  the  facts  alleged  in  the  plea,  to  control  the  debt  at 
^  -  ^  y.  all.  Giving  to  the  plea,  however,  the  construction  most  favorable  to 
»A.'  -"^T  -  ..,&..  jj^g  defendant,  and  holding  that  Martin  had  control  of  the  debt,  and 
might  enter  into  such  a  covenant  for  indulgence,  yet  the  case  falls 
within  the  principle  declared  in  the  case  of  Ward  v.  Johnson :  A  cove- 
nant  not  to  sue  for  a  limited  time  does  not  release  the-dcbt.  It  is 
equally  well  settled  that,  if  a  creditor  shall  make  a  contract  with^His 
principal  debtor  for  an  extension  of  the  time  of  payment,  he  does  not 
thereby  afford  the  surety  for  the  debt,  a  plea  in  bar  in  a  suit  at  com- 
mon law.  The  surety  must  seek  relief,  if  entitled  to  any,  in  a  court  of 
equity.  Ward  v.  Johnson,  6  Munf.  6,  8  Am.  Dec.  729;  Steptoe's 
Adm'rs  v.  Harvey's  Ex'rs,  7  Leigh,  501. 

I  ajTi  therefore  of  opinion  the  court  below  might  have  refused  to 
receive  the  plea,  or,  having  received  it,  might  have  stricken  it  out,  or, 
if  a  verdict  had  found  the  truth  of  the  plea,  might  have  rendered  a 
judginent  "non  obstante  veredicto."  The  court  fell  into  error  in  over- 
ruling  the  plea. 
^1  (  .  /^       The  coiirt,  however,  should  not  have  rendered  a  judgment  against 

,^  J  the  defendants  without  disposing  of  the  issue  on  the  plea  of  payment. 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  449 

The  plaintiff  can  have  no  judgment  until  this  issue  shall  be  found  in 
his  favor. 

I  am  of  opinion  to  reverse  the  judgment,  and  to  remand  the  cause 
for  the  purpose  of  trying  the  issue  on  the  plea  of  payment. 

The  other  judges  concurred  in  the  opinion  of  Samuels,  J, 

Judgment  reversed.^* 


LIQUIDATORS  OF  OVEREND,  GURNEY  &  CO.,  Limited,  Ap- 
pellants, V.  LIQUIDATORS  OF  ORIENTAL  FINANCIAL 
CORPORATION,  Limited,  Respondents. 

(House  of  Lords,  1874.    Law  Rep.    7  Eng.  &  Ir.  App.  Cas.  348.) 

This  was  an  appeal  against  a  decree  of  Lord  Chancellor  Hatherley, 
made  in  a  suit  which  the  present  respondents  had  instituted  against 
the  present  appellants,  in  order  to  restrain  these  appellants  from  prose- 
cuting an  action  at  law  against  these  respondents  to  recover  the  amount 
of  four  bills  of  exchange,  on  which  the  names  of  the  respondents  ap- 
peared as  acceptors.  The  facts  of  the  case  are  set  forth  in  detail  in 
the  report  in  the  court  below.  L.  R.  7  Ch.  App.  142.  The  following 
is  the  summary  of  them  necessary  for  the  present  report : 

14  This  case  is  of  merely  historical  interest,  showing  that  the  equitable  de- 
fense lof  a  covehafit  Of  forbearance  was  not  always  permitted  at  law.'"" 

'^'he  original  doctrine  of  the  common  law  undoubtedly  was  that  a  court 
of  law  deals  only  with  legal  liabilities  and  legal  discharges,  and  that,* al- 
though an  agreement  to  give  time  to  the  principal  varies  the  relations  be- 
tween him  and  the  surety,  and  thus  constitutes  an  equitable  discharge  of 
the  latter,  yet  that  such  a  defense  was  exclusively  co.gnizable  by  a  court  of 
equity,  and  could  not  be  set  up  as  a  bar  to  an  action  at  law.  These  doc- 
trines may  have  been  much  relaxed  by  recent  English  decisions.  *  *  * 
In  some  of  the  UnitciT  States  the  old  English  doctrine  sfems  ui  liii'vail. 
*  *  *  But  in  a  nKiJinity  of  the  states  the  oppositi'  (idcdiiu'  ],rt\  ,ii:-.,  and 
it  is  held  that  any  defense  which  would  avail  a  surety  iu  equity  may  Ikj 
macle  as  well  at  law;  and  it  has  been  decided  in  most  of  the  supreme  tri- 
bunals In  this  country  that  whatever  will  discharge  a  surety  in  equity  will 
be  equally  effectual  as  a  discharge  at  law.  and  that  time  given  to  the  prin- 
cipal upon  a  contract  which  shall  bind  the  creditor  not  to  sue  during  tliat 
time  will  be  a  good  defense  to  an  action  at  law  against  the  surety,  wheth- 
er the  fact  of  the  suretyship  appear  on  the  face  of  the  contract  or  was 
shown  by  extrinsic  evidence,  if  the  creditor  had  notice  of  the  true  stand- 
ing and  relation  of  the  parties."     Heath  v.  Derry  Bank,  44  N.  H.,  at  page 

176  (1802). 

The  jurisdiction  of  equity  is.  however,  not  affected  by  the  giving  of  the 
right'~to~lHtroaTrce  "the  e<pntable  defense  at  law.     Heath  v.   Bank.  44~K""&. 

177  (lSG5)7~oT)Tter  r  Hempstead  et  al.   v.  Watkins,   G  Ark.  319,  358,  359,  42 
Am.  Dec.  a%  (l.S4.^.). 

Courts  of  law  in  the  United  States  therefore  allow  the  equitable  defense 
that  the  creditor  has  given  a  binding  extension  of  tinte.  Niinierous  cases 
t6^this_eft'ect  will  be  found  post,  pp.  449  to  470  accord :  Smith  v.  Clopton,  48 
Sllss.  60  (IS73) ;  and,  similarly,  the  equitable  defense  that  the  creditor  has 
parted  with  collateral  of  the  debtor,  see  post,  pp.  471  to  515;  also  Baker  v. 
Bnggs,  8"Plck.  (Mass.)  122,  19  Am.  Dec.  :ill  (1829),  after-acquired  collateral; 
Kogers  v.  School  Trustees,  -10  III.  42S  (ISUS). 

Hen.Sub.— 29 


4o0  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

James  McHenry,  who,  it  afterwards  appeared,  was  the  agent  in  this 
country  for  the  Atlantic  &  Great  Western  Railway  Company,  had  dis- 
count dealings  with  Overend,  Gurney  &  Co.,  and  in  June,  1864,  ob- 
tained from  them  discount  for  bills  amounting  to  ilO,000.,  drawn  by 
Leon  Lillo,  of  Paris,  on  and  accepted  by  the  respondents.  These  bills 
formed  part  of  a  series  of  bills  to  a  much  larger  amount,  which  the 
respondents  had  agreed  in  like  manner  to  accept  .on  receiving  a  com- 
mission of  4  per  cent.  These  bills  were  not  paid,  but  they  were  from 
time  to  time  renewed,  and  Overend  &  Gurney  took  the  renewals.  On 
the  9th  of  January,  1866,  the  last  renewed  acceptances  of  the  respond- 
ents fell  due,  and  McHenry  gave  to  the  respondents  a  check  on  the 
appellants  for  ilO,000.,  and  the  respondents  then  accepted  four  bills 
of  exchange  for  £2,000.,  £2,000.,  £3,000.,  and  £3,000.  These  bills  were 
drawn  on  the  respondents,  not  by  the  former  drawer,  Leon  Lillo,  but 
by  Emile  Deschamps,  of  Paris. 

They  were  dated  the  22d  of  January,  1866,  and  were  to  become  due 
'iiree  months  after  date.  They  were  on  the  same  day  deposited  by 
•McHenry  with  the  appellants,  and  he  gave  the  appellants  a  written 
ijuarantee  in  these  terms : 

"City  Office,  23,  Throgmorton  Street,  E.  C. 

"Atlantic  and  Great  Western  Railway, 

"5  Westminster  Chambers,  Victoria  Street,  Westminster,  S.  W. 

"London,  9th  January,  1866. 
"Messrs.  Overend,  Gurney  &  Co.  (Limited). 

'•'Gentlemen :  In  consideration  of  your  agreeing  to  discount  the  bills 
of  Emile  Deschamps  on  and  accepted  by  the  Oriental  Financial  Cor- 
poration (Limited)  for  £10,000.,  due  as  per  list  at  foot,  I  hereby 
agree  to  guarantee  and  indemnify  you  from  all  loss  that  you  may  in- 
cur by  so  doing ;  and  in  the  event  of  same  not  being  duly  paid  at  ma- 
turity, I  hereby  engage  to  pay  the  amount  of  said  bills  on  demand, 
and  for  the  above-mentioned  consideration  I  hereby  give  the  guarantee 
of  the  Atlantic  and  Great  Western  Railway  Company  for  the  said  bills 
for  the  said  terms  and  conditions,"  etc. 
Signed  by  W.  B.  Ford  for  McHenry. 

The  list  of  the  bills  was  then  given.  They  were  all  to  fall  due  on 
the  6th  of  April,  1866. 

In  the  course  of  March,  1866,  McHenry  had  some  interviews  with 
Messrs.  Birkbeck  and  Henry  Edmund  Gurney  (managing  the  business 
of  Overend,  Gurney  &  Co.,  Limited),  with  whom  he  had  other  money 
transactions  to  a  large  amount,  and  he  deposited  with  them  shares 
of  the  Atlantic  &  Great  Western  Railway  Company  to  the  amount  of 
$445,000.  The  agreement  that  was  then  arrived  at  between  the  parties 
was  not  reduced  into  writing,  and  was,  in  this  suit,  differently  repre- 
sented by  Messrs.  Birkbeck  and  Gurney  on  the  one  hand,  and  by  Mc- 
Henry on  the  other. 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  451 

The  bills,  on  coming  to  maturity  on  the  6th  of  April,  were  dishon- 
ored. Notice  of  dishonor  was  given  by  the  appellants  to  all  the  par- 
ties whose  names  were  on  the  bills,  and  among  the  rest  to  the  re- 
spondents, whose  names  appeared  as  acceptors.  On  the  9th  of  April 
Mr.  Farmer,  the  solicitor  of  the  respondents,  called  at  Overend  &  Gur- 
ney's  (Limited)  Bank,  and  informed  them  that  the  bills  had  been  ac- 
cepted by  the  Financial  Corporation  for  McHenry's  accommodation 
and  benefit,  and  must  be  paid  by  him.  The  answer  that  Mr.  Farmer 
received  was  that  the  managing  director  would  see  Mr.  McHenry  in 
the  course  of  the  day. 

OrLthe  27th  of  April  McHenry  went  to  the  appellants,  who  were 
then  largely  in  advance  to  him,  and  had  a  meeting  with  Mr,  Birkbeck 
and  Mr.  Gurne}'.  McHenry  delivered  to  them  bills  to  a  very  con- 
siderable  amount^  among  which  were  bills  on  Lillo  for-£SS,0I10^- and 
an  agreement  was  come  to  between  the  parties.  What  thai  agreement 
was  occasioned  much  discussion  in  the  cause ;  but  the  Lords  in  their 
judgments  adopted  ultimately  the  statement  of  it  as  made  by  Mr.  Birk- 
beck, which,  as  to  the  four  bills  now  in  question,  was  to  this  effect: 
"That  the  said  four  bills,  for  _i3^000^.j£3,0.aQ.,  ,i2^Q0^  and  £2J)00., 
sljQuld  be  held  over  during  the  currency  of  the  bills  on  Leon  Lillo  for 
£38.000.  given  as  additional  security.  The  four  bills  on  the  plaintiffs' 
corporation  (the  present  respoiicTents)  were  then  unpaid  in  the  hands 
of  the  defendant  company  (the  present  appellants),  and  therefore  could 
not  be  retired  by  them." 

Both  companies,  the  Overend  &  Gurney  Company  and  the  Financial 
Corporation,  went  into  liquidation.  On  the  29th  of  October,  1867, 
payment  of  these  bills  was  demanded  by  the  liquidators  of  the  Overend 
&  Gurney  Company  from  the  liquidators  of  the  Oriental  Financial 
Corporation  ;  but,  liability  on  them  being  denied,  an  action  was  brought 
by  tjiejippellants  in  February,  ISGS,  to  recover  the  amount.  I-n  March, 
1868j_the  respondents  filed  a  bill  in  chancery  to  restrain  this  action,  on 
the  ground  that  they  were  mere  acceptors  for  accommodation  of  J^Ic- 
Henry,  and  that  he  was  the  principal  debtor;  .that  notice  of  those  facts 
had  been  given  to  Overend  &  Gurney,  who  by  their  arrangement  with 
McHenry  of  the  27th  of  April,  18156,  made  after  such  notice,  had  in 
fact  released  them  from  all  liability  on  the  bills.  Evidence  was  taken 
on  both  sides,  and  in  June,  1871^Ance  Chancellor  Malins  made  a  de- 
cree whereby  the  bill  filed  by  the  liquidators  of  the  Financial  Corpora- 
tion was  ordered  to  be  dismissedC^-ADn  appeal,  to  Lord  Chancellor 
Hatherley,  this  decree  was  reversed.  L.  R.  7  Ch.  App.  1-12,  in  a  note 
to  which  the  previous  judgment  of  Vice  Chancellor  Malins  is  given. 
The  case  was  then  brought  up  to  this  House. ^' 

The  Lord  Chancellor  (Lord  Cairns).  My  Lords,  the  bills  of 
exchange  out  ot  which  tbe  pfoceeHTngs  m  this  suit  arose  were  four 
in  number,  and  amounted  in  value  to  the  sum  of  ilO.OOO. ;   and  I  will 

IB  The  arguments  of  counsel  have  been  omitted. 


452  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

ask  your  Lordships,  in  the  first  place,  to  observe  the  position  of  the 
persons  who  are  liable  upon  the  face  of  those  bills  of  exchange.  In 
form,  the  bills  of  exchange  were  drawn  by  a  person,  apparently  a  na- 
tive of  France,  of  the  name  of  Deschamps ;  and  they  were  drawn  up- 
on, and  accepted  here  by,  the  Oriental  Financial  Corporation.  The 
bills  drawn  and  accepted  in  this  way  were  drawn  for  the  purpose  of 
being  used  by  a  gentleman  of  the  name  of  McHenry,  who  was  a  de- 
fendant in  the  original  suit,  and  who  appears  to  be  the  agent  in  this 
country  for  a  railway  company  across  the  Atlantic,  and  these  bills 
were  obviously  drawn,  and  their  acceptance  was  obtained,  for  the 
purpose  of  having  the  bills  used  in  the  financial  arrangements  of  that 
transatlantic  railway  company. 

My  Lords,  the  bills  so  drawn  and  so  accepted  were  taken  to  the 
firm  of  the  Overend  &  Gurney  Company  for  the  purpose  of  discount, 
and  they  were  discounted  by  that  firm ;  but  at  the  time  of  the  discount, 
and  along  with  it,  there  was  given  by  McHenry  to  this  firm  a  guar- 
antee, to  the  wording  of  which  I  will  now  direct  your  Lordships'  par- 
ticular attention.  It  is  signed  by  a  Mr.  Ford,  by  procuration,  for  Mc- 
Henry, and  addressed  to  Messrs.  Overend,  Gurney  &  Co.  It  runs  in 
ihese  words :  "Gentlemen :  In  consideration  of  your  agreeing  to  dis- 
count the  drafts  of  Emile  Deschamps  on,  and  accepted  by,  the  Oriental 
Financial  Corporation  (Limited)  for  £10,000.,  due  as  per  list  at  foot. 
I  hereby  agree  to  guarantee  and  indemnify  you  for  all  loss  that  you 
may  incur  by  so  doing,  and  in  the  event  of  same  not  being  duly  paid 
at  maturity,  I  hereby  engage  to  pay  the  amount  of  said  bills  on  de- 
mand, and  for  the  above-mentioned  consideration  I  hereby  give  the 
guarantee  of  the  Atlantic  and  Great  Western  Railway  Company  for 
the  said  bills  for  the  said  terms  and  conditions."  This  guarantee  was, 
as  I  have  stated,  given  to  Overend,  Gurney  &  Co.  upon  the  occasion 
of  the  discounting  of  the  bills. 

Now  I  will  assume,  for  it  is  stated  by  the  directors  oX_QYei£nd, 
Gurney  STCo.  positively,  and  it  is  not  denied,  that  in  January,  1866, 
the  time  of  the  discounting  of  the  bills,  they  were  not  aware  of  anv 
relationship  between  the  parties  to  the  bills  and  McHenry  which  would 
impart  to  them  the  knowledge  of  McHenry  being  the  principal^.a^d 
the  Financial  Corporation  Company  being  the  surety.  But,  in  point 
of  fact,  your  Lordships  find  that  that  was  the  relationship  between 
the  parties.  The  giving  of  these  bills  of  exchange,  the  drawing  of 
them,  and  the  acceptance  of  them  were  for  the  benefit  of  McHenry  and 
his  principals.  Mcjienry  was  bound  to  provide  the  funds  for  the  pay- 
ment of  the  bills  as  between  himself  and  the  acceptors;  and  tliT  re- 
latibnship  of  principal  and  surety  plainly  existed  between  the  parties. 

That  being  the  position  of  the  parties,  the  bills  of  exchange  became 
due  on  the  6th  of  April,  1866,  and  they  were  not  paid  at  maturity. 
Notice  of  this  fact  was  given  to  all  the  parties  concerned.  It  was  giv- 
en to  McHenry,  it  was  given  to  the  drawer,  and  it  was  given  also, 
although  that  perhaps  was  unnecessary,  to  the  acceptors.     That  no- 


Ch.  S]  TRANSACTIONS  OF  CREDITOR   WITH   PRINCIPAL.  453 

tice  was  given  apparently  about  the  9th  of  April,  and  I  find  that  on 
the  9th  of  April  the  persons  constituting  the  Oriental  Financial  Cor- 
poration informed  Overend  &  Gurney  of  the  exact  position  in  which 
they  stood  as  to  McHenry.  I  will  direct  your  Lordships'  attention 
to  the  evidence  on  that  point,  because  it  is  given  in  one  affidavit,  and 
is  not  the  subject  of  any  contradiction  or  of  any  dispute.  Farmer,  in 
his  affidavit,  says:  "On  the  9th  of  April  I  called  at  the  place  of  busi- 
ness of  Overend  &  Gurney.  I  saw  one  of  the  managing  directors 
(whom  I  believe  to  be  Mr.  Birkbeck),  and  after  stating  to  him  that 
certain  bills,  namely,  the  bills  in  question,  bearing  the  acceptance  of 
the  plaintiffs  in  the  cause,  in  respect  of  which  Overend,  Gurney  &  Co. 
had  claimed  payment  from  the  plaintiffs,  were  accepted  by  the  plain- 
tiffs merely  for  the  benefit  and  accommodation  of  McHenry,  and  that 
such  bills  ought  to  have  been  paid  or  provided  for  by  him  at  maturity, 
and  referred  the  defendants,  the  company,  to  him  with  respect  to  the 
payment  of  the  said  bills  of  exchange,  and  the  managing  director  in- 
formed me  in  reply  that  he  should  probably  see  McHenry  in  tlie  course 
of  the  afternoon  of  the  same  day."  Therefore,  my  Lords,  at  that  time, 
w^hichwas  three  days  after  the  maturity  of  the  bills,  Overend,  Gurney 
&  Ca~were  distinctly  and  clearly  informed  that,  upon  and  in  respect 
of  these  bills,  the  Financial  Corporation  stood  in  the  situation  of  surety 
onTyTand  that_the  person  primarily  liable  to  provide  for  the  bills  "was 
TvIcHenry! 

But  your  Lordships  will  observe  that  it  was  not  merely  a  formal 
intimation  of  this  kind  which  was  given  to  Overend,  Gurney  &  Co. 
It  was  an  intimation  which  was  accepted  and  acted  upon  by  them,  be- 
cause the  managing  director  stated  that  he  intended  to  see  McHenry 
on  the  same  day  upon  the  subject ;  and  your  Lordships  have  it  in 
evidence  that  from  that  day,  the  9th  of  April,  1866,  until  the  5th  of 
November,  1867,  no  application  whatever  on  the  subject  of  these  bills 
was  made  to  the  Financial  Corporation.  Overend,  Gurney  &  Co.  seem 
to  have  thoroughly  understood  the  position  in  which  McHenry  stood 
towix3s.-the  Financial  Corporation,  as  the  person  who  was  bound  to 
provide  for  the  payment  of  the  bills— 

Now,  my  Lords,  that  relationship  having  existed  between  the  par- 
ties, and  having  thus  been  clearly  brought  to  the  notice  of  Overend, 
Gurney  &  Co.,  your  Lordships  will,  I  think,  find  that  the  decision  of 
this  case  will  turn  upon  a  very  short  examination  of  certain  facts  which 
took  place  upon  a  subsequent  day,  the  27th  of  April,  1866.  On  that 
day  there  was  a  meeting  between  Mr.  McHenry  and  two  of  the  di- 
rectors of  Overend,  Gurney  &  Co.,  Mr.  Gurney  and  Mr.  Birkbeck. 
There  was  apparently  no  person  else  at  the  meeting.  The  evidence 
which  is  given  by  Mr.  McHenry  upon  the  subject  of  what  passed  at 
that  meeting,  whether  from  confusion  of  mind  or  from  want  of  mem- 
ory, is  so  vague,  and  obviously  so  inaccurate,  that  I  think  both  parties 
at  your  Lordships'  bar  agreed  in  placing  no  reliance  upon  it ;  and  it 
is  clearly  evidence  which  cannot  be  accepted  as  a  correct  narrative  of 


454  DEFENSES  OF  SUnETY   AGAINST  CREDITOR.  (Part    3 

what  took  place.  On  the  other  hand,  the  evidence  of  the  two  directors 
of  Overend,  Gurney  &  Co.  is  completely  consistent  in  all  its  parts,  and 
the  appellants  at  your  Lordships'  bar  must,  of  course,  have  their  case 
jud-ed,  and,  indeed,  are  content  to  have  their  case  judged,  by  the 
statement  that  those  t\yo  gentlemen  give  as  to  what  took  place  upon 
the  day  in  question. 

Now,  what  is  stated  by  these  gentlemen  may  be  taken  from  the  af- 
fidavit of  one  of  them,  the  affidavit  of  Mr.  Birkbeck,  who  says:  "I 
deny  the  following  statement  contained  in  the  tenth  paragraph  of" 
McHenry's  answer,  "namely,  that  *it  was  also  agreed  between  me' 
(meaning  McHenry)  'and  the  managing  directors  that  in  considera- 
tion of  such  deposit  the  defendants  should  retire  the  four  bills  of  ex- 
change for  £3,000.,  £3,000.,  £2,000.,  and  £2,000.,  accepted  by  the  plain- 
tiffs as  aforesaid,  and  also  (to  the  best  of  my  recollection  and  belief) 
the  acceptance  for  £3,000.  rediscounted  by  the  defendants,  the  com- 
pany, for  the  Joint  Stock  Discount  Company  as  aforesaid,'  or  that  it 
was  agreed  between  James  McHenry  and  me,  this  deponent,  to  any 
such  or  the  like  effect."  Your  Lordships  will  observe  that  Mr.  Birk- 
beck denies  a  statement  which  had  been  made  by  McHenry,  and  then 
he  replaces  that  statement  by  his  own  narrative  of  what  was  done.  He 
says :  "I  say  that  the  agreement  was  that  the  said  four  bills  for  £3,000., 
£3,000.,  £2,000.,  and  £2,000.  should  be  held  over  during  the  currency 
of  the  said  bills  on  Leon  Lillo  for  £38.000.,  given  as  additional  secur- 
ity." Now  it  is  admitted  upon  all  sides  that  on  this  day  there  were 
given  to  Overend,  Gurney  &  Co.  by  McHenry  these  bills  of  Leon  Lillo 
for  the  amount  of  £38,000.  Those  bills  were  drawn  by  Leon  Lillo,  but 
not  accepted.  And  it  is  also  admitted  that  certain  other  arrangements 
were  made  at  the  ^ame  time  which  resulted  in  a  part  payment  of  the 
demand  which  Overend,  Gurney  &  Co.  had  against  McHenry. 

And,  my  Lords,  I  cannot  do  better  than  read,  in  connection  with 
this  affidavit  which  I  have  last  read,  another  statement  from  the  same 
gentleman,  Mr.  Birkbeck,  joining  in  that  relation  with  ]Mr.  Gurney. 
On  the  27th  of  April,  1866,  McHenry,  "being  unable  to  take  up  the 
last-mentioned  bills,  as  well  as  others  which  the  defendant  held  un- 
paid, proposed  to  us  that  the  defendant  company  should  discount  £6,- 
000.  acceptances  of  Bailey  Brothers,  due  on  the  12th  of  August,  1866, 
against  which  they  had  made  an  advance  of  £5,000.,  and  apply  the  mar- 
gin of  £1,000.  towards  payment  of  the  said  bills  for  £2,000.,  £2,000., 
£3,000.,  and  £3,000. ;  and  he  gave  to  us,  on  behalf  of  the  defendant 
company,  drafts  drawn  by  Leon  Lillo  upon  the  Bank  of  London,"  but 
not  then  accepted,  for  the  balance. 

Therefore,  what  your  Lordships  find  is  that  the  sum  of  £1,000.  was 
applied,  as  far  as  it  would  go,  in  part  payment,  and  these  Lillo  drafts 
were  given  for  the  balance.  The  explanation  of  the  giving  of  those 
drafts,  and  the  narrative  of  what  accompanied  the  giving  of  them,  is 
to  be  found  in  the  second  affidavit  of  Mr.  Birkbeck,  which  I  read  first: 
"The  agreement  was  that  the  said  four  bills."  for  the  £10,000.,  "should 


Ch.  8)  TRANSACTIONS  OF  CREDITOR   WITH   PRINCIPAL.  i55 

be  held  over  during  the  currency  of  said  bills  on  Leon  Lillo  for  i38,- 
000.  given  as  additional  security."  Now,  my  Lords,  what  is  the  mean- 
ing^of  these  words,  which  really  musFbe  taken  as  the  narrativeTagreed 
between  the  parties,  of  v.Iiat  took  place?  What  is  the  meaning  of  tfie 
words,  it  \va>  ,i:;i\x^l  tliai  the  ±10,000.  bills  "should  be  held  over  dMr- 
mg  the  currency  of  the  bills  on  Leon  Lillo  for  £38,00n."?  If  those 
worclrmean  that  the  ^agreement  between  jMcHenry  and  Overend,  Gur- 
ney  &  Co.  was  that  the  bills  for  £10,000.  should  not  be  put  in  suit  as 
against  the  parties  to  the  bills,  namely,  the  acceptors  and  the  drawer, 
but  that  Overend,  Gurney  &  Co.  should  be  left  perfectly  free  to  pro- 
ceed against  McHenry  upon  his  guarantee,  then  I  should  be  decidedly 
of  opinion  that  there  was  nothing  in  an  agreement  of  that  kind  which 
in  any  way  discharged  the  sureties  for  the  debt,  but  that,  the  creditor 
remaining  at  liberty  to  sue  the  principal  debtor,  there  was  nothing  in 
the  transaction  of  which  the  sureties  could  complain.  But,  on  the 
other  hand,  if  the  meaning  of  these  words  is  that  the  agreement  was 
that  no  proceeding  should  be  taken  either  upon  the  bills  or  upon  the 
guarantee  given  for  the  payment  of  the  bills,  then  it  appears  to  me 
that  the  agreement  would  be  one  entered  into  to  sue  neither  principal 
nor  surety,  but  entered  into  at  the  instance,  not  of  the  surety,  but  of 
the  principal,  and  was  therefore  one  that  would  be  open  to  all  the  vice 
of  an  agreement  to  give  time  to  the  principal  debtor, 

I  must,  my  Lords,  repeat,  what  is  the  meaning  of  these  words?  In 
point  of  fact,  the  names  upon  the  bills  of  exchange  no  doubt  were  the 
names  only  of  the  drawer  and  of  the  acceptors ;  but,  as  I  have  just  now 
observed  to  your  Lordships,  there  cannot  be  a  doubt  that  these  bills 
were  discounted  by  Overend,  Gurney  &  Co.,  not  merely  upon  the  faith 
of  the  names  upon  the  bills,  of  the  drawer  and  the  acceptors,  but  upon 
the  faith  of  that  guarantee  which  T  have  already  read.  For,  if  not, 
for  what  purpose  was  that  guarantee  given,  and  what  is  the  stipula- 
tion in  that  guarantee,  "I  agree  to  indemnify  you  for  all  the  loss  that 
you  may  incur  by  discounting  the  bills,  and,  in  the  event  of  the  same 
not  being  duly  paid  at  maturity,  I  engage  to  pay  the  amount  of  the 
bills  on  demand"?  My  Lords,  to  all  intents  and  purposes,  as  regarded 
Overend  &  Gurney,  McHenry  was  exactly  in  the  same  position  as  to 
those  bills  as  if  his  name  had  been  found  upon  the  bills  as  a  party  to 
them.  He  had  promised  to  pay  them  on  demand  when  they  had 
reached  maturity.  Although  he  had  given  that  promise,  not  upon  the 
face  of  the  bills,  but  upon  a  collateral  writing,  to  all  intents  and  pur- 
poses he  was  bound  by  whatever  might  be  the  fate  of  the  bills. 

I  therefore  repeat  that,  when  your  Lordships  find  that  the  agreement 
which,  it  is  admitted,  was  come  to,  not  at  the  instance  of  the  sureties 
of  the  bills,  not  at  the  instance  of  the  Financial  Corporation,  nor  of 
Deschamps,  but  at  the  instance  of  McHenry,  and  that  during  this  long 
period  of  eighteen  months  to  which  I  have  referred  the  sureties  were 
taking  no  steps  to  shelter  themselves  from  proceedings  under  the  bills, 


456  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

but  the  only  person  who  was  taking  proceedings  to  prevent  the  bills 
being  put  in  suit  was  McHenry,  and  that  there  was  obviously  an  im- 
portant end  to  be  gained  by  McHenry,  just  as  much  with  regard  to 
himself  as  with  regard  to  the  parties  to  the  bills,  namely,  that  the 
transatlantic  railway  company  should  not  have  its  credit  endangered 
by  proceedings  being  taken  against  him,  its  agent — when,  I  say,  your 
Lordships  consider  those  circumstances,  it  appears  to  me  that  you  can- 
not do  otherwise  than  arrive  at  the  conclusion  that  the  agreement, 
which  clearly  was  everything  to  him,  that  tlie  bills  should  belTCtTfover 
during  the  currency  of  the  bills  of  Leon  Lillo,  was  an  agreem^at-that 
no  proceedings  should  be  taken  in  respect  to  those  bills,  either  against 
McHenry  or  against  the  Financial  Corporation  Company. 

And,  my  Lords,  I  venture  to  think  that  if,  after  that  agreement  was 
entered  into,  any  proceedings  had  been  taken  against  McHenry  upon 
the  guarantee,  it  would  clearly  have  been  open  to  ]\IcHenry  to  defend 
himself  against  any  such  proceedings  by  alleging  (whether  he  would 
do  it  in  the  shape  of  a  legal  plea  or  an  equitable  plea,  by  a  defense  in 
a  court  of  law  or  by  proceedings  in  a  court  of  equity,  it  is  unnecessary 
to  consider)  that,  whereas  the  guarantee  was  a  guarantee  that  he  would 
pay  the  amount  of  the  bills  on  demand  when  the  bills  reached  maturity, 
the  holders  of  those  bills  had,  at  his  instance,  agreed  to  defer  taking 
any  proceedings  upon  them,  and  had  agreed  that  the  bills  should  be 
held  over  during  the  currency  of  the  Leon  Lillo  bills.  My  Lords,  I 
need  not  point  out  to  your  Lordships  that  that  was  a  perfectly  valid 
agreement.  It  was  an  agreement  for  good  and  valuable  consideration, 
and  the  only  question  which  can  arise  is  as  to  the  construction  of  those 
words  to  which  I  have  referred.  In  my  opinion,  the  agreement  to  hold 
over  the  bills  had  the  effect  of  protecting  during  the  continuance  of 
that  agreement  both  the  parties  whose  names  were  on  the  bills,  and 
also  McHenry  himself,  from  any  proceedings. 
^  Now,  my  Lords,  it  is  said  that  this  case  was  not  sufficiently  alleged 
in  the  pleadings.  It  appears  to  me  that  it  was  the  supposition  of  the 
plaintiffs,  when  the  bill  was  first  filed,  that  the  effect  of  what. was  done 
on  the  27th  of  April  was  at  once  to  put  an  end  to  the  £10,000.  bills 
by  an  arrangement  under  which  the  Lillo  bills,  and  other  secujTties, 
were  accepted  as  payment.  It  was  found  out,  as  the  suit  proceeded, 
that  that  was  not  the  view  taken  by  Overend,  Gurney  &  Co.,  although 
it  was  the  view  of  McHenry  as  to  what  took  place  on  the  27th  of  April. 
On  the  other  hand,  Overend,  Gurney  &  Co.,  through  their  directors,  al- 
leged that  what  took  place  was  not  an  agreement  to  terminate  the  bills, 
or  to  pay  the  bills,  but  an  agreement  to  hold  over  the  bills  in  the  way 
I  have  described.  Thereupon  the  bill  was  amended  in  a  manner  which, 
although  it  may  be  criticised  as  somewhat  curt  and  bare  in  the  allega- 
tion, is,  as  it  appears  to  me,  sufficient  for  the  purpose  in  view.  "The 
plaintiffs  charge  that,  even  if  the  agreement  was  such  as  the  defend- 
ants, the  company"  (that  is  Overend,  Gurney  &  Co.),  "allege  the  de- 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH  rRINCIPAL.  457 

fendants,  the  company,  at  the  same  time  they  made  the  same,  well 
knew  that  the  plaintiffs  were  sureties  only  for  James  McHenry,  and 
that  the  defendants,  the  company,  by  giving  time  to  James  McHenry 
without  their  privity  or  consent  for  the  payment  of  the  said  bills  of 
exchange,  have  released  the  plaintiffs  from  all  liability  to  pay  the 
same."  ><  E-^r  U^t  fe, - 

Then,  my  Lords,  it  was  said_thatjtlie_kno\yledge  that,  the  Financial  '• 
Corporation  was  surety  Was  not  obtained  by  Overend.  Gurney  &  Co. 
until  after  the  bills  became-due ;  and  inasmuch  as  the  contract  aris- 
ing out  of  and  connected  with  the  bills  was  made  before  Overend, 
Gurney  &  Co.  had  any  knowledge  of  that  suretyship,  their  rights  and 
their  powers  of  proceeding  under  that  contract  ought  not  to  be  inter- 
fered with  in  consequence  of  knowledge  subsequently  obtained.  My 
Lords,  it  appears  to  me  that  after  the  case  which  was  referred  to  at 
the  bar,  decided  by  your  Lordships'  House,  that  of  Oakley  v.  Pash- 
eller,  4  CI.  &  F.  207,  it  is  impossible  to  contend,  if.  after  a  right  of 
action  accrues  to  a  creditoF^gainst  two  or  more  per-sorvs,  he  is  in- 
formed that  one  of  them  is  a  surety  only,  and  after  that  he  gives  time 
to  the  principal  debtor  v/ithout  the  consent  and  knowledge  of  "Tlie 
surety,  that  under  those  circumstances  the  rule  as  to  the  discharge  of 
the  surety  does  not  apply.  V 

~My  Lords,  it  was  then  said  that  at  all  events  you  must  read  the      '  "''^  "''''-, 
statement  made  by  Mr.  Birkbeck  as  to  the  agreement  that  was  come      ' 
to  as  if  it  implied  that  all  the  rights  were  reserved  by  the  agreement 
against  the  surety,  and  that,  inasmuch  as  the  words  with  regard  to  the 
Lillo  bills  are  that  they  were  given  "as  additional  security,"  the  giving 
of  additional  security  does  not  discharge  in  any  way  the  surety. 

]\Iy  Lords,  it  is  quite  true  that  the  giving  of  additional  security  will 
not  of  itself  discharge  a  surety ;  but  if  the  additional  security  is  given 
upon  a  contract  to  give  time,  in  consideration  of  this  giving  of  the  ad- 
ditional security,  then  time  given  under  those  circumstances,  apart  from 
the  consent  of  the  surety,  is  a  discharge  of  the  liability  of  the  surety. 
I  cannot  find  in  the  words  which  I  have  read  any  reservation  of  right 
whatever  as  againsLlhe-Surd^'.  If  I  am  right  in  the  construction  which 
I  have  put  upon  it,  it  is  a  voluntary  agreement,  entered  into  with  Mc- 
Henry, to  sue  no  person  at  all  for  the  period  of  time  mentioned.  If 
that  is  so,  it  is  an  agreement  not  to  sue  the  surety,  and  there  is  no 
reservation  of  right  as  against  that  surety. 

My  Lords,  I  certainly  think  that  the  conclusion  at  which  the  late 
Lord  Chancellor  arrived  in  this  case  is  entirely  correct,  and  I  therefore 
submit  to  your  Lordships  that  the  appeal  should  be  dismissed  with 

yCOStS. 

/"    Lord  Chelmsford.    My  Lords,  the_only_question  jn  this  case  is  one 

entirelv  of  iact  which  is  whether  the  agreement  by  Overend,  Gurney  & 

Co.  with  Mr.  McHenry  to  hold  over  the  bills  upon  which  he  was'the 

"prmcipal,  and  the  respondents  the  sureties,  during  the  currency  of  t^e 


458  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

bills  drawn  by  Lillo,  involve  a  giving  of  time  to  the  principal?  The 
agreement  is  provccTBS'lVrfr  Birkbecl<,  oiie'df  "the  appellants,  who  states 
that  the  agreement  was  that  the  four  bills  should  be  held  over  during 
the  currency  of  the  said  bills  on  Leon  Lillo  for  £38,000.  given  as  ad- 
ditional security.  During  the  course  of  the  argument  I  certainly  en- 
tertained very  great  doubt  as  to  what  was  the  construction  of  this 
agreement;  but,  upon  consideration,  I  am  disposed  to  agree  with  the 
view,  which  has  been  taken  by  my  noble  and  learned  friend  on  the 
woolsack,  that  it  amounted  to  this :  That  they  would  not,  during  the 
currency  of  Lillo's  bills,  place  McHenry  in  the  position  of  being  sued. 
That  being  so,  it  is  quite  clear  that  it  was  a  giving  time  to  the  principal ; 
and  upon  this  short  ground  I  agree  with  my  noble  and  learned  friend  i  , 
that  the  decree  of  the  Lord  Chancellor  ought  to  be  affirmed.  j( 

Lord  O'Hagan.  I  can  add  nothing  material  to  the  reasoning  by 
which  my  noble  and  learned  friend  on  the  woolsack  has  sustained  an 
opinion  with  which  I  concur.  The  question  is  a  short  and  a  clear  one. 
It  is  a  question  as  to  the  construction  of  a  contract  contained  in  a  very 
few  words,  and  is  presented  to  us  without  any  obscurity  arising  from 
a  conflict  of  evidence.  It  seems  to  me  a  case  without  difficulty  in  law, 
or  doubt  as  to  facts. 

The  matter  stands  simply  thus :  Mr.  McHenry,  the  person  who  en- 
tered into  the  contract,  had  an  interest  in  it,  either  on  his  own  account 
or  for  those  whom  he  represented — the  Atlantic  &  Great  Western 
Railway  Company.  He  came  to  make  the  contract  and  to  settle  its 
terms,  and  by  him  it  was  made  accordingly.  In  entering  into  that 
contract  he  procured  the  making  of  it  for  good  consideration.  He 
gave  additional  security,  and,  upon  his  giving  it,  the  parties  with 
whom  he  dealt  agreed  that  they  would  not,  for  a  certain  period,  sue 
upon  the  bills  which  were  at  that  time  in  circulation  and  in  their  hands. 
I  think  it  clear,  under  such  circumstances,  that  the  agreement  was 
not  to  have  a  merely  limited  effect,  protecting"  only  the  persons  who 
had  become  sureties,  but  that  according  to  the  intention  of  the  parties 
it  was  to  suspend  all  action  upon  the  bills,  or  in  relation  to  them,  di- 
rectly or  indirectly,  for  the  period  during  which  it  was  to  operate. 

Such  being,  as  I  conceive,  the  meaning  of  the  contract,  it  seeems 
to  me  that  it  would  have  been  a  complete  breach  of  it,  between  Over- 
end,  Gurney  &  Co.  and  Mr.  McHenry,  if,  during  the  period  of  the  cur- 
rency of  the  bills  held  by  the  plaintiffs,  they  had  taken  any  step  what- 
ever for  the  purpose  of  obtaining  payment.  I  think,  also,  that  if  the 
guarantie,  to  which  my  noble  and  learned  friend  on  the  woolsack  has 
referred,  had  been  sued  upon  at  any  time,  during  that  period,  it  would 
have  been  impossible  to  enforce  that  guarantie,  or  to  encounter  a  de- 
fense which  might  have  been  presented,  either  in  the  shape  of  an 
equitable  suit  or  a  plea  at  law,  relying  on  the  case  that  there  had  been, 
for  good  consideration,  a  contract  to  suspend  any  action  for  the  re- 
covery of  the  money  affected  by  the  guarantie. 


Ch.  8)  TUANSACTIONS  OP  CREDITOR  WITH   PRINCIPAL.  459 

I  am,  tlierefore,  of  opinion  that  the  judgment  of  the  Lord  Chancellor 
ought  to  be  sustained. 

Order  appealed  from  affirmed,  and  appeal  dismissed,  with  costs.^" 


HALL  V.    CAPITAL   BANK   OF   MACON. 

(Supreme  Court  of  Georgia,  1883.     71  Ga.  715.) 

Blandford,  Justice.  The  Capital  Bank  brought  an  action  upon  the 
following  paper,  viz.: 

"$335.50  Macon,  Ga.,  July  12,  1880. 

"Thirty  days  after  date  I  promise  to  pay  to  the  order  of  L.  W. 
Rasdal,  agent,  three  hundred  and  twenty-five  dollars  and  ^"'/loo  dol- 
lars at  Capital  Bank,  Macon,  Ga.,  value  received. 

"[Signed]     Roland  B.  Hall." 

Indorsed :     "L.  W.  Rasdal,  Agent." 

The  defendant,  Hall,  pleaded  that  he  was  only  a  security  on  the  note ; 
that  the  note  was  made  for  the  benefit  of  Rasdal,  who  discounted  it 
at  plaintiff's- bank;  that  Hall  got  no  part  of  the  proceeds  from  the 
bank;    when  the  note  fell  due,  it  was  not  presented  to  Hall  for  pay- 

ig  Accorjj:  Zapalac  v.  Zapp.  22  Tex.  Civ.  App.  375,  54  S.  W.  938  (1000); 
Wheat  V.  Kendall,  6  N.  H.  504  (18.34) ;  Fuller  v.  Quesnel,  G3  Minu.  302,  Go 
N.  W.  634  (1895);  Smith  v.  Clopton.  48  Mis.s.  66  (1873).  See,  also,  note  in 
8  H.  L.  R.  56  (1895),  on  "An  Unfortunate  Creditor." 

Ciiuiimre  Insurance  Co.  v.  Hanford,  143  U.  S.  187,  12  Sup.  Ct.  437,  36  L.  Ed. 
118  (1802). 

Coiitra:  Fentum  v.  Pocock,  5  Taunton,  192  (1813);  Wilson  v.  Isbell,  45  Ala. 
142  (1871),  ohiter;   Cronlse  v.  Kellogg,  20  111.  11  (1858). 

Parol  e\  idince  to  show  that  the  surety's  true  position  was  known.  at_JJie 
time  the  creditor  made  the  original  contract  is  generally  admitted.  Hub- 
bafnvTGurney,  64  N.  Y.  457  (1876) ;  Branch  Bank  v.  Darringtou.  9  Ala.  949 
(1846) ;  Scott  v.  Scruggs.  (M)  Fed.  721,  9  C.  C.  A.  246  (1894).  RuL contra:  Cali- 
fornia Nat.  Bank  v.  Ginty,  108  Cal.  148,  41  Pac.  38  (1895).  Heath  v.  Dorry 
Bank,  44  N.  H.  174  (1862),  the  note  reading,  "all  as  principals  promise  to 
pay." 

Ifj_hpwever,  the  joint  obligors  have  contracted  by  common-law  spedalti, 
thg__doctrine  of  estoppel  by  deed  excludes  parol  evidcuce  that  the  obligee 
had  knowledge  of  the  suretyship  when  he  accepted  tho  specialty.  Sprigg  v. 
Bank,  35  U.  S.  257.  9  I;.  Ed.  416  (1836).  See  title,  "Estoppel  by  Deecl,"  Fed. 
Dig.  vol.  2,  cols.  4266-4268. 

Thaeffoct  of  modern  statutes  in  certain  jurisdlction.s  aboUshius  distinctions 
between  contracts  under  seal  and  simple  contracts  must  be  taken  into  consid- 
eration.    See,  e.  g.,  Rogers  v.  School  Trustees.  46  111.  428  (1868). 

See.  on  the  effect  of  the  negotiable  instrument  law  upon  tho  doctrine  of  the 
principal  case,  Wolstenholme  v.  Smith.  34  Utah,  300,  97  Pac.  329  (1908).  And 
see^also,  the  note  by  Robert  T.  McCracken.  I<:sq.,  in  1  University  of  Pennsyl- 
vania Law  Review  and  American  Law  Itogister  (vol.  56,  Old  Series)  p.  311, 
and  other  cases  cited  therein.  See,  also,  Bradley  Engineering  Co.  v.  Ilcyburn 
(Wash.)  100  Pac.  170  (1910). 

See  note  by  T.  A.  Street  in  11  Law  Notes  (Northport)  105.  OtUejl.casea 
arising  under  Jiie  act  are  in  notes,  20  IL  L.  R.  646,  and  21  H.  L.  R.  55. 


The  plaintiff  demurred  to  the  sufficiency  of  this  plea.    The  court  sus- 
Uaincd  the  demurrer  and  dismissed  defendant's  plea,  and  this  ruling 


460  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

ment ;  that  after  it  became  due  the  bank  extended  it  with  Rasdal  for 
12  months,  on  the  condition  of  1  per  cent,  per  month  paid  by  Rasdal, 
without  the  knowledge  or  consent  of  Hall;  that  when  the  note  fell  due 
Rasdal  was  solvent ;  that  Hall  was  not  advised  of  the  non-payment  of 
the  note  until  Rasdal  had  become  insolvent;  and  that  the  bank  was 
fully  advised  that  Hall  was  only  a  security  at  the  time  it  discounted  the 
note. 

/    [ - -^ -  ..    . 

Jj>'^'<    'forms  the  subject  of  the  complaints  by  the  plaintiff  in  error. 

The  question  is  as  to  the  real  relations  of  the  parties  to  this  note 
or  contract.  After  the  indorsement  of  a  promissory' nbfeTThe  maker 
stands  in  the  position  of  an  acceptor  to  a  bill  of  exchange,  and  the  in- 
dorser  in  that  of  the  drawer.  As  to  the  holder,  the  maker  (now  ac- 
ceptor) is  primarily  liable,  and  the  indorser  (now  drawer)  is  secondarily 
liable.  And  the  transaction  stands  thus:  The  indorser  says  to  the 
holder  that,  if  the  maker  does  not  pay  the  note  at  maturity,  I  will,  and 
such  is  his  liability.  The  point  of  resemblance  between  a  promissory 
note  and  a  bill  of  exchange  being  thus  fixed,  the  law  relative  to  bills 
of  exchange  becomes  applicable  to  promissory  notes.  2  Burr.  G76 ; 
Chitty  on  Bills,  521 ;  Stewart  v.  Parker,  55  Ga.  656. 

According  to  the  statements  and  allegations  in  defendant's  plea, 
Rasdal  was  liable  as  the  maker,  and  Hall  was  liable  as  an  accom- 
modation acceptor,  to  the  holder,  the  plaintiff  in  this  action.  An  accom- 
modation indorser  is  considered  merely  as  a  security.  The  form  of  the 
contract  is  immaterial.  Code,  §  2151.  The  plea  avers  that  the  bank, 
when  it  took  this  note,  knew  that  Hall  was  not  interested  in  the  same ; 
that  he  was  merely  surety  for  Rasdal,  and  when  he  drew  this  bill,  or 
made  this  note,  he  did  it  merely  for  the  accommodation  of  Rasdal,  who 
was  to  pay  the  same,  and  to  whom  the  bank  extended  time  of  payment, 
upon  a  consideration  promised  by  Rasdal,  without  the  consent  of  Hall. 
We  have  seen  that  as  to  this  transaction  Hall  was  merely  an  accom- 
modation  acceptor,  and  he  may  show  that  he  is  but  a  security.  "Bbyn- 
ton  v.  Twitty  et  al.,  53  Ga.  217,  fully  sustains  this  principle, 
i^  In  the  case  of  Parmelee  v.  Williams  [72  Ga.  42],  decided  at  the  pres- 
ent term  of  this  court,  it  was  held  that  indulgence  by  the  holder  to 
the  acceptor,  without  consent  of  the  drawers,  upon  consid^eration, 
would  discharge  the  drawers,  who  were  but  sureties  in  that  case; -and 
indulgence  to  the  indorser  in  this,  who  is  the  drawer,  as  it'  were,  and 
primarily  liable  on  this  paper,  on  consideration  stated  in  the  plea,  will 
discharge  the  accommodation  acceptor,  who  is  but  a  surety  in  this 
case.  See  the  case  last  referred  to.  So  it  appears  that  the  judgment 
of  the  court  below,  sustaining  the  demurrer  and  dismissing  defend- 
ant's plea,  was  error,  and  this  judgment  is  reversed. 

Judgment  reversed. 


Ch.  8)  TRANSACTIONS  OF  CIIEDITOR  WITH   PRINCIPAL.  461 

STEWART'S  ADM'R,  Plaintiff  in  Error,  v.  PARKER,  Defendant 

in  Error. 

(Supreme  Court  of  Georgia,  1876.     55  Ga.  656.) 

Warner,  Chief  Justice.  This  was  an  action  brought  by  the  plaintiff 
a^ainst^the_defendants  on  a  promissory  note,  of  which  the  following  is 

a  *^opy-  '  "Sumter  County,  February  9,  1860. 

"Ten  months  after  date  we,  or  either  of  us,  promise  to  pay  to  our 
own  order,  in  the  city  of  *  *  *  $5,000.00,  for  value  received, 
and  with  interest  from  date,  if  not  punctually  paid. 

"[Signed]  James    Stewart. 

"A.  S.  Cutts." 
The  following  indorsement  was  on  the  back  of  the  note: 
"Pay  W.  B.  Parker,  or  order.  James   Stewart. 

"A.  S.  Cutts." 

The  defendant,  Stewart,  filed  a  plea  to  the  action,  in  which  he  alleged 
that  he  was  a  security  on  the  note  for  Cutts,  which  fact  was  known  to 
the'^plaintiff,_and  that  when  said  note  became  due  the  plaintiff,  in  con- 
sidefation  that  Cutts  would  execute  him  a  deed  to  certain  lands  owned 
byTiim,  agreed  that  he  would  extend  the  time  of  payment  of  said'  note 
for  12  months  from  that  time  for  the  consideration  aforesaid,  and 
that  said  Cutts  did  execute  and  deliver  said  deed,  all  of  which  was 
without  the  knowledge  or  consent  of  said  defendant,  Stewart,  where- 
by he  claimed  to  be  released  and  discharged  from  the  payment  of  the 
note  sued  on. 

It  was  proven  on  the  trial  that  Cutt,s,  on  the  18th  of  July,  1866,  ex- 
eciT!ect~a!Td^elivered  to  Parker  a  deed  to  3,600  acres  of  land  in  Florida 
as  collateral  security  for  the  debt,  in  consideration  of  which  Parker 
agreed  to  give  him  further  time  on  said  note  to  the  April  term  of  the 
court,  1868.  The  correspondence  between  Parker  and  Cutts  was  read 
in  evidence,  and  also  the  testimony  of  Parker,  in  which  he  denied  that 
Stewart  was  security  for  Cutts  on  the  note.  Cutts  stated  in  his  evi- 
dence that  Stewart  was  security  for  him  on  it.  o         ^ 

In^yiew  of  the  evidence  contained  in  the  record,  the^ court  charged  ^'M>rv  'j^' 
the  jury  "that  if  you  believe,  from  the  evidence  submitted  to  you  in 
this  case,  that  James  Stewart  was  only  security  on  the  note  sued  on, 
and  not  interested  in  the  consideration,  which  fact  was  known  to  the 
plaintiff,  Parker,  and  after  the  note  became  due  he  gave  the  principal, 
Cutts,  time  on  the  same,  or  extended  the  time  aforesaid  for  a  valuable 
consideration,  then  that  would  discharge  James  Stewart's  estate  from 
all  liability  on  said  note,  and  you  ought  to  find  for  the  defendant.  If 
Parker  took  the  deed  submitted  in  evidence  to  the  lands  in  the  state 
of  Florida,  either  as  a  conveyance  or  as  collateral  security,  that  is  a 
valuable  consideration.    Before  the  security  can  be  discharged  on  the 


402  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

plea  of  indulgence  given  to  his  principal,  the  creditor  must  know  that 
he  is  such  security.  The  forbearance  must  be  for  a  definite  time  and 
for  a  consideration  binding  in  law.  The  indulgence  imist  be  without 
the  knowledge  or  consent  of  the  security  before  the  security  is  dis- 
charged upon  the  plea  of  indulgence.  The  jury  must  believeTTTaTtfle 
plaintiflF  gave  indulgence  to  Cutts  for  a  valuable  consideration,  and 
without  the  knowledge  and  consent  of  Stewart,  before  they  can  dis- 
charge the  security  from  liability,  and  that  Parker  knew  at  the  time 
that  Stewart  was  only  security." 

The  jiiry  found  a  verdict  for  the  plaintiff  for  $4,750.     The  defend- 
ant made  a  motion  for  a  new  trial 'on_tlj£_§i::ouiid  that  the  verdict  was 
i->;"^<  "^contrary  to  law  and  the  evidence,  "and  for  error  in  the  charge  of  the 
.  /court,  which  motion_was  overruled,  and  the  defendant  excepted. 
y^tsftJ^  J^       ^^  Parker  l<new  that  Stewart  was  security  on  the 'note  at  the  time 

the  contract  for  indulgence  for  a  consideration  was  made  with  Cutts, 
then  the  security  would  have  been  entitled  to  be  discharged,  under  the 
law ;  but  if  Parker  did  not  know,  at  the  time  of  the  contract  with  Cutts 
for  indulgence,  that  Stewart  was  a  security  on  the  note,  then  Stewart 
would  not  have  been  entitled  to  be  discharged  from  its  payment.     In 
,  the  first  part  of  its  charge,  the  court  gave  the  law  applicable  to  the 
,^--^-  r,,-'      /'facts  of  the  case  to  the  jury,  substantially  correctly,  and   if  it  had 
W.v^urvrWL',c<L,*7  stopped  there  we  should  not  have  interfered  with  the  verdict;   but  the 
"     ■    '  '  court  did  not  stop  there,  but  charged  the  jury  that  "the  indulgence 

must  be  without  the  knowledge  or  consent  of  the  security  before  the 
security  is  discharged  upon  the  plea  of  indulgence;  that  the  jury 
must  believe  that  plaintiflF  gave  indulgence  to  Cutts  for  a  valuable 
consideration,  and  without  the  knowledge  and  consent  of  Stewart, 
before  they  can  discharge  the  security  from  liability."  This  latter 
portion  of  the  charge  was  error. 

If_ the  indulgence  had  been  given  by  the  plaintiff  to  the  principal 
debtor  for  a  consideration  without  the  consent  of  the- security, -^the 
latter  would  have  been  discharged,  although  he  had  no  knowledge-irf  it 
at  the  time.  It  is  not  necessary  that  the  security  should  have  knowledge 
of  the  contract  for  indulgence  for  a  consideration,  made  by  the  plain- 
tiff with  the  principal  debtor,  at  the  time  it  is  made  and  the  indulgence 
given,  to  entitle  him  to  be  discharged.  It  is  quite  sufficient,  if  itjbe  done 
without  the  security's  consent,  whether  he  has  knowledge  of  it  or  not. 
How  far,  and  to  what  extent,  the  jury  may  have  been  influenced  in 
making  up  their  verdict  by  this  erroneous  charge  of  the  court,  we  can- 
not tell,  in  view  of  the  facts  in  the  case.  It  may  have  controlled  their 
verdict,  and  for  that  reason  we  reverse  judgment,  and  order  a  new  trial. 
Let  the  judgment  of  the  court  below  be  reversed.^^ 

IT  Accord:  Da  vies  v.  Stainbank,  6  De  Gex,  M.  &  G.  679  (1855). 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   TRINCirAL.  465 

HAYDENVILLE  SAVINGS  BANK  v.  PARSONS  et  al. 
(Supreme  Judicial  Court  of  Massachusetts.  1SS4.     13S  Mass.  53.) 

Contract,  upon  a  joint  and  several  promissory  note  for  $2,500,  dated 
October  20,  1877,  payable  in  six  mbnlTis  a"tler  datelo  the  plaintiff,  and 
made  by  Ansel  Wright  as  principal  and  by  the  defendants  as  sureties. 
Answer,  that  the_p^laiiitLff  had  discharged  the  sureties  by  agreeing  with 
Wright  to  extend  the  time  of  payment  of  the  note.  Trial  iiT'  the 
superior  court,  before  Staples,  J.,  who  ruled  that  the  action  could  be 
maintained,  nnd  directed  a  verdict, for  the  plaintiff;  and  the  defend- 
ants  alleged  exceptions.    The  facts  appear  in  the  opinion. 

Holmes,  "J!  Tt  hasJ^een  lield  repeatedly  in  this  commonwealth  that 
receipt  of  interest  in  advance  upon  an  overdue  promissory  note  from 
the  maker  does  not  of  itself  import  such  a  giving  of  time  as  will  dis- 
charge the  sureties.  Oxford  Bank  v.  Lewis,  8  Pick.  458  ;  Blackstone 
Bank  V.  Hill,  10  Pick.  129;  Central  Bank  v.  Willard,  17  Pick.  150, 
28  Am.  Dec.  284;  Agricultural  Bank  v.  Bishop,  6  Gray,  317;  Jen- 
nings v.  Chase,  10  Allen,  526.  The  most  that  the  evidence  for  the 
sureties  in  the  case  at  bar  tended  to  show  was  such  a  payment,  and  as 
we  think,  not  even  that.  It  is  true  the  note  mentioned  no  rate  of  in- 
terest, and  that  the  sum  paid  was  more  than  the  statutory  rate  of  G 
per  cent.  But  this  can  make  no  difference ;  for  if  payment  at  G  per  cent. 
of  a  sum  which  would  not  be  legally  due  if  the  debtor  insisted  on  his 
i  ight  to  pay  at  maturity,  or  unless  payment  of  the  note  was  postponed 
for  a  certain  time,  does  not  postpone  the  right  to  collect  the  note, 
payment  at  7  per  cent,  will  not  do  it. 

In  this  case  the  maker  asked  for  an  extension  until  his  father's  es- 
tate" could  bo  settled,  and  was  answered  by  the  plaintiff's  treasurer  on 
behalf  of  the  finance  committee:  "We  have  concluded  to  let  the  note 
lay  along,  if  you  keep  up  the  interest  as  you  have  done."  A  few  days 
later,  July  24,  1878,  the  maker  "received  a  letter  from  the  treasurer 
saying:  "Your  interest  must  be  paid."  The  next  day  he  paid  a  sum 
equal  to  7  per  cent,  per  annum  for  six  months  on  the  amount  of  the 
noteT^vliich  was  not  then  six  months  overdue.  It  was  the  same  sum 
that The  maker  had  paid  several  times  when  renewing.  The  treasurer 
made  the  following  indorsement  on  the  note:  "July  257  1878.  Re- 
ceived^ onjhe^  within  note  eighty-seven  and  "^Aoo"  dollars  C$S7.'50):^ 
The  maker  "called  his  attention  to  the  fact  that  it  was  not  specified 
that  it  was  paid  as  interest ;  he  said  it  was  paid  as  interest,  and  he 
preferred  to  have  it  indorsed  in  that  wayJ'  Before  the  next  six  months 
had  elapsed,  another  similar  payment  was  made,  and  indorsed  in  like 
form.  Subsequent  payments  were  made  at  the  end  of  each  successive 
six  months,  and  were  indorsed  as  interest. 

It  seems  tous^thiLt  the  import  of  the  first  transaction  was  that  the 
bank^ijQsTsted^  on  receiving  the  money  ambiguously — to  be  applied  as 
interest  if  the'Bank  should  allow  the  note  to  run  six  months;   other- 


464  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

wise,  to  be  applied  upon  the  note — for  the  very  purpose  of  avoiding 
even  such  an  impHcation  of  extension  as  might  be  drawn  from  the  re- 
ceipt of  interest  eo  nomine  in  excess  of  what  was  due  at  the  time.  The 
bank  made  no  semblance  of  a  promise,  except  to  let  the  note  lie  along, 
whicli  means  that  it  reserved  the  right  to  sue  at  any  time,  and  it  de- 
clined to  indorse  the  payment  as  interest.  Whether  the  bank  might 
have  been  bound  by  the  words  of  indorsement  to  treat  the  sum  as  paid 
in  respect  of  interest  then  legally  due  upon  the  note  and  principal  is 
not  before  us. 

Payments  and  the  indorsement  of  payments  of  interest  3t  7  per  cent., 
in  respect  of  time  since  the  note  was  due,  do  not  amount  to  a  change 
of  the  contract,  or  satisfy  the  statutory  requirement  of  an  agreement 
in  writing  to  bind  the  maker  to  pay  that  rate  in  the  future. 

'  The  fact  that  one  surety  told  the  plaintiff's  treasurer  to  sue  the  note 
was  immaterial.     Frye  v.  Barker,  4  Pick.  382 ;    Bellows  v.  Lovell,  o 

'^Pick.  307.  It  is  unnecessary  to  consider  the  authority  of  the  treasurer 
to  bind  the  bank,  which  is  the  only  other  question  argued  for  the  de- 
fendant.    Exceptions  overruled.^* 


DODGSON  et  al.  v.   HENDERSON 
(Supreme  Court  of  Illinois,  1SS5.     113  111.  360.) 

Appeal  from  the  Appellate  Court  for  the  Third  District.  Heard  in 
that  court  on  appeal  from  the  Circuit  Court  of  Greene  County;  Hon. 
George  W.  Herdman,  Judge,  presiding.^" 

Mr.  Justice  Cr-MG  delivered  the  opinion  of  the  court. 

This  was  a  bill  in  equity,  brought  by  Edwin  Henderson,  to  enjoin 
the  prosecution  of  an  action  brought  to  collect  a  certain  promTs'sory 
note,  executed  by  George  B.  Allen,  as  principal,  and  comprainaat,  as 
surety7^earing  date  November  6,  1875,  whereby  they  jointly  and  sev- 
erally promised  to  pay,  twelve  months  after  the  date  thereof,  to 
Christopher  Dodgson,  $2,000,  with  interest  at  10  per  cent,  per  annum. 
Dodgson  died  testate,  April  4,  1878,  and  the  executors_of  the  estate, 
with  George  B.  Allen,  the  principal  on  the  note,  were  made^parties 
defendant  to  the  bill. 

It  is  alleged  in  the  bill  that  Allen  was  principal,  and  complain- 
ant surety,  on  the  note ;  that  Allen  paid  the  interest  on  the  note  as  it 
became  due,  up  to  November  6,  1876,  and  on  January  10,  1877, 
Dodgson  agreed  with  Allen  to  extend  the  time  of  payment  to  the  6th 

18  In  Uniontown  Bank  v.  Mackey,  140  U.  S.  220,  11  Sup.  Ct  844,  35  L,.  Ed. 
4S.J  (1891).  it  was  held  that  payment  of  interest  in  advance  would  not  justify 
the  inference  of  a  binding  extension,  where  the  creditor  holding  overdue  pa- 
per sent  blank  notes  for  renewal  by  all  parties,  and  in  ignorance  of  the  death 
of  one  of  the  indorsers  accepted  the  payment  of  interest  in  advance  from  the 
maker. 

' »  The  arguments  of  counsel  are  omitted. 


Ch.  8)  TRANSACTIONS  OF  CREDITOR   WITH   PRINCIPAL.  4G5 

dayj)f  November,  1879,  in  consideration  of  the  prompt  payment  by 
Allen,  annually,  of  the  interest;  that  Allen,  in  consideration  of  said 
promise  of  extension  of  the  time  of  payment,  agreed  with  Dodgson  to 
keep  the  amount  named  in  the  note  ($2,000)  until  November  6,  1879, 
and  pay  the  interest  thereon,  annually ;  that  the  extension  of  the  time 
of  payment  was  made  without  the  knowledge  or  consent  of  the  com- 
plainant. It  is  also  set  up  in  the  bill  that  an  action  at  law  had  been 
brought  in  the  circuit  court  of  Greene  county,  against  Allen  and  Hen- 
derson, on  the  note,  which  was  pending  when  the  bill  was  filed ;  that 
Henderson  set  up  as  a  defense  to  the  action  that  he  was  surety  on  the 
note,  and  that  after  the  note  became  due  Dodgson,  for  a  valuable 
consideration,  agreed  with  Allen  to  extend  the  time  of  payment  to 
November  6,  1879,  without  the  knowledge  or  consent  of  complainant. 
It  is, also  alleged  that  Allen  is  the  only  person  by  whom  the  agreement 
to  extend  the  day  of  payment  can  be  proven;  that  the  executors  will 
not  consent  that  Allen  may  appear  as  a  witness  and  testify  in  the  action 
at  law.  The  bill  contains  other  allegations;  but  it  will  not  be  necessary 
to  state  them  here,  as  enough  has  been  set  out  to  show  the  grounds 
upon  which  the  complainant  relies  for  relief.  <^  . 

It  is  apparent  from  the  allegations  of  the  bill,  as  well  as  from  the  ^•■'^*^ '^/'-  ,1-;^ 
evidence  introduced  in  support  of  the  bill,  that  complainant  could  not 
make  a  defense  to  the  action  at  law,  for  the  reason  thaTTQIen,  who 
was  the  only  person  who  knew  that  an  agreement  had  been  made  to 
extend_the  time  of  payment  of  the  note,  was  not  a  competent  witness 
in  the  action  at  law.  Section  2,  c.  51,  p.  488,  of  the  Revised  Statutes  of 
1874:,  expressly  excludes  a  defendant  from  testifying  in  an  action 
brought  by  an  executor,  like  the  one  brought  against  Allen  and 
Henderson.  Resort  to  a  court  of  equity  was  therefore  a  necessity — 
the  only  tribunal  where  relief  could  be  obtained.  In  Bradshaw,  Adm'r, 
V.  Combs,  102  111.  428,  we  held  that  a  bill  in  equity  was  an  appropriate 
remedy  in  a  case  of  this  character,  and  that  the  principal  on  the 
promjssory  note,  on  a  bill  filed  against  an  administrator  or  executor 
byjthe  sujety,  was  a  competent  witness.  As  to  complainant's  right 
to  file  the  bill,  and  upon  the~ques"lion  of  the  competency  of  Allen  as  a 
witness,  the  case  cited  is  conclusive,  and  no  further  notice  need  be 
taken  of  that  question. 

The  next  question  to  be  considered  is  whether,  after  the  note  b(?- 
camfi^lluej  thelime  of  payment  was  extended  by  an  agreement  between 
thepayee  of  the  note  and  the  principal  maker,  Allen,  based  upon  a 
valid  consideration,  and  the  effect  of  such  a  contract.  Allen  testified 
that  in  the  latter  part  of  the  year  1877  an  agreement  was  made  between 
him  and  Dodgson  that  the  time  of  payment  should  be  extended 
another  year — until  November  6th,  following;  that  he  agreed  to 
keep  the  money  for  that  time,  and  pay  the  interest  promptly.  J\Ve 
thuTJs^jthe.  contract  to  extend  the  time  of  payment  valid,  and  based 
upon  a  sufficient  consideration.  The  effect  of  the  transaction  was  this: 
Hen. Sub.— 30 


466  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

About  the  end  of  the  second  year  after  the  loan  was  made,  Dodgson 
agreed  to  extend  the  time  of  payment  one  year  if  Allen  would  keep 
the  money  that  time  and  pay  10  per  cent,  interest  thereon  promptly 
at  the  expiration  of  the  time.  The  agreement  to  keep  the  money  an- 
other year  and  pay  the  interest  thereon  was  a  sufficient  consideration 
for  the  promise  of  the  payee  to  extend  the  time  of  payment.  It  may 
have  been,  and  doubtless  was,  of  great  benefit  to  Dodgson  to  secure 
a  loan  another  year  at  10  per  cent,  interest.  Had  the  money  been  paid 
in,  a  customer  might  not  be  found  ready  to  borrow  at  so  large  a  rate 
of  interest,  and  hence  the  money  might  lie  idle  in  the  owner's  hands 
a  whole  year.  But^however  that  may  be^  there  can  be  nodoubt  that 
the  agreement  to  keep  the  money  a  whole  year  and  pay  a  specifie3Ixate 
of  interest  is  a  consideration  which  will  support  the  agreement  to  ex- 
tend the  day  of  payment. 
*»*»•»«. ■f'/wH^G'^v,  /^  As  to  the  effect  of  an  agreement  to  extend  the  time  of  payment,  upon 
rW-  "  '  the  rights  of  the  surety,  when  made  without  his  knowledge  or  consent, 

^  the  law  is  well  settled.    As  early  as  Davis  v.  People,  1  Oilman,  409, 

this  court  held  that  if  the  creditor,  by  a  valid  and  binding  agreement, 
without  the  assent  of  the  surety,  gives  further  time  for  paymefinotht 
principal,  the  surety  is  discharged,  both  at  law  and  in  equity,  and  it 
makes  no  difference  whether  the  surety  may  be  thereby  actually 
damnified  or  not.  The  same  doctrine  was  announced  in  Waters  v. 
Simpson,  2  Gilman,  570,  and  in  Grossman  v.  Wohlleben,  90  111.  537. 
The  contract  of  a  surety  is  one  that  should  be  construed  strictly,  and 
in  no  case  can  he  be  held  liable  beyond  the  terms  and  conditions  of 
the  contract  to  which  he  gave  his  assent;  and  any  binding  contract 
entered  into  between  the  principal  debtor  and  the  creditor,  which  works 
a  substantial  change  in  the  original  contract,  when  made  without  the 
consent  of  the  surety,  will  release  the  surety.  An  agreement  based 
upon  a  good  consideration,  and  binding  on  the  parties,  produces  this 
result.    Such  was  the  contract  proven  in  this  case. 

We  are  therefore  of  opinion  that  the  decree  of  the  circuit  court  was 
correct,  and  the  judgment  of  the  appellate  court  will  be  affirmed. 
Judgment  affirmed.-'' 

20  Accord:  Obiter.  Grossman  v.  Wohlleben,  90  111.  537  (1878) ;  obiter,  English 
V.  Ivandoii.  ISl  111.  t;i4.  54  X.  E.  911  (ISOO)  ;  Wheat  v.  Kendall,  6  N.  H.  504 
(1S34) ;  Fowler  v.  Brooks,  1.3  N.  H.  240  (1842) :  obiter,  Bailev  v.  Adams,  10  N. 
11.  1«2  (1839) ;  McComb  v.  Kittridge.  14  Ohio,  348  (184G),  the  interest  being  above 
legal  rate,  but  e.xcess  only  being  forfeitable  by  law ;  Fawcett  v.  Freshwater, 
31  Ohio  St.  (537  (1877):  Chute  v.  Pattee,  37  Me.  102  (1S.j4)  :  obiter.  Brown 
V.  Prophit.  53  Miss.  (',49  (187(1) :  Simpson  v.  Evans.  44  Minn.  419.  46  N.  W.  908 
(18f>0).  interest  at  lower  rate:  Eaton  v.  Whitmore,  3  Kan.  App.  7C>0,  45  Pae. 
450  (189ti).  interest  at  lower  rate:  obiter.  Shuler  v.  Hummel.  1  Neb.  (Unof.) 
2M.  95  X.  W.  3.50  (lOin):  Reed  v.  Tierney.  12  App.  Cas.  (D.  C.)  165  (189S) ; 
Nelson  t.  Flagg.  18  Wash.  .39,  50  Pac.  571  (1897). 

See  note,  13  H.  L.  R.  63. 

Contra:  See  cases  under  note  to  Kellogg  v.  Olmstead,  ante,  p.  435. 

T^e  proposition  is  not  controverted  that  an  agreement  of  extension  of  time 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH  PRINCirAL.  4G7 

BOATAIEN'S  SAVINGS  BANK,  Appellant,  v.  JOHNSON  et  al, 

Respondents. 

(St.  Tx)uis  Court  of  Appeal,  Missouri,  1887.    24  Mo.  App.  31G.) 

Appeal  from  the  St.  Louis  Circuit  Court ;  Shepard  Barclay,  Judge.'* 

Thompson,  J.,  delivered  the  opinion  of  the  court. 

The  sing-le  question  presented  by  this  record  is  whether  an  indorser 
or  surety  is  released  by  a  composition  agreement  between  the  holder 
of  the  obligation  and  the  maker,  acceptor,  or  other  principal  debtor, 

must  be  binding  between  principal  and  creditor  in  order  to  work  the  surety's 
discEafgg;  ' 

Hence  a  mere  naked  promise  by  the  creditor  to  the  debtor  of  further  time 
will,  no  more  than  the  laches  of  the  creditor,  discbarcce  the  surety. 

Nqx  will  laches  or  extension  for  a  given  time,  in  the  absence  of  an  express 
contract  to  extend,  discharge  the  surety,  even  if  interest  he  paid  at  the  end 
of  the  extension.    .Johnston  v.  Thompson,  4  Watts  (Pa.)  440  (18.*>."). 

Payni^ent  of  interest  when  due  is  plainly  not  conclusive  on  the  question  of 
a  Ijicdifig  agreement  to  extend  time  of  pavment.  Bitler's  Estate,  .^0  Pa.  Super. 
Ct.  84  (190G).     See  Higgins  v.  McPherson.  118  111.  App.  4(14   (]90.j). 

But  if  an  express  promise  to  extend  the  time  has  a  consideration,  the  surety 
is  discliarged — e.  g,,  the  receipt  of  notes  for  installment  due  on  a  specialty 
(Rees  V.  Berrington,  2  Ves.  .Tr.  540  [171'}']).  or  the  receipt  of  new  notes  payable 
on  time,  when  not  taken  as  mere  collnteral  for  notes  due  (Hubbard  v.  Gnrney, 
64  N.  Y.  457  [1S7G] ;  Morebead  v.  Citizens'  Deposit  Bank,  1.30  Ky.  414,  113  S. 
W.  501,  23  L.  R.  A.  [N.  S.]  141  [1008]),  or  the  receipt  of  a  new  mort-age  sigiied 
by  the  wife  of  the  mortgagor  (Holland  v.  Johnson.  .^1  Ind.  .340  [1875]),  or  the 
receipt  of  a^niortgage  (Brancli  Bank,  etc.,  v.  .Tamos,  9  Ala.  049  [1S4(!1 ;  Stewart 
V.  Parker,  5o~T5a7  GoG  [1870]),  or  the  receipt  of  a  note  for  a  debt  (Smith  v. 
Shelden,  35  Mich.  42,  24  Am.  Rep.  .529  [1870]) — In  accord  with  the  presnmp- 
tionjof  the  law  merchant  that  a  bill  or  note  is  conditional  payment. 

An  express  promise  to  extend  the  time  of  payment  may,  on  the  iirinciple  of 
the  bilateral  contract,  be  supported  either  by  an  executed  consideration  (i. 
e.,  payment  of  interest  in  advance)  or  (as  exemplified  by  the  principal  case) 
by_an  executory  consideration  (i.  e.,  the  promise  to  pay  interest  at  the  end 
of  the  extension). 

Though  no  conflict  apparently  exists  on  the  proposition  that  Interest  paid 
in  advance,  where  an  express  promise  of  extension  is  given  in  exchange  there- 
for, will  discharge  the  suret.v— Stillwell  v.  Aargn,  09  :\Io,  .539,  33  Am.  Rep. 
mi  (1S79)  ;  Hamilton  v.  Winterrowd,  43  Ind.  393  (1S7.3)  ;  Scott  v.  SalTold,  37 
Ga.  384  (1867) ;  Hallock  v.  Yankey.  102  Wis.  41,  78  N.  W.  150.  72  Am.  St. 
Rep.  801  (1899) — there  are  contradictory  views  on  the  question  whetlier  the 
mere  payment  of  interest  in  advance  is  sullicient  evidence  to  submit  to  a 
jury,  from  which  evidence  they  may  find  a  promise  to  extend  the  time. 

The  affirmative  view  is  maintained  in  Ilollingswortb  v.  Tomllnson,  108  N. 
C.  245,  12  S.  E.  9S'.)  (1891),  and  Wakefield  P.ank  v,  Truesdell,  .55  Barb.  (N.  Y.) 
002  (1804)  ;  and  the  neu'ative  view  in  Ilayder.ville  Itauk  v.  Parsons,  138  Mass. 
53  (18S1),  ante,  p.  403,  Oxford  Bank  v.  Lewis,  8  Pick.  (Mass.)  458  (1820),  and 
Citizens'  Bank  v.  Moorman,  38  Mo.  App.  484  (18S9). 

There  is  also  a  difference  of  judicial  opinion  whether  a  promise  to  pay  In- 
ter est_lnl_exch  an  ge  for  a  promise  to  extend  the  time  discharges  the  surely: 
soiiTe  jnrisdietions  holding  this  to  be  a  bindini:  agreement,  as  In  the  principal 
ca-Se'  McComb  r.  Kittrldge,  14  Oliio.  ;US  (KS40|,  Wheat  v.  Kendall.  0  -N.  H. 
5(jr(lS34),  and  Reynolds  v.  Barnard.  :;o  111.  Api*.  21S  (1S!t(h.  (,)thersho]d- 
ing  that  this  agreement  is  nudum  pa("tum,  as  In  Kellogg  v.  Olmsted,  25  X.  Y. 
189  (1802),  ante.  p.  435.  and  cases  in  that  note,  and  Reynolds  v.  Ward,  5  ^Yeud. 
(N.  Y.)  501  (1830). 

21  The  arguments  of  counsel  and  a  portion  of  the  opinion  dealiug  with  a 
collateral  question  have  been  omitted. 


•468  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

which  composition,  in  express  terms,  reserves  every  right  and  remedy 
whiclithe  holder,  or  obHgee,  has  against  other  persons.     The  ques- 
tion must  be  answered,  u^on  authority,  that  such  an  agreement  does  npt 
discharge  the  indorser  or  surety. 
'^<^■,x;^-    Two  principles  are  universally  conceded  in  respect  of  the  rights  of 
'Sureties,  and  are  not  disputed  by  the  parties  to  this  proceeding:  (1)  That 
a  valid  agreement  between  a  creditor  and  his  principal  debtor,  where- 
by the  creditor,  in  consideration  of  the  payment  of  a  part  of  the  debt, 
discharges  the  principal  debtor,  will,  without  more,  operate  to  dis- 
charge a  surety.     (2)  That  an  agreement  between  a  creditor  and  his 
principal  debtor,  whereby  the  creditor  agrees,  for  a  consideration,  to 
extend  the  time  of  payment,  will,  without  more,  operate  to  discharge 
,,  .       a  surety. 

p^\t^noit  V   ^     gy^  j|.  is^an  exception  to  the  former  of  these  rules,  equally— 3a[gll 
'i'  settled,  that  such  an  agreement  will  not  operate  to  discharge  a  surety, 

where  the  agreement  itself  contains  an  express  reservation  of  the 
remedies  of  the  creditor  against  sureties,  or  against  all  persons  other 
than  the  principal  debtor,  who  may  be  liable.  Ex  parte  Gifford,  6  V'es. 
805,  807,  per  Lord  Eldon,  L.  C. ;  Hubbell  v.  Carpenter,  5  N.  Y.  171 ; 
Sohier  v.  Loring,  6  Cush.  (Mass.)  537;  Tobey  v.  Ellis,  114  Alass.  120; 
Mueller  v.  Dobschuetz,  89  111.  176,  182 ;  Stirewalt  v.  Martin,  84  N. 
C.  4;  Morse  v.  Huntington,  40  Vt.  488,  496.  This  principle  was  recog- 
nized by  this  court  in  Broadway  Savings  Bank  v.  Schmucker,  7  Mo. 
App.  171. 

It  is  an  equally  well-settled  exception  to  the  second  ofjjie.se  rules 
that  such  an  agreement  will  not  operate  to  discharge  a  surety,  where 
the  agreement  itself  contains  an  express  reservation  of  the  remedies  of 
the  creditor  against  sureties,  or  against  all  persons  other  than  the 
principal  debtor  who  may  be  liable.  Ex  parte  Glendenning,  1  Buck, 
517;  Boulthee  v.  Stubbs,  18  Ves.  20,  26;  Nichols  v.  Norris,  3  Barn. 
&  Ad.  41 ;  Clagett  v.  Salmon,  5  Gill  &  J.  (Ud.)  314 ;  Wyke  v.  Rogers, 
1  De  G.,  M.  &  G.  408 ;  Melville  v.  Glendenning,  7  Taunt.  126 ;  Bangs 
V.  Strong,  10  Paige  (N.  Y.)  11;  Bank  v.  Lewis,  8  Pick.  (Mass.)  458; 
Blackstone  v.  Hill,  10  Pick.  (Mass.)  129;  Bank  v.  Lineberger,  83  N. 
C.  454,  35  Am.  Rep.  582 ;  Vielle  v.  Hoag,  24  Vt.  46.  Our  Supreme 
Court  made  a  ruling  which  rests  upon  similar  reasons  in  Rucker  v. 
Robinson,  38  Mo.  154,  90  Am.  Dec.  412. 
J  \'      pi      ^      These  two  exceptions  to  the  two  rules  above  stated  rest  upon  the 

•v^-^kw^Tv  sanie  principle.  They  are  grounded  upon  the  principle  that,  where  a" 
contract  expressly  reserves  the  remedy  of  the  creditor  againsFother 
persons  (which  includes  sureties),  the  sureties  are  in  no  way  prejudiced 
by  the  agreement.  By  entering  into  such  an  agreement,  the  princi- 
pal debtor  impliedly  consents  that  whatever  remedies  his  sureties 
have  against  him  shall  remain  open  to  them.  They  are  thereafter  at 
liberty  to  pay  the  debt  at  once,  and  proceed  immediately  against  their 
principal    for   reimbursement.     An   examination   of   many   decisions 


Ch.  8)  TRANSACTIONS   OF   CREDITOR  WITH  PRINCITAL.  4G9 

shows  that  the  principles  which  support  these  two  exceptions  to  the 
respective  rules  above  stated  are  precisely  the  same.  Courts  adopt 
the  same  mode  of  reasoning  in  the  two  cases,  and  cite  interchangeably 
decisions  where  the  agreement  was  for  a  discharge  of  the  principal 
debtor,  and  where  it  was  merely  for  an  extension  of  time  to  him. 

This  principle  has  been  applied  in  a  number  of  cases  where  the 
agreement  was  merely  that  the  creditor  would  not  sue  the  prin- 
cipal debtor  within  a  stated  period  of  time.  Price  v.  Barker,  4 
El.  &  Bl.  760,  778,  30  Eng.  L.  &  Eq.  157;  Kearsley  v.  Cole,  16 
Mees.  &  W.  128,  135;  Perkins  v.  Oilman,  8  Pick.  (Mass.)  229; 
Fullam  V.  Valentine,  11  Pick.  (Mass.)  156;  Kenworthy  v.  Saw- 
yer, 125  Mass.  28;  Hagey  v.  Hill,  75  Pa.  108,  15  Am.  Rep.  583. 
In  these  cases,  where  there  is  a  reservation  of  the  remedies  of  the 
creditor  against  all  other  persons,  or  against  sureties,  the  reasons 
upon  which  the  courts  refuse  to  discharge  the  sureties,  are  two- 
fold: (1)  The  reason  above  stated,  that  the  agreement  in  no  way 
prejudices  the  surety  as  to  any  remedy  which  he  may  have  against  his 
principal.  (2)  The  additional  reason  that  a  covenant  not  to  sue  cannot 
be  pleaded  in  bar  of  an  action,  in  case  it  is  brought  in  violation  of  the 
covenant,  the  courts  proceeding  upon  the  refinement  that  such  a  cove' 
nant  affords  merely  the  ground  of  an  action  for  damages.  This  dis- 
tinction was  noticed  by  our  Supreme  Court  in  Rucker  v.  Robinson, 
supra. 

Whether  it  is  well,  or  ill,  founded,  we  need  not  now  consider.  As- 
suming that  it  is  well  founded,  the  defendant's  position  is  not  helped, 
because,  in  the  cases  where  the  agreement  was  merely  an  agreement  not 
to  sue,  the  courts  have  universally  rested  their  decisions  as  well  upon 
the  reason  that  the  sureties  were  not  prejudiced  by  the  agreement,  and 
hence  not  discharged,  as  upon  the  reason  that  the  agreement  did  not 
prevent  the  creditor  from  suing  the  principal  debtor  at  any  time.  An 
examination  of  numerous  cases  convinces  us  that,  with  one  or  two 
isolated  exceptions,  they  afford  no  ground  for  raising  the  distinction, 
whjch  has  been  attempted  in  this  case,  between  agreements  not  to 
sue  and  agreements  to  discharge  the  principal  debtor  entirely,  reserving 
rights  against  all  other  persons.  We  should  add  that  the  statement  of 
Judge  Wagner,  in  State  ex"  rel.  v.  Matson,  44  Mo.  305,  308,  that  "a 
release  of  the  principal  will  always  discharge  the  surety,"  was  an  obiter 
dictum  and  did  not  correctly  state  the  law.  Nor  is  there  anything  in 
the  provisions  of  section  666,  Revised  Statutes,  to  which  we  have  been 
cited,  which  changes  the  rule  of  the  common  law  on  this  subject. 

We  find,  then,  that  the  exception  to  the  general  rule,  which  sup- 
ports the  plaintiff's  claim  in  this  case,  has  been  thoroughly  settled  in 
England,  and  in  this  country,  by  the  most  authoritative  courts ;  and  as 
we  have  no  jurisdiction  to  change  the  law,  we  must  hold  that  the  circuit 
court  erred  in  the  view  that  the  defendant  was  not  liable,  and  in  non- 
suiting the  plaintiff.     *     *     * 


4:70  DEFENSES  OF  SURETY  AGAINST   CREDITOR.  (Part   3 

The  judgment  will  be  reversed,  and  the  case  remanded.     It  is  so 
ordered.    All  the  Judges  concur.-- 


HUTCHINSON   v.    WRIGHT. 
(Supreme  Court  of  New  Hampshire,  1881.    61  N.  H.  lOS.) 

Assumpsit,  f orjtheJ)aIance  jof  two  notes,  payable  to  the  plaintiff  in 
one  year,  an'd  signed  by  C.  S.  Peabody  &  Co.  and  the  defendant.  -The 
debt  was  that  of  Peabody  &  Co.,  and  the  defendant  was  surety.  After 
the  notes  were^dueT'Peabedy  &  Co.  suspended  payment,  and  entered 
into  a  WTitten  agreement  with  their  creditors,  including  the  plaintiff 
and  the  defendant,  "that  the  said  Peabody  &  Co.,  having  failed  to  meet 
their  full  liabilities,  hereby  offer  and  agree  to  pay  the  sum  q£  50_ger 
cent,  of  all  the  unsecured  claims  as  follows:  One-third  in  four 
months  and  two-thirds  in  twelve  months,  both  from  date  hereoT^pro- 
vided  they  are  allowed  to  continue  on  in  their  business  of  lumbering  at 
Gorham  during  said  time  of  payment.  *  *  *  And  the  said  credit- 
ors, on  the  other  part,  agree  to  take  said  sum  of  50  per  cent,  in  man- 
ner and  form  as  heretofore  offered,  and  at  the  end  of  said  time  of  one 
year  to  release  and  discharge  all  the  claims  against  said  company  so 
far  as  C.  S.  Peabody  &  Co.  personally  are  concerned,  provided  the  50 
per  cent,  is  fully  paid  as  oft'ered  and  agreed."  The  plaintiff  and  de- 
fendant were  present,  and  acted  at  a  meeting  for  arranging  a  plan  of 
compromise,  and  subsequently  signed  the  agreement. 

The  first  payment  of  the  50  per  cent,  provided  for  was  made,  after 
which  Peabody  &  Co.  went  into  bankruptcy.  The  plaintiff'  claimed 
that^  the  defendant,  by  signing  the  agreement,  was  estopped  from 
denying  that  he  assented  to  the  plaintift''s  agreement  to  extend'The 
time  of  payment  of  the  notes,  and  requested  that  a  verdict  be  ordered, 
and,  on  refusal,  requested  an  instruction  according  to  his  claimj'lvhich 
was  also  refused.  The  question  of  the  defendant's  assent  to  the  ex- 
, .  tension  of  time  of  payment  was  submitted  to  the  jury,  and  the  plaintiff 
excepted. 

Allen,  J.  The  agreement  for  a  compromise  between  Peabody  & 
Co.  and  their  creditors,  signed  by  the  plaintiff",  extended  the  time  of 
payment  of  the  plaintiff's  notes,  and,  being  on  a  good  consideration,  re- 
leased the  defendant  from  further  liability  as  surety,  unless  he  con- 
sented to  the  agreement  (Crosby  v.  Wyatt,  10  N.  H.  318,  324 ;  Watriss 
v.  Pierce,  32  N.  H.  560),  or  unless,  as  a  part  of  the  agreement,  his 
liability  was  reserved  (Viele  v.  Hoag,  24  Vt.  46;  Blackstone  Bank  v. 
Hill,  10  Pick.  [Mass.]  129;  1  Par.  N.  &  B.  241).  The  defendant 
v^signed  the  agreement,  and  assented  to  all  there  was  in  it.  He  assented 
that  all  creditors  signing  the  agreement  should  receive,  at  a  future  day 

2  2  Accord:  Big  Rapids  Nat.  Bank  v.  Peters,  120  Mich.  518.  79  N.  W.  891 
(1S99).  "^ee  cases  cited  in  2  Ames.  Cases  on  Bills  and  Notes,  p.  120,  note  2. 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH   PRINCIPAL.  471 

named,  50  per  cent,  of  their  debts  in  full  discharge.  In  assenting  to 
this,  he  assented  to  the  plaintiff's  making  the  same  agreement.  He  not 
only  assented  to  the  extension  of  time  of  payment  agreed  to  by  the 
plaintiff,  but  he  also  assented  to  a  reservation  of  his  own  liability  as 
surety,  by  signing  the  instrument  which  provided  that  the  claims  of 
creditors  against  Peabody  &  Co.,  so  far  as  they  were  personally  con- 
cerned, should  be  released  on  the  payment  of  the  50  per  cent.  The 
limitation  of  the  agreement  to  claims  against  the  debtors  "personally" 
was  an  exclusion  of  the  plaintiff's  claim  against  the  defendant  as  surety, 
and  saved  his  liability. 

The  agreement  for  a  compromise  being  in  writing,  its  construction, 
meaning,  object,  and  effect  devolved  on  the  court  to  determine,  and 
were  not  within  the  province  of  the  jury.  No  question  of  fraud  being 
suggested,  and  there  being  no  ambiguity  in  the  terms  of  the  instru- 
ment, it  could  not  be  varied  or  controlled  by  parol  evidence  of  the  in- 
tention or  understanding  of  the  parties  to  it.  It  being  plain  that  one 
effect  of  the  agreement  was  to  extend  the  time  of  paying  the  plaintift''s 
not£Sj_and  that  the  defendant  assented  to  this  by  signing  the  paper, 
he  could  not  afterwards  be  heard  to  say  that  he  did  not  assent  to  it.  No 
question  being  made  of  the  defendant's  signing  the  paper,  nor  of  fraud, 
and  the  evidence  being  conclusive  of  the  defendant's  assent  to  whatever 
the  plaintiff  did,  either  in  extending  the  time  of  payment  or  in  any  way 
varying  the  original  contract,  there  was  nothing,  as  the  case  shows, 
from  which  the  defendant's  discharge  from  liability  as  a  surety  could  be 
inferred.  The  plaintiff  was  entitled  to  his  request  for  a  verdict  for  the 
amount  due  on  the  notes.      ~ 

Exceptions  sustained. 

Stanley,  J.,  did  not  sit.     The  others  concurred.''* 


SECTION  2.— SURRENDER  OF  COLLATERAL, 


HOLLAND  et  al.  v.  JOHNSON. 
(Supreme  Court  of  Indiana,  1875.    51  Ind.  346.) 

Pettit,  J.  This  suit  was  prosecuted  by  the  appellants,  William  A. 
Holland  and  John  Holland,  against  the  appellee,  David  Johnson,  on  a 
promissory  note,  copied  below;  it_being  joint  and,  several,  and..,the 
A^llpnt;  having  htj^^n  adji^dged  bankrupts  before  the  suit  was  brought  1 

"Six  months  after  date,  we  or  either  of  us  promise  to  pay  Williarn'A. 
and  John  Holland  six  hundred  and  forty-five  dollars  and  thirty-three 

2  3  Accord:  Osgood  v.  Miller,  67  Me.  174  (1877);  Johnson  v.  Prater,  81  Ga. 
141.  10  S.  E.  589  (1889). 


472  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

cents,  for  value  receiv-ed,  collectible  without  any  relief  from  valuation 
or  appraisement  laws,  with  ten  per  cent,  interest  from  date  until  paid. 
"February  Sth,  1873.  Riley  Allen. 

'^  "Hiram  Allen. 

"David  Johnson" 

iThe  complaint  was  answered  In  eight  paragraphs,  and  the  first  er- 
ror assjgned  and  complained  of  is  the  overruliag_Qf.  ademurrer  to 
theTirst,  second,  third  and  fourth  paragraphs  of  tb.e_ans.W.^r.  Th,s.£rst 
paragraph  of  the  answer  was  this : 

"(1)  The  defendant  herein  says  that  he  executed  the  note  mentioned 
in  plaintiff's  complaint,  but  that  he  executed  it  as  surety,  which  fact 
at  that  time  was  known  to  plaintiff's,  of  Hiram  Allen  and  Riley  Allen, 
who  also  signed  said  note ;  that  said  note  was  secured  by  a  mortgage,. 
a  copy  of  which  is  filed  herewith  and  made  a  part  hereof,  made  by  said 
Riley  Allen  and  Hiram  Allen,  on  the  ISth  day  of  Februarv^  1873,  and 
on  that  day  taken  and  accepted  by  plaintiffs ;  that  said  land,  so  con- 
veyed, was  at  that  time,  and  still  is,  of  the  cash  value  of  three  thou- 
sand dollars,  which  was  sufficient  to  secure  the  note  in  plaintiffs'  com- 
plaint mentioned  and  another  promissory  note  mentioned  in  said  mort- 
gage; that _on  the  5th  day  of  May,  1873,  the  plaintiffs,  without  the 
knowledge  or  consent  of  the  defendant,  and  contrary  to  his  wishes, 
and  for  a  valuable  consideration,  released  said  mortgage,  in  consid- 
eration  of  a  new  mortgage  from  said  Aliens  and  their  respective  wives 
onlTie  land  mentioned  in  said  mortgage,  dated  February  18,_1873^  ex- 
tended the  time  of  payment  of  the  note  set  out  in  plaintiffs'  complaint 
for  a  length  of  time  beyond  when  the  same  would  fall  due,  to  wit,  for 
the  space  of  six  months,  and  agreed  to,  and  did  then  and  there,  bind 
themselves  to  give  said  Aliens  longer  time  for  the  payment  of  said 
note;  that  in  consideration  of  said  promise  and  agreement  by  plain- 
tiffs, said  Aliens  did  then  and  there,  together  with  their  said  wives, 
execute  and  deliver  to  said  plaintiff's  said  new  mortgage,  which  is  filed 
herewith  by  copy.  Wherefore  this  defendant  says  that  he  is  released 
from  all  liability  on  said  note.  He  therefore  asks  for  judgment  for 
his  costs  herein,  and  for  all  proper  relief." 

The  second  paragraph  of  the  answer  sets  up  the  substantial  facts  of 
the  first,  and,  in  addition,  alleges  that  the  interest  of  the  wives  of  the 
Aliens  in  the  lands  mortgaged  on  the  5th  day  of  May,  1873,  was  of 
the  cash  value  of  two  thousand  dollars,  and^hat  the  plaintiffs,  without 
the  knowledge  or  consent  of  the  defendant,  canceled  ana  released,  on 
the  5th  day  of  September,  1873,  the  mortgage  of  the  5th  day  of  ]\Iay, 
1873. 

The  third  paragraph  is  substantially  the  same  as  the  first,  with  the 
addition  that  the  plaintiffs  extended  the  time  of  payment  of  the  note 
to  the  Aliens  six  months,  in  consideration  of  their  making  the  mort- 
gage of  February  18,  1873. 

The  fourth  paragraph  sets  up  a  parol  release  and  surrender  of  the 
mortgage  of  the  ISth  of  February,  1873. 


which  do  not  do  so,  and  that  the  nportgages  were 
oFthe  defense  set  up  in  them,  an^ That  a  j)arol  rele 


Ch,  8)  TRAXSACTIONS   OF  CREDITOR  WITH  PRINCIPAL.  473 

A  majority  of  the  court  hold  all  of  these  paragraphs  .ol.lli£_ans.wer/ 
g;ood,(-^s  well  those  whfcE  make  the~niortgages  a  part  of  them  as  those 

not  the  foundation 
release  is  valid  in  such 
a  case  as  this,  and  that  these  views  are  sustained  by  the  following  au- 
thorities : 

As  to  the  failure  to  file  the  mortgages  or  a  copy  of  them  with  the 
paragraphs  in  which  they  are  set  up,  Heitman  v.  Schnek,  40  Ind.  93. 

As  to  parol  release,  Mauzey  v.  Bowen,  8  Ind.  193,  and  notes  1  and 
2 ;  Knarr  v.  Conaway,  42  Ind.  260 ;  Ackla  v.  Ackla,  6  Pa.  228,  and 
cases  there  cited.  , 

Tn  thes(;  views  the  writer  does  not.^oneur.  Hejhinks that  the  mort- 
gages were  the  foundation  of  the  defense,  and  that,  under  our  statute, 
the  original  or  a^copy  should  have  been  filed  with  each  paragraph  of 
the  answer,  ana  mat  a  parol  release  of  a  mortgage,  in  such  a  case  as 
this,  is  not  valid.  /^  Rji.,jp./o<i«^ 

It  is  urged  by  the  counsel  for  the  appellants  that  the  release  of  se-  ■. \J^ 

curities  given  by  the  principals,  Aliens,  to  the  payees,  Hollands,  after  ^^ 

the  note,  was  made  and  signed  by  Johnson  as  surety,  cannot  release 
Johnson  as  such  surety. 

We  hold  the  reverse  of  this  position.  It  is  the  duty  of  the  payee 
of  anote,  on  which  there  is  a  surety,  to  hold  all  secijr'ities  which.Jae 
has"  from  the  principal  in  the  note,  whether  the  securities  existed  at 
the  date  of  the  note  or  w^ere  given  afterwards^;.,  and  ij  he  releases  such 
securities,  the  surety  on  the  note  will  be  released  to  the~exteiit~of  the 
value  otlEe  securitv  which  has  been  released  by  the  payee.  Stewart 
v.-  UavIs^'Ex'r,  18  Ind.  74;  Story,  Eq.  Jur.  §§' 325,  32^6;  2  Am.  L. 
Cases,  345  et  seq.  y^UoY^vf^rf'o-' 

We  think  and  hold  that  there  was  no  error  in  refusing  to  allow  the  [vw^  P- <*  "^ " 
plaintiff  to  take  a  non-suit  after  the  jury  had  retired  and  before  they 
had  returned  with  their  verdict.    2  Gav.  &  H.  Rev.  St.  1870,  p.  216, 
§363.  X 

The  only  remaining  questions  are  as  to  the  sufficiency  of  the  evi-  i^rU^-'-r^c^-^f^^ 
dence  and  the  correctness  of  the  instructions  given. 

The  evidence  clearly  tends  to  prove  the  allegations  of  the  plead- 
ings, and  the  instructions  are  clearly  within  and  confined  to  the  issues 
jomed  and  the  evidence  given. 

We  can  find  no  error  in  the  action  of  the  court  below. 

The  judgment  is  affirmed,  at  the  costs  of  the  appellants.^* 

24  AppnrrI:  Willis  V.  Davis,  3  Minn.  17  (Gil.  1)  (3859);  Cummings  v.  Little, 
45  Me.  183  (1858),  sureties  held  to  be  discharged  in  toto,  although  security  u.ot 
eoual  to  debt,  because  a  Joint  judgment  could  not  be  rendered  for  different 
amounts  against  principal  and  surety.  Cf.  Acers  v.  Curtis.  (58  Tex.  423,  4l^. 
\rrB51  (1887),  ante,  p.  332;  obiter.'Brown  v.  First  Nat.  Bank,  132  Fed.  450, 
m  C.  C.  A.  293  (1904) ;  Mutual  Loan.  etc..  Ass'n  v.  Sudlow,  28  L.  J.  Rep.  Com. 
Law  (N.  S.)  108  (1858),  Common  Pleas,  Mich.  (1858). 

On  the  admissibUltr  of  the  parol  evidence,  see  cases  under  Chapter  VIII, 
section  1,  ante.  ~  ~" 


474  DEFENSES   OF  SURETY   AGAINST   CREDITOR.  (Part    O 

BINGHAM,  Respondent,  v.  T^IEARS  et  al.,  Appellants. 

(Supreme  Court  of  North  Dakota,  1894.    4  N.  D.  437,  61  N.  W.  SOS,  27  L.  R. 

A.  257.) 

Corliss^  J.^"*  The  defendants  were  sureties  on  an  undertaking  given 
on  appeal  to  this  court  from  a  judgment.  Their  only  defense  to  this 
action  against  them  on  the  undertaking  is  that  the  prmcipal  on  wliose 
behalf  they  signed  the  undertaking  assigned  to  the  plaintift,  as  col- 
lateral to  the  claim  on  which  such  judgment  was  rendered,  certain 
promissory  notes  secured  by  real  estate  mortgages,  and  that  such  col- 
lateral security  is  sufficient  to  pay  such  judgjnent  and  all  expenses; 
"that  they  have  notified  the  plaintiff  that  he  must  resort  to  sucli  col- 
lateral fo  collect  his  claim,  but  that  he  has  failed  to  do  so^ 

r^-T^r^.'  (jt^uf"  ^  Under  the  circumstances  of  this  case,  these  facts  do  not  constitute 
^.,r.j;^(^     I   J     a  defense.    The  general  rule  is  that  the  surety  has  no  right  to  insist 

)  ^eftcv-rJ*-  that  the  creditor  shall  first  proceed  against  the  principal  debtor,  or  any 

^  security  which  such  debtor  may  have  given  him^    Upon  default  tKe 

surety  may  at  once  be  sued.  1  Brandt,  Suretyship,  §  97.  It  is  true 
that,  in  cases  characterized  by  exceptional  features,  equity  may  com- 
pel the  creditor  to  resort  first  to  the  property  of  the  principal  debtQr 
where  this  will  occasion  no  inconvenience  or  delay  to  the  creditor. 
See  Railroad  Co.  v.  Little,  41  N.  J.  Eq.  519,  7  Atl.  356.  But  the  facts 
of  this  litigation  do  not  call  for  the  application  of  this  rule.  There 
is  no  claim  that  the  principal  debtor  is  insolvent,  or  that  these  col- 
lateral securities  will  not  be  available  to  the  sureties  in  their  hands 
for  their  indemnity  after  they  have  become  by  payment  subrogated  to 
all  rights  of  the  plaintiff  therein. 

fc».lr4TyM^  /^  There  is  also  another  rule  which  appears  to  be  well  supported,  but 
this  case  is  not  brought  within  its  scope.  There  is  authority  for  the 
doctrine  that,  upon  indemnifying  the  creditor  agamst  th^~e5cpenses^of 
the"  proceedings,  the  surety  may,  in  equity,  compel  him  to  first  exhaust 
his  remedies  against  the  principal  debtor.  Brandt,  Suretyship,  '§~^8. 
But  in  this  case  no  offer  of  indemnity  appears  to  have  been  made.  This 
is  a  simple  action  at  law  upon  a  contract.  The  right  of  the  sufe^Tes 
jt^ft^t^v^  A  wTtK  respect  to  this  collateral  security  is  to  resort  to  it  themselves  on 

i^v^tj^^Y^^  paying  the  debt,  and  not  to  compel  the  creditor  to  resort  to  it.  It  is 
because  of  this  right  of  a  surety  to  look  to  such  security  for  indem- 
nity  alter  he  has  paid  the  debt  that  the  release  of  such  security  by  the 
creditor  will  discharge  the  surety,  ^^'hen  the  surety  is  sued,  he^cafl- 
not,  in  an  ordinary  case,  at  least,  defend  on  the  ground  that  the  prin- 
cipal should  have  been  first  sued,  and  all  efforts  to  collect  the  debt 
from  him  exhausted.  On  the  same  principle,  the  surety  cannot  insist 
that  the  creditor  must  first  essay  to  collect  his  claim  out  of  the  col- 
laterals the  principal  debtor  has  given  him,  except  in  the  case  men- 
tioned in  section  4310.     This  statute  is  inapplicable  to  this  action. 

2  6  The  arguments  of  counsel  and  a  part  of  the  opinion  are  omitted- 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  473 

Another  section  of  our  statutes  clearly  contemplates  that  the  "^^"^^ J^j^r:^^jJU/ij^ 
failure,  after  request,  to  sue  the  principal  debtor,  or  to  proceed  against 
collateral  security,  will  not  defeat  an  action  against  the  surety.  The 
latter  may  nevertheless  be  sued,  and  is  liable  for  every  dollar  of  the 
debt,  except  to  the  extent  that  he  is  prejudiced  by  the  refusal  of  the 
creditor  to  proceed  as  requested.  Comp.  Laws,  §  4305.  The  fact  that 
the  principal  debtor  has  not  been  sued,  or  that  collateral  security  has 
not  been  exhausted  is  never  a  defense  of  itself.  It  is  not  a  defense, 
even  when  a  request  of  the  surety  is  shown  that  the  creditor  sue  the 
principal  or  resort  to  his  collateral,  unless  the  surety  is  prejudiced  by 
the  failure  of  the  creditor  to  act  as  requested,  and  then  only  to  the 
extent  of  such  prejudice.  To  have  made  out  a  defense  because  of 
the  failure  to  resort  to  this  collateral  security,  defendants  should  have 
proved  that  they  had  been  prejudiced  thereby. 

Another  section  of  our  statute  leads  us  to  the  same  conclusion.  Sec- 
tion 4310,  Comp.  Laws,  provides  that,  "whenever  property  of  a  surety 
is  hypothecated  with  the  property  of  the  principal,  the  surety  is  en- 
titled to  have  the  property  of  the  principal  first  applied  to  the  dis- 
charge of  the  obligation."  Here  is  a  single  instance  in  which  the  surety 
may  insist  that  collateral  held  by  the  creditor  shall  be  first  exhausted. 
It  follows  that  in  no  other  case  does  this  right  exist,  unless  the  right 
was  well  established  under  the  decision  prior  to  the  enactment  of  this 
statutory  law.  So  far  from  finding  such  a  rule  to  have  been  settled 
at  the  time  our  Code  was  adopted,  we  have  been  unable  to  discover  a 
single  authority  sustaining  such  a  doctrine,  where  the  facts  were  not 
exceptional.  All  the  adjudications  support  the  contrary  rule.  Fuller 
V.  Loring,  42  Me.  481;  Thorn  v.  Pinkham,  84  Me.  101,  24  Atl.  718, 
30  Am.  St.  Rep.  335 ;  Morrison  v.  Bank,  65  N.  H.  253,  20  Atl.  300, 
9  L.  R.  A.  282,  23  Am.  St.  Rep.  39 ;  Abercrombie  v.  Knox,  3  Ala. 
728,  37  Am.  Dec.  721 ;  Allen  v.  Woodard,  125  Mass.  400,  28  Am.  Rep. 
250 ;  Jones  v.  Tincher,  15  Ind.  308,  77  Am.  Dec.  92 ;  Freehold  Nat. 
Bkg.  Co.  V.  Brick,  37  N.  J.  Law,  307;  1  Brandt,  Suretyship,  §§  97, 
237;  Buck  v.  Sanders,  1  Dana  (Ky.)  187;  Day  v.  Elmore,  4  Wis. 
190-198;  Penn  v.  Ingles,  82  Va.  65 ;  Davis  v.  Patrick,  6  C  C.  A.  632, 
57  Fed.  909 ;  Callahan  v.  Mitchell,  29  Ind.  419 ;  Aultman  v.  Smith, 
52  Mo.  App.  351. 

The  judgment  of  the  district  court  is  affirmed.    All  concur.^' 

2  6  The  opinion  on  the  rehearing  is  omitted. 


47G  DEFENSES  OF  SURETY   AGAINST   CREDITOR.  (Part   '& 

MONROE  et  al.  v.  WILLIAM  H.  DE  FOREST  et  al. 
(Court  of  Chancery  of  New  Jersey,  1SJ)5.    53  N.  J.  Eq.  2G4,  31  Atl.  773.) 

On  exceptions  to  master's  report. 

Bird,  V.  C7'D'ix~SrP5j^1F'dalm  to  be  creditars-o£-tl»€~4€€«a«ed-tes- 
tatEUf-  Tjiey  hold  a  promissory  note,  which  was  drawn  by  Wilham 
H.  De  Forest,  Jr.,  to  the  order  of  William  H.  De  Forest,  Sr.,  and  in- 
dorsed by  the  latter,  and  also  indorsed  by  the  deceased  testatrix,  who 
was  the  wife  of  the  first  indorser.  At  the  tjme'oT "the "execution  of 
the  note  a  bond  was  given  by  the  maker  of  tlie'  nofe  in  the  sumof 
$60,000,  for  the  payment  of  !?30,000,  with  interest,  which  bondjvas 
secured  by  a  mortgage  on  certain  lots  on  One  Hundred  and  Forty- 
Fourth  street  and  on  Seventy-Sixth  street,  New  York  City.  At  the 
same  time  an  agreement  was  entered  into  between  Dix  &  Phyfe  and 
the~rnaker  of  the  note,  which  concluded  with  the  stipulatioTOTr;the5e 
words : 

'The  parties  of  the  second  part  agree  that  the  said  mortgage  of 
thirty  thousand  dollars  on  the  premises  on  the  south  side  of  One  Hun- 
dred and  Forty-Fourth  street  shall  be  subordinate  and  subject  to  the 
second  mortgage  of  eighty  thousand  dollars,  and  shall  be  withheld 
from  record  for  the  period  of  ten  months,  which  is  the  time  provided 
for  the  completion  of  said  buildings,  provided  the  party  of  the  first 
part  shall  faithfully  perform  his  covenants  under  this  agreement.  And 
the  parties  of  the  second  part  agree  to  release  from  time  to  time  any 
of  the  houses  so  to  be  completed  from  the  lien  of  said  mortgage  on 
the  payment  to  them  of  the  sum  of  twenty-five  hundred  dollars  on 
such  house." 

The  maker  of  the  note  and  the  owner  of  the  lots  con:  the 

erection  of  buildings  thereon,  and  after  the  walls  were  erecLcd  appli- 
caTibns  were  made  from  time  to  time  by  builders  or  materialmeiT'to 
DTx^STPhyfe  for  the  release  of  their  lien  to  the  extent  of  the  labor 
and  material  ^mpjoyed  in  and  upon  the  said  buildings,  which  was 
granted  by  them  without  any  payment  whatsoever^ 
Y\  ~Tt_is  insisted  that  this  release,  without  compensation,  according  to 
the  agreement,'~vvorkra  discharge  of  the  surety.  I  can  find  no  case  or 
rule^  law  which  will  permit  me  to  hold  othervyise.  It  is  well  settled 
that  a  surety  is  entitled  to  the  benefit  of  all  collaterals  which  have  been 
taken  by  the  creditor  from  the  principal  debtor.  In  this  case,  Dix  & 
Phyfe  not  only  had  the  mortgage  referred  to,  but  entered  into  an  agree- 
ment in  and  by  which  they  would  release  the  mortgage  from  each  of 
the  various  lots  upon  the  payment  of  $2,500.  It  is  insisted  that  this 
mortgage  turned  out  to  be  of  no  value,  and  that  therefore  the  surety 
is  not  damaged  by  the  release.  I  very  much  doubt,  under  such  a  stipu- 
lation, if  an  agreement  to  the  effect  can  be  of  any  avail,  especially 
where  the  testimony  respecting  the  value  of  the  premises  at  the  time 
ol  the  release  shed  so  little  light  upon  the  question  of  value.     Besides 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL,  477 

this,  the  release  evidently  worked  such  a  change  of  condition  as  to 
make  it  impossible  to  determine  what  the  result  would  have  been  if 
such  conditions  had  not  been  imposed.  Who  can  tell  but  that  the 
embarrassments  which  the  mortgage  presented  would  not  have  been 
overcome  by  the  owner,  had  the  mortgagee  refused  to  be  subservient  to 
his  wishes  in  surrendering  his  position  as  such  mortgagee? 

But  the  material  point  in  the  case  is  the  absolute  agreement  that  the 
mortgage  is  to  stand  until  the  payment  of  the  $2,500.  It  is  that  agree- 
ment which  the  surety  is  entitled  to,  as  well  as  any  benefit  that  may 
accrue  from  the  value  of  the  mortgaged  premises.  The  Hen  of  the 
mortgage  may  have  been  embarrassing;  but  relief  against  such  en-vbar- 
rassment  devolved  upon  the  mortgagor  or  owner  of  the  premises,  and 
not  upon  the  mortgagee  in  the  face  of  the  agreement.  The  surety  had 
aiTiihdoubted  right  in  any  and  every  event  to  expect  that  mortgage  to 
stand  in  the  place  by  way  of  seniority,  which  it  held  until  $2,500  was 
paid  upon  each  lot. 

This  transaction  comes  directly  within  the  judgment  pronounced  by 
Lord  Loughborough,  in  Reese  v.  Berrington,  2  Ves.  Jr.  540,  also  2 
White  &  T.  Lead.  Cas.  1870 :  "It  only  amounts  to  this :  That  there 
shall  be  no  transaction  with  the  principal  debtor  without  acquainting 
the  person  who  has  a  great  interest  in  it.  The  surety  only  engages  to 
make  good  the  deficiency.  It  is  the  clearest  and  most  evident  equity 
not  to  carry  on  any  transaction  without  the  priyity  of  him  who  must 
necessarily  have  a  concern  in  every  transaction  with  the  principal  debt- 
or. You  cannot  keep  him  bound  and  transact  his  affairs  (for  they  are 
as  much  his  as  your  own)  without  consulting  him.  You  must  let  him 
judge  whether  he  will  give  that  indulgence  contrary  to  the  nature  of 
his  engagement."  2  White  &  T.  Lead.  Cas.  1894,  1901 ;  Harr.  Sub. 
§  19  ;  Pearl  v.  Deacon,  1  De  G.  &  J.  *461,  2  Am.  Lead.  Cas.  394 ;  Baker 
V.  Briggs,  8  Pick.  (Mass.)  122,  19  Am.  Dec.  311;  Vose  v.  Florida 
Railroad  Co.,  50  N".  Y.  374,  375 ;  De  Coly.  Guar.  388,  389 ;  Miller  v. 
Stewart,  9  Wheat.  680,  6  L.  Ed.  189;  1  Story  Eq.  Jur.  §§  324,  325; 
Price  V.  Truesdale,  28  N.  J.  Eq.  200 ;  Philadelphia  &  Reading  Rail- 
road Co.  V.  Little,  41  N.  J.  Eq.  520,  7  Atl.  356 ;  Freehold  National 
Bank  V.  Brick,  37  N.  J.  Law,  307. 

The  surety,  upon  discharging  the  debt,  is  always  entitled  to  all  the 
securities  which  the  creditor  had  taken  for  his  own  protection  in  the 
same  condition  as  the  creditor  received  them.  Pledge  v.  Buss, 
Johns.  (Eng.  Ch.)  663;  2  White  &  T.  Lead.  Cas.  1888,  1891;  Vose 
V.  Florida  Railroad  Co.,  supra ;  New  Hampshire  Savings  Bank  v.  Col- 
cord,  15  N.  H.  119,  41  Am.  Dec.  685;  Guild  v.  Butler,  127  Mass.  386; 
Paulin  V.  Kaighn,  29  A^  J.  Law,  480. 

In  ^uch  cases  the  law  presumes  injury  to  the  surety  until  the  con- 
traixis. estahlish£nrfhe l>urden  of  which  is  upon  the  crrfTTtflr^  aJ  White 
&  T.  Lead.  Cas.  1902. 

When  this  agreement  is  read  and  considered,  it  will  be  seen  that 
the  bond  and  mortgage  referred  to  were  to  give  way  for  other  securi- 


^«^ 


.    i  »^ 


478  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

ties  therein  named,  and  were  in  reality  to  be  postponed  to  such  a  period 
of  time  as  would  enable  the  debtor  and  owner  to  complete  the  build- 
ings upon  the  lands  mentioned.  For  this  he  was  allowed  ten  months, 
by  which  it  was  manifestly  intended  to  give  him  every  opportunity  to 
provide  for  every  embarrassment.  In  the  light  of  the  above  author- 
ities, the  creditor  had  no  right  to  interfere  with  or  to  alter  these  con- 
ditions without  the  consent  of  the  surety. 

r  But  it  is  claimed  that  the  result  above  expressed  is  not  the  just  re- 
sult in  this  particular  case,  because  William  H.  De  Forest,  Sr.,  the  ex- 
ecutor of  the  surety,  consented  to.  if  he  did  not  request,  the  execution 
of  the  releases  by  Dix  &  Phyfe,  after  he  had  proved  the  will  and  taken 
upon  himself  the  burden  of  the  execution  thereof.  I  find  nothing  in 
the  case  that  justifies  the  executor  in  giving  the  least  countenance  to 
such  release.^ ^    ♦    ♦    * 

y^  However,  it  is  pressed  upon  tl^e  attention_oj  the  court  that  the  real 
estate  so  mortgaged  as  security  for  the  payment  of  tTie"  $;jU,Tr(TO'  was 
absolutely  worthless  for  any  such  purpose,  and  that  consequently  "no 
injur)-  was  done  to  the  estate  of  the  testatrix,  or,  in  otHer' worcHT that 
co"hsent  to  such  release  by  !Tfe  executo'r'^ffcTnot'increase  in  any  \vt^Jhe 
i;Tr:,,.  .  .'  .^-  «.tof«  ^jg  conclusion  has  no  foundation  to  rest  upon 
es  of  the  case.  And,  what  is  more  to  Be~Fe- 
gitiicU,  It  IS  unpus-ible,  as  wassai3~by  Lord  Chief  Justice  Knight 
Bruce,  in  Wiles  v.  Gresham,  5  De  G.,  M.  &  G.  773,  now  to  determine 
that  question.  Indeed,  that  question  could  only  have  been  satisfactorily 
settled  by  the  ordinary  or  natural  progress  of  events,  in  the  just  prose- 
cution oif  the  right  of  all  parties  interested  in  the  premises.  From  this 
statement  it  will  be  perceived  that  the  point  to  be  determined  is,  not 
the  value  of  the  premises  at  any  particular  time,  but  whether  William 
H.  De  Forest,  Jr.,  or  any  one  in  his  stead,  would  have  carried  out  the 
implied  promises  and  agreement  entered  into  with  Dix  &  Phyfe,  and 
paid  the  $2. .500  in  discharge  of  their  mortgage  to  that  extent,  in  case 
no  release  had  been  executed.  This  was  his  undertaking.  Upon  the 
strength  of  this  undertaking  the  transaction  was  completed,  not  only 
as  to  Dix  &  Phyfe,  but  as  to  Mrs.  De  Forest,  the  surety. 

When  this  transaction  in  all  its  details  was  carried  through,  the 
prospective  value  of  the  property  must  have  been  considered;  but, 
whether  it  wasor  not,  the  expressed  condition  was  that  upon  the  ex- 
ecution of  a  release  $2,500  should  be  paid.  The  value  of  the  prop- 
erty had  nothing  whatever  to  do  with  this  condition,  and,  as  was  clearly 
and  forcibly  intimated  in  the  case  of  Wiles  v.  Gresham,  supra,  none  can 
say  that  if  the  release  had  not  been  executed  the  mortgagor  or  owner 
of  the  premises  would  not  have  raised  the  $2,500.  It  was  not  only  his 
contract  that  he  would,  but  his  highest  interest  to  do  so.  The  build- 
ings were  partially  erected.     It  would  be  absurd  for  the  court  to  as- 

"  The  opinion  is  here  abridged  by  omitting  the  further  discussion  of  the 
Mecutor's  lack  of  authority  to  sanction  the  release. 


Ch.  8)  TRANSACTIONS   OF   CREDITOR  WITH   PRINCIPAL.  479 

sume  that  it  was  impossible  for  the  owner  to  raise  the  $2,500  upon  each 
lot.  It  was  incumbent  upon  him  to  raise  the  money  or  submit  to  the 
sacrifice  of  all  that  he  had  already  invested,  the  former  of  which  is 
clearly  much  more  probable  than  the  latter. 

The  foregoing  conclusions  seem  to  be  quite  in  harmony  with  the 
authorities,  which  hold  that  an  executor  or  administrator  cannot  bind 
the  estate  which  he  is  administering  by  any  new  promise.  Sumner 
V.  Williams,  8  Mass.  162,  5  Am.  Dec.  83;  Schmittler  v.  Simon,  101 
N.  Y.  554,  5  N.  E.  452,  54  Am.  Rep.  737 ;  Pinney  v.  Johnson,  8  Wend. 
(N.  Y.)  500;  Austin  v.  Monroe  et  al.,  47  N.  Y.  360;  McFarlin  v. 
Stinson  et  al,  56  Ga.  396. 

An  executor  cannot,  by  his  promise  as  such,  bind  the  assets  in  his 
hands,  nor  can  he  consent  to  their  diminution  or  surrender  without  a 
reasonable  consideration  therefor,  or  until  all  the  conditions  of  the 
obligation  be  complied  with.  The  f^.tntP  beinr  innnlrml^  thr-rrpd- 
itors  have  a  right  to  be^heard. 

I  think  the  exception  to  the  master's  report  in  this  respect  shouldbe 
sustained,  with  costs. 


NORTH  AVE.  SAVINGS  BANK  v.  HAYES. 
(Supreme  Judicial  Court  of  Massachusetts,  1905.    18S  :Mass.  135,  74  N.  E.  311.) 

Contract,  by  a  savings  bank  against  a  surety  and  joint  promisor  up- 
on  a  promissory  note  held_bx_the„plaintifiF .  Writ  dated  November  11, 
1901. 

In  the  superior  court  the  case  was  presented  upon  an  agreed  state- 
Qient  of  facts.  That  court  gave  judgment  for  the  plaintiff  in  the  sum 
of ,^2^928.39,  and  the  defendant  appealed. 

The  note  sued  upon  was  as  follows : 

"$2,500.00  Cambridge,  Dec.  10,  1895. 

"For  value  received,  we,  Cornelius  Dorr,  as  principal,  and  Cor- 
nelius Dorr  &  Son  and  Herbert  W.  Hayes,  as  sureties,  jointly  and 
severally  promise  to  pay  to  the  North  Avenue  Savings  Bank,  or  or- 
der, the  sum  of  twenty-five  hundred  dollars,  on  demand,  at  the  office 
of  said  Savings  Bank,  in  Cambridge,  with  interest 'at  the  rate  of  six 
per  cent,  per  annum,  payable  semi-annually,  on  the  tenth  day  of  Janu- 
ary and  the  tenth  day  of  July  in -every  year,  so  long  as  the  said  prin- 
cipal sum  or  any  part  thereof  shall  remain  unpaid. 

"Cornelius   Dorr. 
"Cornelius  Dorr  &  Son. 
"H.   W.   Hayes. 
"Signed  in  the  presence  of  Milton  L.  Walton. 
"Secured  by  note  of  A.  W.  Rucker  for  $2,500." 

On  December  10,  1895,  Cornelius  Dorr  borrowed  from  the  plain- 
tiff $2,500,  for  which  he  gave  the  above  note  in  compliance  with  the 


4S0  DEFENSES  OF  SURETY  AGAINST  CEEDITOR.  (Part   3 

provisions  of  Pub.  St.  1S82,  c.  IIC,  §  20,  cl.  6.  The  plaintiff  for  its 
furtlicr  protection  also  took  from  the  firm  of  Cornelius  Dorr  &  Son 
the  promissory  note  of  A.  W.  Rucker,  referred  to  by  the  above  mem- 
orandum on  the  face  of  the  note,  dated  on  or  about  December  1,  1895, 
for  $2,500,  payable  in  one  year  to  the  order  of  C  Dorr  &  Son,  and  by 
them  indorsed  generally. 

On  the  maturity  of  the  note  of  A.  W.  Rucker  held  by  the  plaintiff 
it  was  not  paid,  and  Rucker  in  place  thereof  executed  a  rene\yal^jiote 
for  the  same  amount,  dated  December  1,  1896,  payable  in  six  months 
after  date  to  the  same  firm  of  C.  Dorr  &  Son,  which  renewal  note 
was  indorsed  generally  by  the  firm,  and  then  was  delivered  Rnhe 
plaintiff,  which  surrendered  in  exchange  the  Rucker  note  then  oxfiir 
due  and  unpaid.  The^ defendant  jvas  ignorant  of  and  did jiot  consent 
to  till-  ■  ■   '     ^e. 

TIk  ;    renewal  note  was  not  paid  at  rnaturity,  and  thereafter 

thej)laintiff_ caused  an  action  to  be  brought  on  it,  and  o~bIained  judg- 
ment, whereon  it  collected  the  sum  of  $700  from  Rucker.  This  SJUln 
the  plaintiff  received  on  July  21,  1902,  and  on  that  date  credited  it 
as  paid  on  the  note  npw  in  suit.  Cornelius  Dorr  failed  to  pay  the  note 
in  suit  on  demand  at  maturity,  and  the  note  has  remained  unpaid,  ex- 
cept to  the  amount  of  $700  collected  on  the  Rucker  note. 

/     It  w'as  agreed  that  if,  on  tlie  facts  stated,  the  plaintiff  was  eirtitled 

I  to  recover,  judgment  might  be  entered  for  the  plaintiff  in  the  sum  of 
SnStraTvN-ith  interest  on  the  sum  of  $2,500  at  the  rate  of  6  per  cent, 
per  annum  from  January  10,  1897,  to  July  21,  1902,  and  interest  on 

►  $1,800  at  the  same  rate  from  January  21,  1902,  to  the  date  of  judg- 
ment. If  the  obligation  of  the  defendant  on  the  note  in  suit  was  dis- 
charged  by  any  of  the  acts  of  the  plaintiff,  judgment  was  ta-be  en- 
tered for  the  defendant. 

Braley,  J.  If  the  defendant  as  one  of  the  makers  of  the  note  was 
jointly  and  severally  liable  for  its  payment,  yet  it  was  open  to  him  by 
way  of  defense  to  prove  that  between  the  debtors  themselves  he  was 
a  surety,  and,  as  this  relation  fully  appears  in  the  body  of  the  instru- 
ment, the  plaintiff  was  charged  with  notice  of  the  fact.  Fitchburg 
Savings  Bank  v.  Torrcy.  134  Mass.  239. 

^  The  note  is  in  the  ordinary  form,  without  any  recitals  to  show  that 
its  payment,  was  secured,  and  when  it  was  delivered  originally  there 
docs  not  appear  to  have  been  any  agreement  to  which  the  defendant 
was  a  party  that  security  was  to  be  given  for  its  payment.  As  the 
pledge  made  by  the  co-surety  was  either  voluntary,  or  at  least  with- 
out_any  understanding  with  the  defendant,  the  course  pursued  sirb^ 
serjucntly  by  the  plaintiff  in  dealing  with  the  collateral  can"noFBe 
treated  as  an  alteration  of  the  original  contract  which  in  itseli  igp'^ 
crated  to  discharge  him.  Cambridge  Savings  Bank  v.  Hyde.  131 
Mass.  77,  79,  41  Am.  Rep.  193  ;  Sanderson  v.  Aston,  L.  R.  6  Exchq.  73. 

7^  By  virtue  of  his  suretyship,  and  not  because  of  his- contract,__upon 
paying  the  note  he  would  have  been  subrogated  to  the  rights^of  the 


Ch.  8)  TRANSACTIONS  OF   CREDITOR  WITH   PRINCIPAL.  481 

plaintiff  in  any  securities  pledged  to  secure  its  payment,  though,  as  in 
this  case,  furnished^  by  a  co-surety".  GutiM^vTBiiirer,  1^  Mass.  'SS6 ; 
Duncan,  Fox  &  Co.  v.  North  and  South  Wales  Bank,  6  App.  Cas. 
1,  19. 

But  aj_the  equitable  right  on  which  this  defense  rests  either  at  law 
or  jn  equity  is  that  a  surety  shall  not  lose  the  benefit  of  any  security 
held  by  the  creditor  if  at  any  time  he  chooses  to  pay  the  debt,  this  in- 
demnity does  not  extend  beyond  the  actual  damage  he  may  be  foiind 
to~have  suffered.  Worcester  Savings  Bank  v.  Thayer,  136  Mass.  459, 
462;  Boston  Penny  Savings  Bank  v.  Bradford,  181  Mass.  199,  63  N. 
E.  427. 

If  the  plaintiff,  without  his  consent,  surrendered  such  security,  or 
permitted  it  to  be  lost  or  impaired  in  value,  the  defendant  would  be 
discharged  to  the  extent  of  any  financial  loss  he  thus  is  shown  to  have 
suffered.  Beacon  Trust  Co.  v.  Robbins,  173  Mass.  261,  272,  53  N.  E. 
868.  The  only  fact  upon  which  the  defendant  relies  as  working  his 
discharge  is  that  without  his  knowledge  or  assent  a  promissory  note 
of  the  face  value  of  the  principal  debt,  and  held  as  collateral  security 
for  its  payment,  not  having  been  paid  at  maturity,  was  surrendered  by 
the  plaintiff'  with  the  assent  of  the  co-surety,  who  was  the  payee  and 
pledgor,  and  a  renewal  note  for  a  similar  amount  taken  in  substitution. 

Beyond  the  mere  recital  of  the  taking  of  one  note  in  place  of  the 
other,  the  agreed  facts  contain  no  statement  upon  which  this  defense 
can  be  put. 

This  is  significant,  for  before  the  defendant  can  be  exonerated  from 
making  payment  according  to  his  promise  it  must  be  made  apparent 
that  by  the  conduct  of  the  plaintiff  in  accepting  the  substitution  he 
suff"ered  an  actual,  and  not  a  speculative,  injury.  Coates  v.  Coates, 
33  Beav.  249 ;  State  Bank  of  Lock  Haven  v.  Smith,  155  N.  Y.  185. 
49  N.  E.  680. 

It  is  not  stated  that  the  exchange  was  made  otherwise  than  in  good 
fajthTor  that  at  the  time  it  was  not  a  prudent  arrangement  entered 
into  for  the  benefit  of  all  parties  in  interest. 

KeitFefis  it  shown  that  the  acceptance  of  one  note  for  the  other 
resulted  in  any  wrong  to  the  defendant,  for  the  value  of  the  collateral 
held  in  either  form  depended  upon  the  ability  of  the  maker  to  meet 
his  obligation. 

If  the  original  note  had  been  retained,  it  does  not  appear  that  it 
would  have  been  paid  within  the  time  covered  by  the  note  taken  in 
renewal,  or  that  during  that  time  the  solvency  of  the  maker  had  be- 
come impaired,  although  later,  upon  suit  being  brought,  only  a  por- 
tion of  the  note  was  collected. 

Bv  reasoa^oi  the  absence  of  any  affirmative  proof  that  the  plain-. 

tiff's  action  deprived  him  of  a  benefit  that  might  have  arisen  if  the 

coriateral  note  had  been  retained,  the  defendant  fails  upon  the  agreed 

factSi_^under  which  the  case  is  submitted,  to  make  it  manifest  that  he 

Hen.  Sub.— 31 


4S2  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

has  suffered  any  monetary  loss,  and  consequently  he  is  not  released. 
CoTeman  V.  Lewis.  183  :Mass.  4S5,  67  N.  £.603;' 68  L.  R.  A.  482, 
or  Am.  St.  Rep.  450;  State  Bank  of  Lock  Haven  v.  Smith,  ubi  supra; 
Eaton  V.  Waite.  6G  Me.  221;  Bull  v.  Coe,  77  Cal.  54,  62,  18  Pac. 
808,  11  Am.  St.  Rep.  235;  Merchants'  Ins.  Co.  v.  Herber,  68  Minn. 
420,  428,  71  N.  W.  624. 
Judgment  affirmed.*' 


NATIONAL  LEAD  CO.  v.  MONTPELIER  HARDWARE 

CO.  et  al. 

(Supreme  Court  of  Vermont.  1001.     73  Yt  119.  50  Atl.  S09.) 

.\ssumpsitj)"  a  no^p  ELea,  the  general jssue.  Trial  by  court,  Wash- 
ington County,  March  Term,  1900,"  Tyler,  J.,  presiding.  On  facts 
found,  judgment  was  rendered  against  the  defendants  D.  LT Fuller 
and  H.  L.  Dean,  named  in  the  opinion.  The  defendant  D.  L.  Fuller 
excepted. 

The  note  in  suit  was  one  signed  by  all  the  defendants  and  was  as 
follows : 
••$873.82.  Jan.  9,  1897. 

"Two  months  after  date  we  promise  to  pay  to  the  order  of  Na- 
tional Lead  Company  eight  hundred  and  seventy-three  and  ®-/ioo  dol- 
lars, at  Montpelier,  Vt.    Value  received." 

The  consideration  passed  to  the  first  signer,  the  Montpelier  Hard- 
ware Company.  At  some  time  after  the  note  was  given  the  Hard- 
ware Company  went  into  insolvency  under  the  insolvent  lawofthis 
sUte.  The  plaintiff  presented  the  note  against  the  insolvent  estate 
and  received  therefrom  70  per  cent,  of  the  claim  in  dividends.  The 
court  found  that  there  was  a  reasonable  probability  that  another  small 
dividend  would  be  paid.  The  amount  of  damages  for  which  judgment 
was  rendered  was  the  balance  due  upon  the  note  aitSf  dedUClliig~the 
dividendsj)aid_.  "  ' 

Taft,  C.  J.  The  plaintiff  seeks  to  recover  the  amount  due  upon  a 
promissory  note  signed  by  the  Montpelier  Hardware  Company,  the  de- 
fendants b.  L.  Fuller,  H.  L.  Dean,  and  one  Charles  H.  Fuller.  The 
latter  had  been  discharged  by  the  court  of  insolvency.  The  principal 
upon  the  note,  the  Hardware  Company,  is  in  insolvency,  and  two  div- 
idends, amounting  to  70  per  cent,  upon  the  dollar,  have  been  paid  by 
the  assignee.  No  claim  is  made  against  C.  H.  Fuller.  The  plaintiff  is 
entitled  to  a  judgment  against  the  defendants  D.  L.  Fuller  and  Dean. 
1^  The  defendant  D.  L.  Fuller  claimed  on  the  trial  below  tliat  the-fdajn- 
tifl  was  not  entitled  to  judgment  in  this  suit,  for  that  it  was  bound  to 
exhau-t  its  remedy  against  the  principal  of  the  note,  and  thaPtHere 

»»  Accoid:  Vose  v.  Florida  R.  R.  Co.,  50  N.  Y.  3G9  (187^. 


TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  4S3 

was  a  reasonable  probability  of  another  dividend  being  realized  from 
thg  uncollected  assets  of  the  Hardware  Company,  and  that  it  could  not 
proceed  against  the  defendant  D.  L.  Fuller  until  the  insolvent  estate 
was  fully  settled.  This  position  is  not  tenable.  The  plaintiff  has  the 
right  to  collect  the  note  in  any  legal  way  from  any  of  the  signers.  The 
presentation  of  the  note  against  the  estate  of  the  Hardware  Company 
did  not  operate  to  discharge  the  other  signers  of  the  note.  The  note 
being  a  joint  one,  the  plaintiff  could  not  maintain  an  action~against 
tlie  signers  severally,  and  they  were  all  summoned  as  defendants. 
No  judgment~could  be  rendered  against  Charles  H.  Fuller,  as  he  had 
been  discharged  from  the  claim  by  the  court  of  insolvency.  Judgment 
was  rendered  against  the  two  defendants,  D.  L.  Fuller  and  Dean.  If 
it  was  error  not  to  include  the  Hardware  Company  in  the  judgment 
as  debtors,  that  question  is  not  before  us,  as  no  exception  was  taken 
upon  the  ground  that  the  Hardware  Company  were  not  included  in  the 
judgment. 

The  only  questions  made  below  by  D.  L.  Fuller  were  those  above 
mentioned,  viz. :  That  the  plaintiff  was  bound  to  exhaust  its  remedy 
against  the  Hardware  Company,  and  could  not  proceed  against  him 
until  the  estate  of  the  Hardware  Company  was  settled ;  and  that  the 
presentation  of  the  no.te  against  the  estate  of  the  Hardware  Company 
discharged  the  defendants  D.  L.  Fuller  and  Dean.  The  court  below 
was  correct  in  its  rulings  on  these  two  questions. 

No  discharge  is  granted  a  corporation  by  the  insolvent  court,  and 
there  is  no  provision  for  staying  judgment  against  one,  as  there  is 
against  an  individual,  until  the  question  of  a  discharge  is  settled. 
Whether  judgment  against  the  Hardware  Company  could  properly 
have  been  rendered  we  do  not  decide,  as  the  question  is  not  before  us. 

There  was  no  error  in  rendering  judgment  against  D.  L.  Fuller  and 
Dean,  and  the  same  is  attifm^ 


EVERLY  V.   RICE. 

(Supreme  Court  of  Pennsylvania,  1853.    20  Pa.  297.) 

Error  to  the  District  Court  of  Philadelphia. 

This  was  a  scire  facias  post  an.  et  diem  to  revive  a  judgment  en- 
ter e"3~OTra"  bond  executed  by  Martha  J.  Everly  to  John  P.  Rice. 

The  judgment  of  Rice  was  entered  to  June  Term,  1842.  On  8th 
February,  1845,  a  scire  facias  post  annum  et  diem,  and  to  revive  the 
judgment,  was  issued.  Tojhis  scire  facias  the  defendant  pleaded  pay- 
rnent.  with  leav.e.  and  gave  notice  of  special  matter.  See  the  "state- 
ment referred  to  in  the  opinion  of  Black,  C.  J. 

Verdict  was  rendered  for  plaintiff,  and  was  entered  for  $889.63. 

Black,  C.  J.  Miller  N.  Everly,  the  son  of  the  plaintiff  in  error, 
was  indebted  to  Rice  in  the  sum  of  $1,000,  for  which  he  gave  his  judg- 


4S4  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

ment  bond  and  a  mortgage  on  certain  property  in  New  Jersey.  Rice, 
being  advised  that  Everly's  title  to  the  mortgaged  premises  was  worth- 
less, entered  judgment  on  the  bond  in  the  district  court  of  Philadelphia, 
issued  execution,  and  levied  on  personal  property.  Mrs.  Everly,^the 
present  plaintiff,  then  gave  her  bond,  payable  in  a  year,  in  considera- 
tion that  Rice  should  stay  proceedings  for  that  tinie.  He  did  stay  his 
execution  in  Philadelphia,  but,  some  time  afterwards,  filed  a  bill  in  New 
Jersey  to  foreclose  the  mortgage.  It  was  answered  and  resisted,  but 
the  foreclosure  was  decreed.  Mrs.  Everl}^  then  applied  to  the  court  of 
chancery  for  an  injunction  to  prevent  the  sale,  and  this  also  was 
finally  decided  in  favor  of  Rice.  It  _was  sold  by  the  sheriff  to  one 
Dichl  for  $150,  though  Miller  N.  Everly  was  present,  willing  to  bid, 
as  agent  of  his  mother^  $1,250.    This  suit  is  on  the  mother's  bond. 

Tlie  first  question  disputed  in  the  district  court  was  whether  the 
bond  in  suit  wasTgiven  in  consideration  of  an  agreement  by  Rice 
that  all  proceedings  should  be  stayed  for  one  year  from  its  date, 
or  merely  that  the  goods  then  seized  should  be  released  from  that 
levy.  The  defendant  below  asserted  that  there  was  an  express  con- 
tract to  the  effect  that  all  proceedings  on  the  bond  and  on  the  mort- 
gage should  be  stayed.  Xliis_wassubmitted  to  the  jury  as  a  ques- 
tion of  fact,  and  their  finding  is~  ot  course,  not  subject  to  our  re- 
view. We  must  take  it  as  being  conclusively  settled  that  the  object  and 
consideration  of  the  bond  were  as  the  plaintiff  below  alleged.  There 
was,  then,  no  agreement  which  prevented  him  from  proceeding  on  the 
mortgage  for  a  year,  and  the  proceedings  which  he  did  institute  weitr 
not  in  violation  of  any  promise. 

^  Another  point  in  the  defense  was  that  Rice,  by  his  conduct  Jn  con- 
junction with  others  at  the  shenHf^s  sale,  prevented  Mrs.  Everly  from 
bidding  the  property  up  to  its  value,  though  she  was  on  the  ground,^y 
her  agent,  offering  to  do  so,  and  that  he  designedly  (though  for  what 
reason  it  is  not  easy  to  conjecture)  caused  it  to  be  sold  to  another 
person  at  a  much  less  price.  If  this  was  true,  Mrs.  Everly  was  in- 
jured to  the  extent  of  the  difference  between  the  value  of  the  property 
(or  of  the  title  which  she  would  have  got)  and  the  price  it  sold  for. 
This,  also,  was  submitted  to  the  jury,  and  apparently  found  in  favor  of 
tiie  plaintiff  below. 

/>  But^  the  submission  of  this  question  to  the  jury  was  accompanied 
with  instructions  from  the  court  that,  if  the  fact  was  as  the  plaintiff 
alli-cd  it  to  be,  it  was  a  defense  only  pro  tanto,  and  would  not  entirely 
dcicat  the  plaintift''s  right  to  recover  on  his  bond. 

When  a  fraud  has  been  perpetrated  in  the  making  of  an  instrument, 
the  dishonest  cannot  be  separated  from  the  honest  parts.  It  is  tainted 
through  and  through.  But  when  a  bond  is  originally  sound,  and  the 
defense  rests  on  matter  subsequent,  I  know  of  no  principle  or  authority 
for  saying  that  the  party  is  entitled  to  anything  more  than  that  simple 
justice  which  prevents  him  from  suffering  by  the  act  of  his  adversary. 
He  is  entitled  to  be  kept  and  maintained  in  the  same  condition  he  would 


Ch.  8)  TRANSACTIONS   OF  CREDITOR  WITH  PRINCIPAL.  485 

have  been  in  if  the  act  complained  of  had  not  been  committed,  and  he 
is  entitled  to  no  more. 

A  surety  may  be  subrogated  to  the  rights  of  the  creditor  in  all  the 
securities  helTas  against  the  principal.  Mrs.  Everly  could  demand  to 
be"so  subrogated,  or  else  to  have  the  mortgaged~preniises  sold  fur  the 
b^t  price,  and  the  proceeds  applied  to  the  payment  of  the  debt  in  her 
relief.  Concede  that  the  defendant  improperly  prevented  this ;  how 
rnucli  did  she  lose?  The  jury  have  said  that  she  lost  the  sum  which 
they  deducted  from  the  amount  of  the  plaintiff's  claim.  She  is  only 
required  to  pay  what  she  would  have  been  out  of  pocket  in  any  event. 

When  the  creditor  has  in  his  hands  the  means  of  paying  his  debt, 
and  hFdoes  not  use  it,  but  gives  it  up,  the  surety  is  discharged.  But 
the'  dis'chafge  does  not  extend  to  the  whole  debt,  if  the  means  of 
payment  was  only  of  part.  It  is  said  that  this  mortgage  was  security 
for  the  whole  debt.  Whatever  it  was  technically,  it  was  in  truth  and 
fact  security  for  as  much  as  it  would  pay ;  and  to  that  extent  the  de- 
fendant was  allowed  for  its  loss.  In  cases  of  this  kind,  the  law  deals 
in  facts  and  disregards  fictions. 

Of  the  other  assignments  of  error,  it  is  sufficient  to  say  that  they 
are  not  sustained. 

Judgment  affirmed. 


SKIP  V.   HUEY,   WILCOX   &  EDWARDS. 

(High  Court  of  Chancery,  1744.    3  Atk.  91.) 

The^  dsffiJjdants  were  jointly  and  severally  bound  to  the  plaintiff  in 
the  penal  sum  of  £4,000.  on  the  5th  of  December,  1739,  conditioned 
for  the  payment  of  i2,000.  on  the  5tli  of  March  ensuing,  which  money 
caine  to  the  hands  of  Huey  and  Wilcox,  who  were  the  principals  in 
the_bond. 

Huey  comes  to  the  plaintiff,  and  desires  he  will  take  four  notes, 
giyfn  by  different  persons,  and  payable  at  future  days,  in  lieu  of  the 
bond,  and  that  if  he  would  give  up  the  bond,  though  the  notes  should 
not  produce  the  whole  £2,000.  and  interest,  he  would  see  him  paid 
the  deficiency,  and  signed  an  agreement  to  this  eft'ect  in  his  own  name, 
and  in  the  names~bt  vVilcoST'ahd  Edwards.  Hu£y  ■  likewise  gave  the 
pTamtiff  a  draft  on  Martin  the  banker. 

But  Huey,  coming  to  the  plaintiff  on  a  Saturday  after  six  o'clock, 
desired  the  plaintiff  would  give  him  leave  to  date  the  draft  on  Martin 
of  the  Monday. 

Hnfy  hriji  t?^^^n-^**  '^-'^  ^^^'•^'"'g  shop  all  the  money  due  to  himself 
and  Wilcox  and  Edwards  on  the  very  same  Saturday. 

The_plaintiff  afterwards  went  to  Martin's  shop,  where  he  found 
nj2_money  in  the  name  of  Huey  and  Company.  And  before  the  notes 
became  due  Huey  and  Wilcox  were  bankrupts,  but  Edwards  still  re- 
mgins^a-iplvent  person. 


re 


4SG  DEFENSES  OF  SURETY  AGAINST  CKEDITOE.  (Part   3 

The.  plaintiff,  who. has  received  about  ioOO.  on  thejiotesjthe  rest 
.  emaining  unreceived  to  this  day),  brings  his  bill  against  Edwar^  the 
co-obligor,  for  the  residue  of  the  principal  and  interest  due  on  the 
bond,  insisting  this  was  a  fraud  of  Huey's  upon  him,  and  tliat,  tholi^ 
lie  lias  been  drawn  in  to  deliver  up  the  bond,  yet  he  is  entitled  to  be 
relieved  against  Edwards  as  a  co-obligor. 

The  '  •■  ■•  ':int  Edwards  insisted  that  he  was  no  party  tn  the  norree- 
mem  the  plaintIff"and~Huey,  and  that  he  ought  r  -^^af- 

fected  by  it;  and  as  the  bond  is  delivered  up  in  consideratioa  of  t^e 
notes,  that  it  is  novated,  and  this  defendant,  who  is  one  of  the  sureties 
only  in  the  bond,  is  released,  and  no  longer  liable  as  a  surety.f 

The  Lord  Chaxcellor.  I  have  had  some  doubt  during  the  course 
of  this  cause,  but  am  now  fully  satisfied  that  the  plaintiff  is  not  entitled 
to  relief, 

Mr^Ed wards  has  not  been  guilty  of  any  fraud. 

Thjere  are  many~^ases  where  equity  will  set  up  debts  extinguished  at 
law  against^a  surety,  as  well  as  against  a  principal;  as  where  a  "bond 
is  burnt  or  canceled  by  accident  or  mistake,  and  much  stronger  if  a 
principal  procure  the  bond  to  be  delivered  up  by  fraud,  in  such  a  case 
the  court  would  certainly  set  it  up,  because  he  should  not  avail  him- 
self of  the  fraud  of  any  of  the  debtors. 

But  this  is  not  one  of  those  cases,  for  the  whole  transaction  was  in 
order  to  discharge  Edwards.  Mr.  Skip  was  told  so,  and  Huey  in- 
fonned  him  that  Edwards  and  he  had  quarreled  about  it,  and  Skip 
himself  asked  Edwards  how  he  came  to  be  so  pressing  to  have  the 
bond  delivered  up,  so  that  he  was  fully  apprised  it  was  solicited  at 
the  importunity  of  Edwards. 

Skip  was  a  competent  judge  of  what  he  should  do,  and  might  have 
declined  it,  but,  instead  of  that,  accepts  the  notes  from  Huey,  and  a 
draft  on  Martin,  the  banker,  for  the  Monday  following,  which  shows 
the  confidence  and  reliance  Skip  had  in  Huey,  for  it  is  very  unusual  to 
take  such  a  draft. 

It  is  plain  from  hence  that  Skip  discharged  Edwards,  for  he  knew 
Edwards  would  not  trust  Huey  any  longer. 

What  is  the  rule?  He  who  trusts  most  shall  lose  most;  if  Skip 
had  refused,  Edwards  might  have  arrested  Huey  upon  the  note  which 
he  had  given  Edwards  by  way  of  indemnity  against  the  bond. 

It  is.  .said  there  is  a  fraud  in  part  of  the  case  relating-to_tli£_jicaft 
'  :   perhaps  it  may  be  so,  but  this  is  not  clear;  and  what  has 

I"  by  Skip  preponderates,  and  rebuts  the  fraud;    for  it  was 

not  right  in  hira,  after,  he  had  delivered  up  tHeborid,"to  make  Huey 
sign  such  an  agreement  in  the  names  of  Wilcox  and  Edwards.       ^ 

^Vhat  was  the  original  scope  and  intention  of  the  application,  but 
that  the  bond  might  be  delivered  up,  and  Edwards  absolutely  dis- 
charged ? 

tThe  argument  of  counsel  is  omitted- 


Ch.  8)  TRANSACTIONS   OF   CREDITOR  WITH   PRINCIPAL.  487 

Instead  of  this,  what  does  Skip  do?  WJTy_he  takes  a  note,  and 
makes  Edwards  liable  by  another  instrumentranH  was  a  plain  deceit 
upon  Edwards :  whereas  the  intention  was  clearly  to  discharge  him, 
and  therefore  the  bill  must  be  dismissed,  but  without  costs. 


WULFF  &  BILLING  v.  JAY. 

(Court  of  Queen's  Bench.  Trinity  Term,  1872.     L.  R.  7  Q.  B.  756.) 

Declaration:  That  the  defendant  on  the  25th  of  August,  1870,  by 
deed  covenanted  with  the  plaintiffs  that  he  would  on  the  25th  of 
August,  1871,  pay  unto  the  plaintiffs  the  sum  of  i75.,  or,  if  required 
so  to  do,  purchase  in  the  names  of  the  plaintiffs,  or  the  survivor  of 
them,  in  the  books  of  the  Governor  and  Company  of  the  Bank  of  Eng- 
land, the  sum  of  £82.  8s.  4d.  three  per  cent,  reduced  annuities,  and 
would  also  on  the  25th  of  August  in  each  succeeding  year  pay  the 
sum  of  £75.,  or,  if  required  so  to  do  in  manner  aforesaid,  purchase  in 
the  names  of  the  plaintiffs,  or  the  survivor  of  them,  the  sum  of  £82.  8s. 
•id.  three  per  cent,  reduced  annuities ;  and  would  also  yearly  and  every 
year,  until  the  sum  of  £300.  should  be  fully  paid  and  satisfied,  pay 
unto  the  plaintiff's'  interest  on  the  sum  of  £300.,  or  on  so  much  thereof 
as  should  from  time  to  time  remain  unpaid,  or  unpurchased,  at  and 
after  the  rate  of  £5.  per  cent,  per  annum,  to  be  computed  from  the  date 
of  the  deed,  and  that  in  case  default  should  be  made  in  the  payment  of 
the  sum  of  £300.  or  in  the  investment  of  the  sum  of  £329.  13s.  od. 
three  per  cent,  reduced  annuities,  at  the  times  and  in  the  manner  men- 
tioned, the  defendant  would  forthwith,  after  such  default  should  have 
been  made,  upon  the  request  of  the  plaintiffs,  repay  the  plaintiffs  the 
sum  of  £300.,  or  so  much  thereof  as  should  be  unpaid,  or  invest  the 
said  sum,  or  the  residue  thereof  then  unpaid,  in  the  purchase  of  £329. 
13s.  5d.  three  per  cent,  reduced  annuities,  or  so  much  thereof  as  should 
not  have  been  repaid  or  reinvested.  And  the  defendant  did  not  pay 
the  sum  of  £75.  on  the  25th  of  August,  1871,  nor  has  he  paid  the  in- 
terest on  the  sum  of  £300,  for  the  year  ending  the  25th  of  August, 
1871 ;  and  although  defendant  made  default  in  payment  of  the  sum  of 
£75.,  the  first  instalment  of  the  sum  of  £300.,  and  the  plaintiff's  re- 
quested the  defendant  to  repay  the  £300.,  yet  the  defendant  has  not 
paid  the  same,  and  the  £300.  and  interest  from  the  date  of  the  deed 
still  remains  wholly  due  in  arrear  and  unpaid. 

Plea:  Upon  equitable  grounds,  that  the  deed  set  out  in  the  declara- 
tion was  made  between  one  Burns  of  the  first  part,  defendant  of  the 
second  part,  and  the  plaintiffs  of  the  third  part,  and  by  the  deed  the 
plant  and  stock  in  trade  of  Burns  and  his  partner  Pim  were  assigned 
to  the  plaintiffs  as  security  for  the  sum  of  £300.,  advanced  by  the  plain- 
tiff?~to  Burns  and  his  partner  Pim.  And  that  after  the  execution  of 
the  deed,  to  wit,  on  the  6th  of  August,  1871,  a  petition  for  liquida- 


488  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

tion  \v-as  filed  in  the  London  bankruptcy  court  by  Burns  &^im;  that 
a  trustee  to  the  joint  estate  of  the  two  petitioners  was  duly  appointed, 
and  that  the  plant  and  stock  in  trade  of  the  petitioners,  being  the  same 
assigned  to  the  plaintiffs  by  the  deed  recited  in  the  declaraTtSSZwlre 
sold  by  public  auction,  of  all  which  premises  the  plaintiffs  had  due 
notice  and  were  well  aware,  but  of  all  which  premises  the  defendant 
knew  nothing,  and  received  no  notice ;  and  that  such  plant  and  stock 
in  trade  were  more  than  sufficient  to  cover  the  sum  advanced  by  the 
plaintiffs  to  Burns,  and  to  satisfy  the  debt,  for  the  payment  of  which 
the  defendant  became  surety  for  Burns,  and  entered  into  the  cove- 
nants set  forth  in  the  deed.  And  tliat  the  plaintiffs  did  not,  as  it  was 
their  duty  to  do,  take  possession  of  the  plant  and  stock  in  tra4ey-but 
ajlowed  the  same  to  be  taken  possession  of  by  the  trustee  appointed  to 
the  joint  estate  of  Burns  &  Pim,  and  permitted  the  same  to  be  sold  and 
appTTcd  to  the  liquidation  of  the  debts  of  Burns  &  Pim,  other  than^to 
secure  the  payment  of  which  the  said  plant  and  stock  in  trade  were 
as'signcd  the  plaintiffs.  And  that  by  their  conduct  in  this  respect  the 
plaintiffs  have  exonerated  the  defendant  from  the  covenants  entered 
into  by  him  in  the  deed  recited  in  the  declaration. 

Issue  joined. 

At  the  trial,  before  Quain,  J.,  at  the  Middlesex  sittings  after  Hilary 
term,  1872,  the  following  facts  were^r^yed :  In  the  month  of  August, 
1870,  Messrs.  Burns  &  Pim,  who^camed  on  the  business  of  printers  in 
partnership,  applied  to  the  plaintiff.  Billing,  who  was  an  attorney,  for  a 
loan  of  money.  Billing  agreed  to  lend  them  the  sum  of 'iSOO.,  part  of 
certain  trust  moneys  in  the  funds,  in  the  name  of  himself  and  the  plain- 
tiff Wulff ;  and  he  stipulated  that  Burns  &  Pim  should  give  by  way  of 
security  a  mortgage  of  the  lease  of  the  partnership  premises,  and  of 
rtre~pTant,  fixtures,  and  goods  therein,  and  also  that  two  sureties  should 
join  in  a  guarantee  for  securing  the  payment  of  the  mortgage  money. 

I'he  mortgage  deed  was  dated  on  the  25th  of  August,  1870,  and  was 
made  between  Burns  &  Pim,  thereinafter  called  the  mortgagors,  of  the 
first  part,  the  defendant,  thereinafter  called  the  surety,  of  the  second 
part,  and  the  plaintiffs,  thereinafter  called  the  mortgagees,  of  the  third 
part,  and  after  reciting  that  the  plaintiff's  had  sold  the  sum  of  £329.  13s. 
5d.  three  per  cent,  reduced  annuities,  standing  in  their  joint  names, 
which  had  produced  the  sum  of  i300.,  and  that  the  repayment  of  that 
sum,  or  the  repurchase  of  the  sum  of  £329.  13s.  5d.,  should  be  secured, 
the  deed  assigned  to  the  plaintiffs  the  partnership  premises,  consist- 
ing of  a  workshop,  for  the  residue  of  a  term  of  21  years,  and  also 
assigned  the  plant,  trade  fixtures,  goods,  chattels,  and  things  upon  the 
premises,  subject  to  a  proviso  for  redemption  if  the  mortgagors  should 
pay  to  the  mortgagees  on  the  25th  of  August,  1871,  the  sum  of  £75., 
part  of  the  £300.,  or,  if  required  so  to  do  by  the  mortgagees,  purchase 
in  the  name  of  the  mortgagors  the  sum  of  £82.  8s.  4d.  three  per  cent, 
reduced  annuities,  and  also  on  the  25th  of  August  in  each  succeeding 
year,  pay  £75.  or  purchase  the  sum  of  £82.  8s.  4d.  three  per  cent,  re- 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH  PRINCIPAL.  489 

duced  annuities ;  and  also,  if  the  mortgagees  should  pay  interest  on 
the  sum  of  £300.,  or  on  so  much  thereof  as  should  for  the  time  being 
remain  unpaid  or  unrepurchased,  after  the  rate  of  £5.  per  cent,  per 
annum  by  equal  half-yearly  payments  on  the  25th  of  February  and 
the  25th  of  August  of  every  year;  and  until  default  should  be  made 
by  the  mortgagors  in  the  payment  or  investment  as  mentioned,  the 
mortgagors  should  remain  in  possession  and  receipt  of  the  rents, 
profits,  etc.,  of  the  workshop,  plant,  fixtures,  and  things.  The  deed 
contained  a  power  of  sale  on  default  being  made  in  the  repayment  of 
investment  of  the  principal  sum,  or  in  the  non-payment  of  the  interest, 
provided  that  one  calendar  month's  notice  in  writing  be  given  to  the 
mortgagees  requiring  payment  before  exercising  the  power  of  sale. 
The  deed  contained  covenants  by  the  mortgagors  and  the  surety  to 
pay  the  principal  and  interest  according  to  the  agreement  of  the 
parties. 

The  first  half  year's  interest  became  due  on  the  25th  of  February, 
1871,  and  was  not  paid.  Shortly  afterwards  the  mortgagors  became 
embarrassed,  and  on  the  5th  of  August,  1871,  filed  a  petition  for 
liquidation,  in  the  London  court  of  bankruptcy,  and  were  adjudged 
bankrupts  on  the  20th  of  August ;  one  Venn,  a  partner  of  the  plain- 
tiff Billing,  acting  for  the  mortgagees  in  the  bankruptcy  proceedings. 
TJTpir  in<;n1vpnrY,  prior  to  the  bankruptcy,  was,  a  week  before  the 
petition  was  filed,  well  l<n6wn  to  the  plaintiff  Billing,  to  whom  they 
we'fe~otEerwise~ihdebted.  Thejdeed  of  assignment  was  not  registered 
under  17  &  18  Vict.  c.  36,  and  the  trustee  appointed  by  the  court  of 
bankruptcy  took  possession  of  the  plant,  fixtures,  and  things,  which 
were  afterwards  sold  for  the  benefit  of  creditors,  and  realized  £300.       )< 

On  these  facts  a  verdict  was  by  consent  entered  for  the  plaintiffs  for"^  ^ 
£3-10.,  leave  being  reserved  to  enter  the  verdict  for  the  defendant,  theC  •'^**'^ 
court  having  power  to  draw  inferences  of  fact.  a 

A  rule  was  afterwards  obtained  to  enter  a  verdict  for  the  defendant, 
or  to  reduqe  the  damages  to  such  sum  as  the  court  should  direct,  upon 
the  grounds  that  on  the  facts  proved  the  defendant  had  an  equitable 
defense  to  the  action,  and  as  surety  was  discharged  as  to  the  whole 
or  part  of  the  claim,  that  the  equitable  plea  was  proved,  and  that  the 
plaintiffs  were  guilty  of  such  laches  and  conduct  as  would  in  equity 
discharge  him  as  surety.^ ^  A  c    '  /  j 

CocKBURN,  C.  J.  This  is  an  action  brought  against  the  defendant,  riu^  yt^ttf^ 
as  surety.  It  appears  that,  as  part  of  the  transaction  between  the  prin- 
cipal creditors  and  the  debtors,  there  was  to  be  a  mortgage  of  the 
plant,  trade  fixtures  and  things  upon  the  debtors'  premises,  by  bill  of 
sale,  as  security  for  the  principal  debt.  The  debtors  were  to  remain  - 
in  possession  of  the  things  thus  mortgaged  until  default,  and  the  credit- 
ors were  to  have  power,  in  the  event  of  a  default  in  the  payment  of  the 

2  9  T&e  arguments  of  counsel  and  the  concurring  opinions  by  Hannen  and 
Quain,  JJ.,  are  omitted. 


490  DEFENSES  OF  SURETY  AGAINST  CREDITOR.       (Part  3 

instalments  of  the  debt  which  were  to  be  paid  under  the  bill  of 
sale,  or  in  the  event  of  the  interest  which  was  to  accrue  from  time  to 
time,  not  being  paid,  to  enter  and  sell  the  things  thus  assigned  upon 
giving  a  month's  notice. 

Now,  it  appears  tiiat  in  the  month  of  February  interest  first  became 
due,  and  that  interest  was  not  paid,  and  it  remained  unpaid  until  the 
month  of  August,  when  the  debtors  became  bankrupt.  It  further  ap- 
pears that  the  insolvent  condition  of  the  debtors'  affairs  was  plain, 
and  that  bankruptcy  was  imminent,  and  had  been  impending  for  some 
time  before  it  actually  took  place;  and  it  further  appears  that  one  of 
the  creditors  was  cognizant  of  that  fact,  and  was  afterwards,  when 
the  bankruptcy  took  place,  solicitor  to  the  proceedings  in  bankruptcy. 
He  was  therefore  perfectly  aware  of  the  bankruptcy  being  imminent. 
Xotwithstanding  ITFtoot^ho  steps  either  to  protect  the  bilLof  ffllf.  by 
registration,  or  to  enter  and  take  possession  of  the  effects. 

/-  Now,  I  think  there  jvas  a  l\\v)fold  laches  on  the  plaintiffs'  part — 
laches  JD  the  first  place  in  nut  registering  the  bill  of^sale.  If  they  had 
registered  it,  the  effect  would  have  been  that  the  fixtures  would  have 
been  protected.  That  would  not  have  applied  to  the  other  nToy^ttes 
which,  remaining  in  the  order  and  disposition  of  the  bankrupt,  \yould 
have  been  affected  by  the  bankruptcy.     But  then  there  was  laches,  if 

'^  possible,  of  a  more  serious  description,  affecting  not  only  the  movables, 
l)Ut  the  fixtures  also.  The  plaintiffs  might  have  entered  and  taken 
possession  upon"  the  interest  not  being  paid  at  the  time  when  it  became 
due.  Instead  of  doing  this,  however,  they  allow  the  mortgagors  to  re- 
main in  possession  when  they  see  that  bankruptcy  is  impending  and 
imminent.  I  cannot  doubt  myself  that  their  intention  was  that,  being 
creTJITbrs  ultra  the  amount  thus  secured,  the  goods  in  question  should 
be  available  as  assets  under  the  bankruptcy,  while  they  had  the  security 
of  the  defendant  to  come  upon  in  order  to  get  paid  the  debt  of  £300. 

^  secured  by  the  bill  of  sale.     I  think,  looking  at  all  the  circumstances. 

'  it  is  impossible  to  say  that  the  plaintiffs  did  what  they  ou^ht  to  have 
done  to  realize  the  security  they  possessed.  Cases  have  been  cited  and 
authorities  have  been  referred  to  in  Story's  Equity  Jurisprudence, 
which  abundantly  establish  that  which  is  a  common  and  well-known 
proposition,  that  wlicre_a_delltJ.s  secured  by  a  surety  it  is  the  business 
of  the  creditor,  where  he  has  security  available  for  the  payment  jmd 
satisfaction  of  the  debt,  to  do  whatever  is  necessary  to  make  that 
security  properly  available.  He  is  bound,  if  the  surety' voluntarily 
proposes  to  pay  the  debt,  to  make  over  to  the  surety  what  securities 
he  holds  in  respect  of  that  debt,  so  that,  being  satisfied  himself,  he  shall 
enable  the  surety  to  realize  the  securities  and  recoup  himself  the 
amount  of  the  debt  which  he  has  had  to  pay. 

That  is  now  a  well-known  proposition.  Here,  by  registering  the 
bilLolsale,  and  by  afterwards  avaihng  themselves  of  the  power  which 
they  possessed  to  take  possession,  the  plaintiffs  might  have  secured  the 
payment  of  the  debt  to  themselves,  or  by  protecting  the  securities  and 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  491 

holding  them  in  their  hands  they  could  have  made  them  over  to  the 
surety  when  the  surety  was  wilhng,  or  was  called  on,  to  pay ;  but  by 
omitting  to  do  what  was  necessary  in  order  to  place  themselves  in  that 
position,  and  by  allowing  bankruptcy  to  supervene  so  as  to  enable  the 
trustee  under  the  bankruptcy  to  take  possession  of  these  goods  ad- 
versely, it  is  clear  that  they  have  placed  the  surety  in  a  position  very 
detrimental  and  prejudicial  to  the  surety;  and  for  that  the  surety  ought 
to  have,  according  to  the  general  doctrine,  a  remedy.  I  think  the 
creditors  have  clearly  been  guilty  of  laches  in  not  protecting  them- 
selves,  and  in  not  availing  themselves  of  these  securities.  Then  it  is  /^ ' '  , 
said,  granted  that  at  the  end  of  the  time  when  the  interestlia^ac-  ?',''^','^^ 
crued  the  surety  was  liable  both  for  principal  and  interest,  and  the  **/f^'n  ' 

principal  and  interest  together  amounted  to  i307.  10s.,  although  the 
surety  is  entitled  to  say  to  the  creditors,  "I  am  entitled  either  to  have 
such  security  as  you  have  made  available  for  this  debt,  or  I  am  en- 
titled to  set  off  the  amount  against  what  I  owe  you  under  my  agree- 
ment to  indemnify  you  against  loss  in  respect  of  this  debt,"  yet  he  can 
only  say  it  to  the  extent  of  the  value  of  the  security  itself. 

inIow,  It  appears  that  these  goods  which  the  creditors  might  have 
taken  possession  of  and  made  available  for  the  payment  of  the  debt, 
or  to  which  they  might  have  given  the  surety  a  title  in  order  that  the 
surety  might  recoup  himself  the  amount  of  his  debt,  were  of  the 
value  of  £300.  They  sold  for  £300.  That  is  exactly  the  amount  of 
the  original  principal  debt,  and  there  is  nothing  to  satisfy  us  that  they 
did  not  realize  their  value.  I  do  not  find  anything  leading  to  any 
other  conclusion  than  that  the  goods  did  in  fact  sell  for  what  they 
were  really  worth.  We  must  take  it,  therefore,  that  all  that  was 
i-ealized  was  £300.  NowTmterest  having  accrued,  the  debt  was  £307. 
10s.,  and  in  respect  "of  the  odd  money  the  plaintiffs  must  have  their 
verdict.  There  will,  therefore,  be  a  verdict  for  the  plaintiffs  for  J.7. 
10s.  ' 

Rule  absolute  to  reduce  the  damages  accordingly. 


BOARD  OF  COM'RS  OF  MORGAN  COUNTY  v. 
BRANHAM  et  al. 

(Circuit  Court  of  the  United  States,  District  of  Indiana,  1893.     57  Fed.  179.) 

At  Law.  Action  on_a_b.ond  by  the  board  of  county  commissioners  of 
Morgan  county,  Ohio,  against  George  F.  Branham  and  Enos  Hege, 
principals,  and  William  G.  Wasson  and  Henry  C.  Adams,  sureties. 
Heard  on  demurrer  by  Wasson  and  Adams  to  the  complaint,  ^e- 
murrer  sustained. 

Baker,  District  Judge.  This  is  an  action  on  a  bond  executed  by 
Branham  and  Hege,  as  principals,  and  Wasson  and  Adams,  as  sureties, 
to  the  board  of  county  commissioners  of  Morgan  county,  Ohio.     The 


»Aivt>.i^, 


492  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

sureties,  Wasson  and  Adams,  demur  to  the  complaint  on  the  ground 
that  the  same  does  not  state  facts  sufficient  to  constitute  a  cause  of 
action  ajijainst  them. 

The  facts  disclosed  by  the  complaint,  so  far  as  ma_terial_ tojhe  de- 
termination of  the  question  raised  by  the  demurrer,  are  as  follows: 

A  contract  in  writing  was  entered  into  between  the  plaintilf,  as 
party  of  the  first  part,  and  Branham  and  Hege,  as  party  of  the  second 
part,  by  the  terms  of  which  the  latter  agreed  to  furnish  the  material 
and  do'  the  work  specified  therein.  The  part  of  the  contract  having 
reference  to  the  payments  for  the  work  is  as  follows :  "Payment  for 
5^id  work  is  to  be  made  as  follows,  to  wit:  When  said  work  shall 
have  been,  in  opinion  of  party  of  first  part,  half  completed,  said  party 
of  first  part,  or  its  engineer,  shall  carefully  estimate  the  work  complet- 
ed, and  pay  the  party  of  the  second  part  a  sum  of  money  equal  to  So% 
of  the  cost  of  the  completed  work,  as  agreed  upon  therein:  Provided 
said  sum  shall  not  exceed  the  amount  of  $7,480.  And  on  the  com- 
pletion of  the  entire  work,  and  its  acceptance  by  party  of  the  first  part, 
then  full  and  complete  payment,  as  herein  provided  for,  shall  be  made 
to  party  of  the  second  part." 

Branham  and  Hege,  as  principals,  and  Wasson  and  Adams,  as 
sureties,  executed  to  the  plaintiff  the  bond  in  suit,  for  the  faithful 
performance  of  the  contract.  Branham  and  Hege  entered  upon  the 
construction  of  the  work  contracted  for,  and  prosecuted  the  same  until 
they  had  completed  about  one-third  part  thereof,  when  they  falsely 
and  fraudulently  represented  to  the  plaintiff,  through  its  board  of 
county  commissioners,  that  they  had  fully  completed  the  one-half 
part  or  more  of  said  work,  and  asked  to  be  paid  therefor  the  sum  of 
$10,046.68.  The  plaintiff,  relying  upon  these  false  and  fraudulent 
representations,  thereupon  paid  to  them  said  sum  of  $10,046.68.  As 
a  matter  of  fact.  Branham  and  Hege  had  not  completed  more  than 
one-third  part  of  said  work,  and  thereupon  they  abandoned  said  work 
and  contract,  and  neglected  and  refused  to  proceed  with  the  same,  and 
left  it  uncompleted.  The  plaintiff  was  compelled  to,  and  did,  complete 
baid  work,  at  a  cost,  in  excess  of  that  provided  for  in  the  contract,  of 
^$13,429.56. 
4v^K^  The  contention  on  behalf  of  the  sureties  is  that  they  have  been 
released  because  IHe  plaintiff,  without  any  estimate  having  been 'made 
by  it  or  its  engineer  to  ascertain  whether  one-half  of  the  work  ha3 
'  1.  paid  to  Branham  and  Hege  $10,046.68— a  sum  largel>' 

lie  amount  to  which  they  would  have  been  entitled  if  thsv 
had  actually  completed  one-half  of  the  work— and  because,   at  the 

^""~  ''"  '  made,  Branham  and  Hege  had  not  complet^ 

.ind  hence  were  not  entitled  to  receive  any  pay- 
mciit  wlialcvcr. 

>  '  Tt  is  well  settled  that  a  surety  is  bound  only  by  the  strict  terms  of 
I  cment,  and,  as  he  assumes  the  burdens  of  the  contract  witTlout 

biia,,..^  .is  benefits,  he  has  the  right  to  prescribe  the  exact  terms  upon: 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH   PRINCIPAL.  493 

which  he  will  enter  into  an  obligation,  and  to  insist  upon  his  discharge 
if  those  terms  are  not  observed.  An  innocent  surety  is  always  a 
favorite  subject  of  legal  protection.  State  v.  Cutting,  2  Ohio  St.  1 ; 
Raymond  v.  Whitney,  5  Ohio  St.  201 ;  Hall  v.  Williamson,  9  Ohio  St. 
17.  It  is^  not  a  quesliQa-w-h€t-h€F-h€-4s-liarnied.  or  benefited  by  a  dis- 
reg-ard  of  the  terms  to  which  he  has  assented.  Miller  v.  Stewart,  9 
Wheat.  681,  6  L.  Ed.  189 ;  Manufacturing  Co.  v.  Kimmel,  87  Ind.  560  ; 
Post  v.  Losey,  111  Ind.  74,  12  N.  E.  121,  60  Am.  Rep.  677.  Where, 
by  the  terms  of  the  contract,  the  principal  is  to  be  paid  by  the  debtor 
or  obligee  in  installments,  and  the  payments  are  made  in  advance  of 
the  time  specified  in  the  contract,  the  surety  will  be  discharged,. 
Brandt,  Sur.  (Ed.  1878)  §  102;   Id.  §  371.  %  dJ.-^Jl^ ih.  ~ 

Calvert  v.  Dock  Co.,  2  Keen,  639,  is  a  case  similar  to  the  one  at  bar.  /^y^  t^o*.W« 
One  Streather  contracted  to  build  certain  works  for  the  dock  company,  (jiJ^j^  ^-^ 
and  to  furnish  the  materials.    The  company  was  to  pay  the  agreed  price  f^ 

of  £52,200.  in  installments,  to  wit,  three-fourths  of  the  costs  of  the 
work  done  to  be  paid  for  every  two  months,  on  the  certificate  of  the 
company's  engineer,  and  the  residue  on  the  completion  of  the  contract. 
Warburton  and  Eaycock  became  sureties  upon  the  bond  of  Streather 
for  the  performance  of  the  contract.  Streather  entered  upon  the  work, 
but  failed  to  complete  it,  and  finally  abandoned  it,  and  suit  was  in- 
stituted upon  the  bond.  Streather  had  been  paid,  from  time  to  time, 
more  than  three-fourths  of  the  estimated  cost  of  the  work  performed, 
and  it  was  held  that  thereby  the  sureties  were  released.  In  the  course 
of  his  opinion  Lord  Langdale,  M.  R.,  said : 

"In  this  case  the  company  were  to  pay  for  three-fourths  of  the 
work  done  every  two  months.  The  remaining  one-fourth  was  to  re- 
main unpaid  for  till  the  whole  was  completed;  and  the  effect  of  this 
stipulation  was,  at  the  same  time,  to  urge  Streather  to  perfoFm  the 
work,  and  to  leave  in  the  hands  of  the  company  a  fund  wherewith  to 
complete  the  work  if  he  did  not;  and  thus  it  materially  tended  to  pro- 
tecjLllie_  sureties,^  What  the  company  did  was  perhaps  calculatedH;o 
make  it  easier  for  Streather  to  complete  the  work,  if  he  acted  with 
prudence  and  good  faith ;  but  it  also  took  away  that  particular  sort  of 
pressure  which,  by  the  contract,  was  intended  to  be  applied  to  him. 
And  the  company,  instead  of  keeping  themselves  in  the  situation  of 
debtors,  having  in  their  hands  one-fourth  of  the  value  of  the  work 
done,  became  creditors  to  a  large  amount,  without  any  security ;  and 
under  the  circumstances  I  think  that  their  situation,  with  respect  to 
Streather,  was  so  far  altered  that  his  sureties  must  be  considered  to 
be  discharged  from  their  suretyship." 

Leeds  v.  Dun,  10  N.  Y.  469,  is  a  case  where  the  defendant  was  sued 
for  the  price  of  certain  goods  sold  by  the  plaintiff  to  one  Woodcock  on 
the  credit  of  the  defendant's  guaranty.  The  instrument  signed  by  the 
defendant  stipulated  that  he  would  be  responsible  for  the  payment  of 
certain  bills  of  goods  to  be  sold  on  a  credit  of  six  months.  The  goods 
were  sold  in  part  on  a  credit  of  six  months,  and  in  part  on  a  credit 


494  DEFENSES  OF  SURETY  AGAINST   CKEDITOR.  (Part    S 

of  four  months,  and  it  was  adjudged  that  the  guarantor  could  not  be 
holden  for  any  part  of  the  goods  so  sold.  The  court,  in  the  course  of 
its  opinion,  says : 

"The  recitals  in  this  instrument  show,  and  with  every  precision,  the 
contract  into  which  the  defendant  proposed  to  enter.  It  was  optional 
with  the  plaintifT's  firm  to  accept  the  proposition,  and  enter  into  the 
contract,  or  to  refuse  it.  If  they  accepted  the  contract,  they  could 
only  do  so  on  the  terms  proposed  by  the  defendants.  If  they  did  not 
comply  with  the  terms  so  proposed,  there  was  no  contract  made,  and 
there  was  no  meeting  of  minds  between  the  parties.  The  contract  pro- 
posed by  the  defendant  was  to  guaranty  the  payment  of  a  debt  to  be 
contracted  by  a  third  person  upon  certain  terms.  The  compliance  with 
those  terms  formed  the  only  consideration  of  the  defendant's  contract. 
The  plaintiff's  firm  did  not  comply  with  the  terms,  for  they  sold  a 
part  of  the  goods  ordered  upon  a  credit  of  four  months,  instead  of 
si,\  months." 

Bragg  V.  Shain,  49  Cal.  131,  is  a  case  wherein  a  church  society  con- 
tracted with  Shain  for  the  erection  of  a  church,  and  was  to  pay  for  the 
work  and  materials  $31,850,  in  installments,  payable  on  the  1st  day  of 
each  month,  to  the  amount  of  75  per  cent,  of  the  value  of  the  materials 
furnished  and  work  done  during  the  preceding  month,  and  the  re- 
nwinder  was  to  be  paid  when  the  work  was  completed.  One  Bonnet 
became  surety  for  Shain  for  the  faithful  performance  of  the  con- 
tract. During  the  progress  of  the  work  the  society  paid  Shain  more 
than  the  75  per  cent,  provided  for  in  the  contract.  While  the  work  was 
under  way,  Bragg,  Tobin  and  Bonnet  furnished  Shain  materials  which 
were  used  in  the  construction  of  the  building,  and  for  which  Shain 
neglected  to  pay,  and  they  filed  liens,  and  the  present  suit  was  instituted 
to  enforce  these  liens.  The  trial  court  decided  against  Bonnet,  hold- 
ing that,  as  he  was  surety  for  Shain,  he  could  not  enforce  his  lien 
against  the  society.  On  appeal,  Bonnet  contended  that  as  Shain  had 
been  paid  by  the  society  more  than  the  75  per  cent.,  in  violation  of  the 
terms  of  the  contract,  he  was  released  as  surety;  and  this  contention 
was  sustained  by  the  court,  which  held  that  the  failure  of  the  society 
to  retain  in  its  hands  the  one-fourth  part  of  the  contract  price,  as 
stipulated  in  its  contract  with  Shain,  operated  as  a  discharge  of  Bon- 
net as  surety. 

The  case  of  Taylor  v.  Jeter,  23  Mo.  244,  was  as  follows :  A.  agreed 
to  furnish  material  and  erect  a  building  for  B.,  and  B.  agreed  to  pay  A. 
specified  sums  at  particular  stages  in  the  progress  of  the  work,  the  re- 
mainder to  be  paid  60  days  after  the  completion  of  the  building,  and 
its  acceptance  by  B.  Upon  this  contract,  C.  became  surety  for  A. 
The  building  was  completed  and  accepted  by  B.,  and  although  B. 
received  notice,  before  the  completion  of  the  building,  of  the  filing  of 
various  mechanics'  liens  thereon,  he  paid  the  contract  price  to  A.  be- 
fore he  was  bound  by  the  contract  to  pay  the  same.  B.  afterwards  had 
to  pay  the  liens,  and  sued  C.  on  the  contract;  but  it  was  held  he  could 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  495 

not  recover,  as  he  had  released  C.  by  paying  A.  before  he  was  bound 
to  do  so. 

The  case  of  Simonson  v.  Grant,  36  Minn.  439,  31  N.  W.  861,  is 
similar,  in  its  essential  features,  to  the  case  of  Taylor  v.  Jeter,  supra. 
Following  the  cases  hereinbefore  cited,  the  court  held  that  the  sureties 
upon  the  bond  were  to  be  considered  as  released.  In  the  course  of 
its  opinion  the  court  says:  "In  such  cases  the  surety  may  be  de- 
prived of  the  inducement  which  the  principal  would  have  to  perform 
the  contract  in  due  time,  as  the  contract  required." 

In  the  case_aJ:__barj_Qv£r--$l^TQ^^  wei:^  paid  to  the  principals  before, 
by  the  terms  of  the  contract,  they  were  entitled  to  receive  anything. 
Snrh  p  grn's';  dppartnre  from  the  terms  of  the  contract,  to  the  prejudice  Jj4y 

of  the  sureties,  operates  to  release  them  from  the  bond  in  suit,  unless  v  1  '■]' '' 
the  false  and  fraudulent  conduct  of  the  principals  in  procuring  the  pay-  C^'lflvKifv^  i 
ment  deprives  the  sureties  of  the  right  to  take  advantage  of  it.     In  fJ^h,.^ 

Bebout  V.  Bodle,  38  Ohio  St.  500,  it  is  held,  where  a  principal  debtor,  ff^^ 
by  falsely  and  fraudulently  representing  to  the  creditor  that  his  surety 
has  consented  to  an  extension  of  time  for  payment,  procures  from 
the  creditor  an  agreement  for  such  extension  in  consideration  that  in- 
terest be  paid,  such  agreement  is,  as  to  the  creditor,  fraudulent ;  and  he 
may,  upon  discovery  of  such  fraud,  even  after  the  period  of  extension 
has  expired,  repudiate  such  agreement,  and  sue  upon  the  original  con- 
tract without  refunding  or  tendering  back  the  interest  paid  under  such 
invalid  agreement. 

It  is  rudimentary  that  fraud  vitiates  all  contracts ;   and  if  the  nlain- 
tijff  was  induced  to  make  the  payment  to.  the  principals  by  their,  ialse 
and"  f raudulenT  representations,  without  any  fault  or  negligence  on  its 
part,  it  may  well  be  that  the  sureties  would  be  precluded  to  invoke  such^  v  aI.  cW*^ 
paymenF  as  a  ground  for  their  release  from  the  bond  in  suit.     But^l  jw-  Ji  ,^^jyLcM>^ 
such  is  not  the  situation  of  the  plaiijtiff.    The  contract  provides  that:  ^>1^' ^^T, 
"When  said  work  shall  have  been,  in  opinion  of  party  of  first  part,   .    ^^        i^  J 
half  completed,  said  party  of  first  part,  or  its  engineer,  shall  care-  'ji']y*'ij^^^' 
fully  estimate  the  work  completed,  and  pay  the  party  of  the 'second 
part  therefor  a  sum  of  money  equal  to  eighty-five  per  cent,  of  the  cost 
of  the  completed  work,  as  agreed  upon  herein:    Provided,  said  sum 
shall  not  exceed  the  amount  of  seven  thousand   four  hundred  and 
eighty  dollars." 

By_JJiS_terms  of  the  contract  the  plaintiff,  or  its  engineer,  was  re- 
quired carefully  to  estimate  the  amount  of  work  completed  before 
making  any  payment.  The  performance  of  this  duty  was  important, 
for  the  protection  of  the  sureties.  But,  it  the' plaintiff  had  the  right 
to  rely  on  the  representations  of  the  contractors,  that  would  have  been 
a  justification  for  the  payment  of  no  more  than  $7,480;  so  that  the 
fraudulent  representations,  relied  on,  afford  no  excuse  for  the  pay- 
ment to  the  contractors  of  the  sum  of  $10,046.68.  In  ,no  just  sense 
can  it  be  claimed  that  the  plaintiff  was  induced  to  make  the  payment  by 
the  fraudulent  representations  of  the  contractors.     It  had  no  right  to- 


496  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

rely  on  such  representations,  and  it  was  bound,  either  m  person  or  by 
its  engineer,  to  make  the  estimate  of  the  work  done  for  itself.  If  the 
plaintitT  was  misled,  it  was  through  its  own  fault,  and  the  failure  to 
perform  wliat  was  required  of  it  by  the  contract.  In  such  case,  it  can- 
not shift  the  consequences  of  its  own  fault  and  want  of  care  onto  the 
sureties.    Manufacturing  Co.  v.  Kimmel,  87  Ind.  5G0. 

In  the  opinion  of  the  court,  the  demurrer  must  be  sustained,  and 
it  is  so  ordered.^** 


WILLIAM  MAYHEW  and   ANX  GENT  v.   CRICKETT  et  al. 

(nigh  Court  of  Chancery,  1818.    2  Swanston,  185.) 

The  bill  stated  that  in  August,  1814,  Charles  Batteley,  being  indebted 
to  the~3efendants,  his  bankers,  in  the  amount  of  il,000.  or  thereabout, 
secured  by  a  warrant  of  attorney  to  confess  judgment,  thedefendants 
agreed  to  advance  to  him  the  farther  sum  of  £300.  on  condition  of  his 
procuring  two  persons  as  sureties  for  the  repaA^mfiiit  fKgrgUfp.  zflid 
also  of  the  former  balance ;  and,  the  plaintiffs  having  agreed  to  be- 
come sureties,  two  promissory  notes,  for  1^0.  each,  payable  to  the 
defendants  on  demand,  dated  the  20th  of  August,  1814,  were  signed, 
one  by  Battelev  and  Mayhew.  the  other  by  Batteley  and  Gent  ;_that  the 
plaintiffs  had  lately  discovered  that  the  defendants  did  not  advance  the 
farther  smji^j^auu.,  noF  any  part  of  it ;  that  in  November,  isr4, 
th^jjcjendants  entereJup.iudgment  on  Ihe  warrant  of  attorney  against 
Batteley  and  issued  execution  thereon,  and  entered  into  pOSi>t:sst©«--®f 
his  dwelling  house,  and"  flie  stock  in  trade  and  other  effects  therem, 
and  after  continuing  several  days  in  possession,  without  consulting-or 
apprising  the  plaintiffs,  withdrew  the  execution,  Batteley  paying  the 
ex'penses;  and  that  in  August,  1815,  Batteley  again  becoming' ehi- 
barreSifed,  the  defendants  for  the  first  time  applied  to  the  plaintiffs  for 
{)ayment  of  the  promissory  notes,  which  the  plaintiff's  refused ;  and  in 
Michaelrojas.le.nhj  1816,  the  defendants  commenced  actions  against 
tliein.  ~'  ■"'  -~- 

The.  bill,  charging  that  tlie  notes  ought  in  equity  to  be  ooncidered  as 
vo|d_and  given  without  consideration,  that  by  withdrawing  the  ex- 

-■''U'liou  till.'  surveyor's,  certificate  (upon  which   by  the  contract  payments 

has  been  obtained  by  the  fraudulent  concealment  by  tlie  yrilAr 

In  his  worlc,  and  his  faithful  performance  was  sruaranteed  by 

(lit-  sur.ty,  tlie  latter  is  not  discharged.    Mayor,  etc.,  of  Kingston,  v.  HardluK. 

L.  n.  2  Q.  B.  494  (15^2). 

To  the  defense  raiswl  In  the  principal  case,  a  replication  of  notice  to  the 
giitrty  and  hLs  assent  is  soch\.  General  Steam  Xavij:ation  Co.  v.  Rolt  6  Com. 
P..    ■'.  R.n.  (Scott)  540  (lS.-)8).. 

;    in  advance  of  stipulated  time  discharges  the  surety  at  lajy  in 

■  1  <>ourts.     Shelton  v.  Am.  Surety  Co..  131  Fed.  210.  66  C    C    A    94 

(I'-'i'  :    1  Monty  &  Deposit  Co.  v.  Agnew,  152  Fed.  955.  82  C.  C.  A    103  (1907) 

On   suretj-  s   right  of  subrogation   to   reserve  under   building  contract  as 

*«aliist  creditor  of  principals,  see  note,  10  H.  L.  R.  387.  t      l-oo 


Ch.  8)  TRANSACTIONS  OP  CREDITOR  WITH  PRINCIPAL.  497 

ecution  against  Batteley  the  defendants  had  released  the  plaintiffs, 
that  Gent  never  requested  the  defendants  not  to  press  for  payment  of 
Batteley's  debt,  and  that,  if  Mayhew  made  such  request,  it  was  in  ig- 
norance that  the  execution  had  been  withdrawn,  prayed  that  the  de- 
fendants might  be  decreed  to  deliver  the  promissory  notes  to  the 
plaintiffs,  and  indemnify  the  plaintiffs  against  them,  and  be  enjoined 
from  proceeding  in  the  actions  at  law. 

The  defendants,  by  their  an^wef.  stated  that,  being  dissatisfied  with 
the  large  balance  due  from  Batteley,  they  informed  him  that  unless 
he  procured  a  joint  note  from  persons  of  responsibility  they  would  take 
possession  of  his  effects ;  and,  Batteley  promising  to  give  unexception- 
able security,  the  defendants  added  that  if  they  were  satisfied  with  the 
security  they  might  advance  £300.  more,  that  when  Batteley  brought 
the  two  promissory  notes  the  defendants  said  that  they  should  make  no 
farther  advance  till  they  had  satisfied  themselves  of  the  security,  and 
after  inquiry  refused  an  advance,  and,  admitting  that  the  execution  was 
withdrawn  at  the  request  of  Batteley  on  the  6th  of  November,  1814, 
the  defendants  not  thinking  it  necessary  to  consult  or  apprise  the  plain- 
tiffs, who  were  not  informed  of  the  existence  of  the  warrant  of  at- 
torney, further  stated  that  j3n  the  application  of  the  plaintiffs  in 
August.  lS15^.-Mavhew  promised  to  pay  his  note  in  Septertiber' follow- 
ing, and  at  that  time  came  to  the  defendants,  representing  that  it  was 
not  convenient  then  to  take  up  his  note,  but  promised  to  pay  it  at 
Christmas,  if  they  would  wait  till  then  ;  denied  that  they  gave  time  and 
indulgence  to  Batteley  to  pay  the  debt  secured  by  the  promissory 
notes,  except  by  withdrawing  the  execution,  and  stated  that  on  the 
lith  of  February,  1816,  Mayhew  promised,  in  the  presence  of  two 
persons  named,  to  take  up  the  note  for  which  he  becaipe  answerable, 
on  or  before  Lady  day  following,  and  before  that  promise  Mayhew 
knew  that  the  defendants  had  taken  possession  of  Batteley's  effects 
under  the  execution,  and  had,  at  the  request  of  Batteley  and  his  friejids, 
abandoned  the  same,  and  relied  upon  the  notes  as  a  security  for  the 
balance  then  due  to  them;  and  the  defendants  stated  that  they  had 
heard  and  believed  that  at  the  time  of  such  promise  Mayhew  was  in 
possession  of  a  warrant  of  attorney  given  to  him  by  Batteley  to  secure 
the  payment  of  the  i650.  and  interest,  and  that  Batteley  soon  after- 
wards committed  an  act  of  bankruptcy,  which  prevented  Mayhew 
from  taking  execution  against  his  effects. 

The  defendants  had  recovered  a  yerdict.against-.the-^plaintiff.Jvlay- 
liew,  before  the  common  injunction  was  obtained  for  want  of  answer. 
OiTaTmotion,  after  filing  the  answer,  to~dissolve  the  injunction,  the 
Lord  Chancellor,  by  order  of  the  13th  of  December,  1817,  continued 
it,  with  liberty  to  the  defendants  to  proceed  to  trial  against  Mrs.  Gent. 
The  defendants,  having  declined  to  proceed  to  trial,  not  intending  to 
prosecute  their  claim  against  Mrs.  Gent,  now  moved  to  dissolve  the 
injunction. 

Hen.  Sub.— 32 


(//ApA/y-^r 


498  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

Sir  ^\rthur  Piggott  and  Mr.  Treslove.  in  support  of  the  motion,  in- 
sisted that  the  grounds  on  which  the  plaintiffs  resTecTtheir  equity,  the 
want  of  consideration  for  the  notes  and  the  abandonment  of  execu- 
tion bv  tlie  principal  creditor,  formed  a  legal  defense,  and  cited  Hoare 
V.  Conlcncin,  1  Bro.  C.  C.  27. 

Mr.  Hart  ami  ^llr, ,  against  the  motion,  argued  that  concur- 
rent, jurisdiction  of  courts  of  equity  was  not  excluded  by  the  novel 
equitable  doctrines  of  courts  of  law,  and  that  the  question  of  fraud  in 
,  (ibtaining  the  notes  was  peculiarly  proper  for  a  court  of  equity. 
"^  Lord  Chancellor  [Ei.don].  On  the  motion  for  an  injunction,  two 
Unrounds  were  taken:  First,  that  the  principal  debtor  being  indebted 
to  the  defendants  in  il,000.,  the  contract  on  which  these  notes  were 
given  was  that,  if  he  should  produce  securities  for  £1,300.,  the  defend- 
ants would  advance  £300.  in  addition  to  the  existing  debt.  In  con- 
sidering the  question  whether  there  was  that  agreement,  we  must  not 
lose  sight  of  the  fact  that  security  was  given  for  the  exact  sum  of 
£1,300. ;  and  if  such  was  the  transaction,  I  am  not  quite  prepared  to  say 
that  the  sureties  could  not  avail  themselves  of  their  non-liability  at  law 
as  well  as  in  equity,  speaking  of  law  at  this  day;  for  many  questions 
(questions,  for  example,  on  marriage  brokage  bonds,  and  on  lost 
deeds),  formerly  exclusive  subjects  of  equitable  jurisdiction,  have, 
since  Lord  Mansfield's  time  become  subjects  of  the  jurisdiction  of 
I  courts  of  law. 

'  The  second  ground  was  that  the  defendants,  by  releasing  the  ex- 
ecution, had  relinquished  their  remedy,  at  least  pro  tanto.  I  always 
understood  that  if  a  creditor  takes  out  execution  against  the  prin- 
cipal debtor,  and  waives  it,  he  discharges  the  surety,  on  affoBVtTTlR 
principle  which  prevails  both  in  courts  of  law  and  in  courts  dt  equity. 
On  the  other  iiand,  if  the  surety  afterwards  makes  a  promise^o  p^, 
he  cannot  object  to  that  as  a  promise  without  consideration.  The 
promise  is  valid,  not  as  the  constitution  of  a  new,  but  the  revival  of 
an  old,  debt.  So,  when  a  bankrupt  is  discharged  by  his  certificate,  he 
cannot,  for  that  reason,  impeach  a  subsequent  promise  to  pay  a  former 
debt,  as  a  promise  without  consideration. 

Although  the  amount  of  £1,300.  is  constituted  here  by  separate 
promissory  notes,  and,  although  at  one  time  the  doctrine  prevailed 
that  where  there  were  separate  securities  there  should  be  no  contribu- 
tion, that  has  been  exploded  ever  since  the  case  of  Deering  v.  Lord 
Winchelsea,  2  Bos.  &  Pul.  270,  1  Cox,  318.  The  liability  of  the  plain- 
tiffs must  be  considered  with  reference,  not  only  to  general  prin- 
ciples, but  to  the  fact  that  one  surety  promised  to  pay  after  he  knew 
that  the  execution  had  been  waived.  The  eflfect  of  that  may  be  varied 
by  the  circumstance  whether  he  then  knew  what  was  known  to  the  co- 
surety. 

/  There  can  be  no  doubt  that  jt  js  z  question  fit  to  be  tried  at  law 
whether,  if  a  party  takes  out  execution  on  _a  bill  of  exchange,  and 
afterwards  waives  that  execution,  he  has  not  discharged  those  who 


Ch.  S)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  499 

were  sureties  for  the  due  payment  nf  the,  hill-  The  principle  is  that 
heis  a  trustee  of  his  execution  for  all  parties  interested  in  the  bill. 

IvORD  ChancelIvOR  [Eldon].  I  must  be  informed  whether  the  de- 
fendants abandon  all  claim  against  the  plaintiff  Gent.  That  is  an  im- 
portant feature  of  the  case. 

The  counsel  for  the  defendants  having  undertaken  to  release  the 
plaintiff  Gent,  the  Lord  Chancellor  proceeded  to  give  judgment. 

Lord  Chancellor  [Eldon].  The  bill  is  filed  by  Mayhew  and 
Gent,  against  the  latter  of  whom  I  must  consider  the  defendants  as 
having  no  demand,  since  they  prosecute  none.  It  appears  from  the 
answer  that  there  had  been  a  proposition  for  an  advance  of  a  sum 
of  £300.  in  addition  to  the  original  debt ;  it  is  now  admitted  that  the 
two  notes  of  £1,300.  can  be  considered  as  a  security  for  £1,000.  only, 
and,  therefore,  each  note,  in  a  court  of  equity  at  least,  is  a  security 
for  only  £500.,  the  defendants  never  having  advanced  the  £300.  or 
any  other  sum.  The  bill  charges,  as  a  particular  ground  of  the  equity 
on  which  the  plaintiffs  insist,  that  two  promissory  notes  were  given, 
to  enable  the  debtor  to  obtain  time  for  £1,000.,  and  a  further  advance 
of   £300.,  and   that,  the  advance   not  having  been  made,  the  notes      ,  i 

ought  not  to  be  considered  as  a  security  for  the  existing  debt.   _The  [l  J^^t.  jj^o,, 
mere  circumstance  that  the  plaintiffs  did  not  know  that  the  defend-  d^,_  ^ip,!,.^ 
ants  held  a  warrant  of  attorney  would  be  of  no  consequence,  because 
sureties  are  entitled  to  the  benefit  of  every  security  which  the  cred- 
itors  had  against  the  principal  debtor,  and  whether  the  surety  knows  w/  ^  «       j.ax 
the  existence  ofjhose  securities  is  immaterial;  ^^  and  I  think  it  clear       {  /     *'    / 
tTiat^  though  the  creditor  might  have  remained  passive  if  he  chose,        ■^T*'*'*^ " 
yet,  if  he  takes  the  goods  of  the  debtor  in  execution,  and  afterwards 
withdraws  the  execution,  he  discharges  the  surety,  both  at  law  and 
in  equity;   and  I  cannot  but  believe  that  there  must  have  been  some 
mistake  on  the  part  of  the  learned  judge,  at  nisi  prius.     That,  how- 
ever, should  have  been  made  the  subject  of  a  motion  for  a  new  trial. y  ; 

The  application  of  the  defendants,  in  equity,  proceeds  on  quite  a     \^''T*%j'^ 
different  principle.    They  swear  that  in  the  presence  of  two  witnesses,  '"'"'■  ^     *' 
Mayhew,  knowing  that  the  execution  had  been  withdrawn,  promised  ^ 

to  pay  the  debt ;  and  it  cannot  be  objected  that  there  is  a  want  of  con- 
sideration for  such  a  promise.  If  a  creditor,  having  given  time  to 
the  debtor  primarily  liable,  makes  a  demand  on  one  who  is  secondarily 
liable,  and  receives  a  promise  from  him,  that  is  sufficient  to  sustain 
the  demand,  not  as  the  creation  of  a  new,  but  as  the  revival  of  an  old, 
debt.  X  ^-  ?^^t'fjfr.i 

With  respect  to  the  other  plaintiff,  Mrs.  Gent,  it  must  be  assumed   ->.,  ^^s>-^^ 
that  the  defendants  have  no  demand  against  her.     That  reduces  the 
case  to  this  singular  condition,  that  one  surety  is  discharged  while 
there  is   a  verdict  against  the  other;    and  the   court  must   consider 

31  Record:  Scott  v.  Knox.  2  Jones  (^Irish  Ex.)  "^Sl  ^1838).  tUe  security  hav- 
ing been  given  to  secure  anotner  deuiauu  in  addition  to  tiie  debt  for  wnicti 
the  surety  was  responsible. 


nOO  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

the  effect  of  the  discharge  of  one  of  two  co-sureties.  The  fact  that 
the  liabiHty  arises  on  separate  instruments  aflfords  no  disfmcttCTn  as 
to^fhe  right  of  contribution  between  the  sureties.  "The  taL\v~t^-srr?et- 
tlcd  by  Decring  v.  L<^rd  Winchclsea.  I  recollect  that  the  decision  in 
that  case  disturbed  the  then  existing  notions  in  Westminster  Hall. 
Having  myself  been  counsel  against  that  doctrine,  I  was  much  dis- 
satisfied with  it;  but  on  farther  and  maturer  consideration  I  ought 
to  make  so  much  amends  as  to  say  that  I  am  convinced  it  was  right. 
When  one  surety  has  been  discharged,  the  co-surety  is  entitled  to  say 
to  the  creditor,  asserting  a  claim  against  him,  "You  have-dw«Si?ged 
a  surety  from  whom  I  might  have  compelled  contribution^  .either  in 
my  own  name  in  equity,  or  using  your  name  at  law." 
"nC  ""  Another  view  is,  whether  the  circumstances  of  the  case  would  not 
raise  the  question  whether  it  is  competent  to  the  defendants  to  make 
any  use  of  the  promissory  notes,  if  the  fact  is,  as  the  bill  alleges,  that 
the  principal  debtor  had  solicited  a  farther  advance  of  iSOO.,  and  that, 
when  the  sureties  lent  their  names  on  instruments  which  raised  a 
demand  for  £1,300.,  the  defendants  refused  an  advance,  and  now  claim 
the  notes  as  securities  for  the  previous  debt.  There  is  some  ground 
to  infer  that  the  real  dealing  was  for  an  advance  of  £300.  ultra  the 
£1,000.;  and  two  points  therefore  require  consideration:  , First,  I  am 
by  no  means  clear  that,  iTtiie  sureties  could  establish  that,  it  would 
not  be  a  defense  at  law,  though  I  am  not  disposed  to  say  that  there- 
lore  a  court  of  equity  would  not  relieve;  but,  secondly,  the  surety 
must  have  known  that  the  execution  had  been  "witliSrawn,  and  his 
promise  to  pay  is  to  be  considered  as  a  promise  made,  in  all  probabil- 
it\7ivTth  a  knowledge  of  the  circumstances  of  the  case. 

Qn  the  whole,  I  am  of  opinion  that  the  plaintiff  Mayliew  must  j)ay 
into  court  so  much  as,  with  what  the  defendants  have  received  from 
the  bankrupt's  estate  (a  commission  of  bankrupt  had  been  issugd 
against  Batteley),  will  amount  to  £500.,  without  prejudice.  On  those 
terms  the  injunction  must  be  continued. 


ALCOCK  V.  HILL. 

(Court  of  Appeals  of  Virginia,  1833.    4  Leigh,  622.) 

This  was  a  bill  in  the  Superior  Court  of  Chancery  of  Fredericksburg, 
exhibited  byTltman  Hill  against  Abner  Alcock,  alleging  that,  Alcock 
having  recovered  a  judgment  in  the  circuit  court  of  Stafford  against 
James  Hifflin  and  Richard  Hill,  and  sued  a  fieri  facias  thereon,  which 
was  levied  on  their  property,  the  plaintiff  Pitman  Hill  and  one  Corbin 
became  their  sureties  in  a  forthcoming  bond  for  the  delivery  of  the 
pro|)erty  at  the  day  and  place  of  sale ;  aTfd,  the  forthcoming  bond  be- 
ing returned  forfeited,  ex£oitiQn-.\vas^  awarded  thereon  against  the 
principals  and  sureties.    That_.e2cecution"  wa£  suedTy  AlcoclcranTr  de- 


Ch.  8)  TRANSACTIONS   OF  CREDITOR  WITH  PRINCIPAL.  501 

livered  to  the  sheriff,  anH  if  Alcock  had  not  suspended  proceedings 
thereon  the  debt  might  have  been  levied  of  the  property  of  the  prin- 
cipals,  they  being  solvent  at  the  time ;  Jjijt  Alcock,  without  the  con- 
seht  or  kno\vTe3ge  of  the  plaintiff,  Pitman  Hill,"~gavT'lVTitten^irec- 
tions  to  "the  sheriff  to  suspend  proceedings  on  the  execution  till  he 
should  give  further  instructions.  That-£i€har4-iiUt-,-<me-Q£  the  prin- 
cipal, debtors,  had  delivered  a'  slave  to  one  Hore,  to  be  sold,  and^the 
proceeds  applied  to  the  discharge  of  the  debt  due  to  Alcock,  of  which 
Alcock  was  informed,  and  afterwards  offered  the  slave  for  sale  him- 
self, and  might  have  sold  him  at  any  time,  or  procured  the  sale ;  and 
it  was  because  Alcock  had  the  means  thus  placed  in  his  own  hands, 
or  power,  of  obtaining  satisfaction  of  his  demand,  that  he  directed 
proceedings  on  his  execution  to  be  suspended.  That  the  plaintiff.  Pit- 
man Hill,  being  also  apprised  of  these  facts,  took  no  steps  to  secure 
indemnity  against  loss  by  reason  of  his  suretyship.  That  Alcock  for- 
bore any  further  proceedings  for  many  years,  until  all  the  other 
obligors  in  the  forthcoming  bond  had  become  insolvent,  but  had  lately 
sued  out  an  execution,  and  caused  it  to  be  levied  on  the  property  of 
the  plaintiff.  Therefore  the  bill  prayed  an  injunction  to  inhibit  Al- 
cock  from  further  proceedings^  on  hig jastripentioned  execution,  a'gainst 
the  plai_ntiff. 

The  injunction  was  awarded. 

Alcock,  in  his  answer,  said  that  when  the  plaintiff.  Pitman  Hill,  be- 
came  surety  in  me  forthcoming  bond,  he  did  so  because  he  was  told 
by  the  sheriff,  and  therefore  expected,  that  indulgence  could  be  ob- 
tained from  Alcock,  by  the  principal  debtor,  Richard  Hill,  so  soon  as 
the  debt  should  be  secured  by  a  forthcoming  bond ;  and  it  was  because 
Alcock  was  apprised  that  this  assurance  had  been  given,  and  was 
content  with  such  security,  that  he  directed  the  sheriff  to  suspend 
proceedings  on  the  execution,  which  was  afterwards  issued  by  the 
clerk  on  the  forthcoming  bond ;  that  his  suspension  of  proceedings 
was  a  mere  indulgence,  given  without  consideration,  and  he  did  not 
thereby  preclude  himself  from  proceeding  whenever  he  should  think 
proper,  and  he  would  have  proceeded  at  any  time,  if  the  sureties  had 
required  him  to  do  so;  and  that,  if  Richard  Hill  did  deliver  a  slave 
to  Hore  to  be  sold  for  the  purpose  of  satisfying  the  debt,  it  was  a 
transaction  between  Hill  and  Hore,  to  which  he,  Alcock,  was  nowise 
privy.  He  never  offered  the  slave  for  sale,  nor  had  any  power  to 
make  such  sale. 

I5^pipeaj£d„in  proof^  that,  when  Pitman  Hill  joined  in  the  forth- 
coming bond  as  surety,  he  was  told  by  the  sheriff  that  Alcock  would 
give  Richard  Hill,  the  principal,  time  to  discharge  the  debt,  provided 
satisfactory  surety  was  given  in  the  forthcoming  bond,  and  that  Al- 
cock obtained  an  award  of  execution  on  the  forthcoming  bond;  and 
an  execution  having  been  issued,  he  then  directed,  in  general  terms, 
that  proceedings  should  be  suspended  till  further  instructions.  It  ap- 
peared, also,  that  Richard  Hill  did  deliver  a  slave  to  Hore,  to  be  sold 


502  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part    3 

and  tlie  proceeds  applied  to  the  payment  of  the  debt  due  Alcock,  and 
that  this  slave  died  in  Here's  possession.  But  it  was  doubtful,  upon 
the  evidence,  whether  the  other  allcjjations  of  the  bill  in  respect  to 
this  slave  were  true,  namely,  that  he  was  delivered  by  Richard  Hill 
to  Hore,  before  the  forthcoming  bond  was  executed,  with  power  to 
sell  him,  and  with  authority  to  Alcock  to  direct  the  sale,  to  pay  the 
debt  due  him,  and  that  this  was  the  consideration  on  which  Alcock 
gave  the  indnl'^ence. 

TMu  '  'r.  thinking  that  the  allegations  of  the  bill  were  proved, 

p,M".  _ii4unction.    .^nd  this  court,  upQn_t_he  petition  of  Al- 

»  liim  an  jappea^^frqm  the  decree. 

L.-VKK,  J.  It  was  admitted  by  tlie  appellee's  counsel  that^Alcock's 
vi,<;nen«;inn  of  proceedings  on  his  execution  would  nowise  impai^  his 
I,    '  ;ainst  the  surety,  if  that  suspension  was  merely  voluntary 

ui.  ....  ,  ..:t.  But  they  insisted  that  it  was  in  consequence  of  aiLagree- 
ment  upon  valuable  consideration,  which  tied  up  Alcock's  hands^_and 
therefore  released  the  surety,  an  agreement,  namely,  that  one  of  the 
principal  debtors  should  put  a  slave  In  Alcock's  hands,  or"unaer  his 
ix)wer.  to  be  sold  for  the  debt,  and  that  in  consideration  of  this  the 
execution  should  be  suspended,  which  agreement,  they  said,  was  com- 
plied with  by  the  delivery  of  the  slave  to  Hore,  to  be  sold  by  him  for 
the  purpose,  or  to  be  sold  when  Alcock  should  so  require.  If  this  case 
had  been  made  out  by  the  proofs,  the  counsel  would  have  had  pretty 
strong  grounds  to  stand  on.  But  to  my  mind  the  evidence  proves  no 
such^  agreement.  On  the  contrary,  I  think  the  evidence  proves  iHat 
the  slave  was  put  into  Hore's  hands,  but  never  into  the  possession  or 
under  the  power  of  Alcock,  and  that  this  was  a  transaction  between 
Richard  Hill  and  Hore,  to  which  Alcock  was  not  a  party,  and  which, 
indeed,  was  subsequent  to  the  indulgence  given  by  Alcock,  and  was 
nowise  the  consideration  on  which  Alcock  gave  the  indulgence.  The 
circumstances  detailed  in  the  evidence,  instead  of  disproving,  corrobo- 
rate Alcock's  answer.  This  case,  therefore,  belongs  to  that  class  of 
cases  in  which  it  has  been  held  that  a  voluntary  indulgence,  given^By 
a  creditor  to  the  principal  debtor,  does  not  impair  the  creditor's  rem- 
edy against  the  surety.  The  case  of  McKenny  v.  Waller,  1  Lefgh, 
434,  is  in  point  for  the  appellant. 

The  decree  should  be  reversed,  and  the  bill  dismissed. 

Cabell  and  Brooke,  JJ.,  concurred. 

Tucker,  P.  The  direction,  given  by  Alcock  to  the  sheriff,  to  sus- 
pend proceedings  on  his  execution  against  the  principal  till  further 
directed,  was  not  of  itself  sufficient  to  discharge  the  surety.  If,  in- 
deed, a  creditor  engages,  for  a  good  consideration,  to  give  indulgence, 
so  as  to  tie  up  his  hands  from  proceeding  at  any  moment  he  may  be 
required  by  the  surety  to  do  so,  the  surety  is  absolved,  unless  such  in- 
dulgence is  given  with  his  assent.  The  constituents  of  this  prin- 
ciple are :  ( 1)  A  consideration ;  for,  without  it,  a  promise  to  indulge 
is  not  binding.     (2)   A  promise  or  agreement  to  indulge;    for,  with- 


Ch.  8)  TRANSACTIONS   OF   CREDITOR    WITH   PRINCIPAL.  503 

out  it,  the  hands  of  the  creditor  are  not  tied,  whatever  collateral  se- 
curity he  may  have  received.  (3)  That  the  promise  should  not  be  al- 
together indefinite;  for  an  indefinite  promise  of  forbearance  is  void 
and  nugatory,  and  is  held  not  to  be  an  adequate  consideration  to  sup- 
port even  a  promise,  since  the  forbearance  might  be  but  an  hour, 
which  would  be  a  forbearance  indeed,  but  of  no  advantage  to  the 
debtor.  And  (4)  that  the  surety  should  not  have  assented  to  the  in- 
dulgence given. 

Trying  this  case  upon  these  principles,  I  think  it  very  clear  that 
the  surety  was  not  absolved ;  for,  as  to  the  transaction  at  the  time 
of  the  execution  on  the  forthcoming  bond,  I  think  the  evidence  proves 
that  the  probable  motive  of  the  appellee  for  joining  in  it  as  a  surety 
was  the  expectation  of  getting  that  indulgence  for  his  friend  which 
the  sheriff  assured  him  might  be  obtained  from  Alcock  upon  the  debt 
being  secured  by  a  forthcoming  bond.  To  this  indulgence,  then — if,  in- 
deed, the  promise  of  it,  thus  unauthorized,  by  the  sheriff,  and  the  indef- 
inite character  of  it,  could  bind  Alcock  at  all — the  surety  himself  as- 
sented. It  was  the  consideration  upon  which  he  entered  into  the  bond. 
Surely  he  cannot  complain  that  that  has  been  done  which  was  promised 
by  the  sheriff  on  Alcock's  behalf,  and  was  the  operative  motive  with 
himself  for  joining  in  the  bond. 

With  regard  to  the  transaction  respecting  the  slave  put  into  the 
possession  of  Hore :  This,  it  is  alleged,  was  a  consideration  for  the 
indulgence,  and  sufficient  to  bind  Alcock.  Admitting  the  facts  as  they 
are  contended  for,  although  here  was  a  consideration,  yet  there  was  no 
promise,  unless  we  resort  to  the  original  promise  at  the  time  the  bond 
was  given.  Now  the  fact  that  the  principal  placed  collateral  security 
in  Alcock's  hands,  which  has  been  lost  without  his  default  (as,  in  this 
case,  by  the  death  of  the  pledge)  is  not  sufficient  to  discharge  the 
surety,  unless  accompanied  by  a  promise  of  specified  forbearance.  No 
such  promise  is  proved,  or  even  charged. 

We  must  go  back,  then,  to  the  promise  at  the  time  the  bond  was 
given,  or  there  is  no  promise  in  the  case.  And,  if  we  do,  we  can  see 
in  the  indulgence  given,  until  Hore  could  make  such  sale  of  the  prop- 
erty as  would  be  just  to  all  parties  concerned,  nothing  but  a  fair, 
bona  fide,  and  honorable  compliance  with  the  engagement,  made  by 
the  sheriff  and  ratified  by  Alcock,  that  he  would  give  Richard  Hill 
time  to  discharge  the  debt,  provided  a  forthcoming  bond  was  given 
with  satisfactory  surety,  upon  the  faith  of  which  promise,  as  I  con- 
ceive, the  appellee  did  become  a  surety.  He  cannot  complain  of  a 
compliance  with  it,  and  therefore  ought  not  to  have  sought  this  in- 
junction. 

Decree  reversed,  and  bill  dismissed. 


301 


DEFENSES  OF  SURETY  AGAINST  CREDITOR.       (Paft  3 


\ 


CAMPBELL  V.  ROTH  WELL  et  ah 

ailgb  Court  of  Justice,  Common  Pleas  Division,  1877.    47  L.  J.  Rep.  Q.  B. 

[N.  S.]  144.) 

Tliisjyas  an  action  against  Daniel  Chadvvick  as  the  acceptor,  James 
O'Neiir^Iackle  as  the  drawer,  and  Ephraim  Rothwell  as  Jlie  in- 
dprser  o^five  bills  of  exchange— the  first,  dated  1st  of  August,  1876, 
for  £05.  10s.,  three  months  after  date;  the  second,  dated  8th  of  August, 
ISTG,  for  ilOO.,  three  months  after  date;  the  third,  dated  11th  of 
August,  1876,  for  i75.  10s.,  three  months  after  date;  the  fourth, 
dated  12th  of  August,  1876,  for  £96.  14s.  6d.,  four  months  after  date ; 
and  the  fifth,  dated  14th  of  August,  1876,  for  il6.  10s.,  three  months 
after  date. 

The  defendant  E.  Rothwell,  whose  liability  was  the  only  _one  in 
disputerpleaded  in  his  statement  of  defense,  inter  alia,  paragraph  7, 
ilfat  Tie  indorsed  the  said  bills  as  surety  for  the  defendant  James 
O'Neill  Mackle,  and  that  the  plaintiff  held  them  without  value,,and 
also  paragraph  10,  which  \'  '  'Hows :    "That  he  was  induced  to 

indorse  ITfe'said  bills  as  sui  ^  aforesaid,  and  at  the  time  of  such 

indorsing  plaintiflf  held  certain  goods,  or  had  a  lien  upon  them,  as  se- 
curity for  the  payment  of  the  amounts  mentioned  in  the  said  bills,  and 
afterwards  received  other  securities,  for  the  same  purpose  of  securing 
the  payment  of  the  amounts  mentioned  in  the  said  bills ;  and  if  the  de- 
fendant E.  Rothwell  were  liable  on  and  had  to  pay  the  said  bills,  he 
would  have  been  entitled  to  the  said  securities,  or  the  benefit  thereof, 
and  they  would  have  been  sufficient  to  cover  his  liability ;  and  the 
plaintiff,  without  the  knowledge  or  sanction  of  the  defendant  E. 
Rothwell,  has  so  dealt  with  the  said  securities  that  he  has  materially 
altered  the  position  of  E.  Rothwell  as  such  surety,  and  has  by  his  own 
acts  disentitled  himself  from  giving  the  said  E.  Rothwell  the  said  se- 
curities, or  the  benefit  thereof,  on  his  paying  the  said  bills,  and  the  said 
E.  Rothwell  has  lost  the  benefit  thereof." 

To  this  tenth  paragraph  the  plaintiff  replied  as  follows: 

"As  to  paragraph  10,  the  plaintiff  admits  that,  at  the  time  of  the  in- 
dorsing of  the  said  bills,  the  goods  referred  to  were  in  his  possession, 
but  he  had  no  lien  thereon  as  security  for  the  payment  of  the  said  bills. 
The  plaintiff  further  admits  that  afterwards  he  did  receive  a  certain 
other  bill  of  exchange  and  a  lien  on  the  said  goods  as  further  security 
for  the  payment  of  the  said  bills.  The  plaintiff,  however,  denies  that 
he  has  so  dealt  with  the  said  securities  last  named  as  to  alter  the 
position  of  the  defendant  E.  Rothwell  in  any  way;  the  said  goods  still 
remaining  in  his  possession,  and  three  judgments  having  been  recover- 
ed against  the  respective  parties  liable  on  the  said  last-named  bill,  but 
no  proceeds  realized,  and  that  any  right  or  benefit  to  which  the  de- 
fendant E.  Rothwell  may  be  entitled  as  against  the  said  securities  re- 
main- still  in  the  same  position  and  unimpaired." 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  505 

The  cause  was  tried  before  Denman,  J.,. at  the  last  Liverpool  sum- (^  ir(Jj>„^ 
mer  assizes,  when  it  appeared  that  the  defendant  Rothwell  indorsed 
the  several  bills  sued  on  as  "surety  for  the  defendant  Mackle,  and  that 
certain  goods  sold  by  the  plaintiff  to  Mackle,  and  for  the  payment  of 
which  three  of  the  said  bills,  namely,  those  for  ilOO.,  £75.  10s.,  and 
£96.  14s.  6d.,  amounting  to  £272.  4s.  6d.,  had  been  given,  were  at 
the  plaintiff's  warehouse  on  7th  of  September.  lS7fij  whpn  Mark-le 
signed  j_document„  (_wMj:h  is  set  out  in  the  judgment.oiJDenman^J.), 
by  which  he  stated  that  he  gave  the  plaintiff  a  lien  on  these  and  other 
goods  tlierem  referred  to,  for  the  balance  due  to  him  from  Mackle,  as 
well  as^  for  the  bills  which  had  been  so  indorsed  by  Rothwell,  as 
Mackle's  surety.  Afterwards,  on  28th  of  October,  1876,  Mackle  gave 
one  John  Daniel  Murphy,  to  whom  he  was  indebted  in  £100.,  an  order 
on  the  plaintiff,  authorizing  the  plaintiff  to  deliver  to  him,  Mackle,  the 
said  goods,  and  >the  plaintiff,  to  whom  this  order  was  sent,  undertook 
to  deliver  the  goods  to  Murphy  on  payment  of  £143.,  which  was  the 
amount  of  the  plaintiff's  claim  against  Mackle,  exclusive  of  tlie  bills 
for  £2 72. "4s.  6d.  Murphy  had  not  yet  paid  this  £143.,  and  therefore  the 
goods  still  remained  with  the  plaintiff. 

Yke  queslion   was   whether,   by   reason  of  the  plaintiff  having  so 
agrgSLto  give  up  the  goods  to  Murphy,  he  had  not  so  dealt  wit£  the/ 
security. he  had  acquired  by  the  document  of  7th  Septemberrl876,  asV  3^^^ 
to  discharge  the  surety  of  the  defendant  Rothwell,  notwithstanding  [^ 
such  security -liad  been  acquired  after  the  bills  had  been  indorsed  by  i 
him  as  such  surety.     This  _2uestion  was   reserved   for   further   con-j 
<\dera tionT^nrT wa s  argued  afterwards  before  uenman,  j.,  on  the  mo- 
tion  to  enter  judgment  for  the  plaintiff. 

Denman,  J.  (on  December  21st),  delivered  the  following  judgment: 

This  was  an  action  brought  against  one  Daniel  Chadwick,  as  the  ac-  f L^r^^Y^jisi^ 
ceptor,  one  James  O'Neill  Mackle,  as  the  drawer,  and  the  defendant 
Ephraim  Rothwell,  as  the  indorser,  of  five  bills  of  exchange. 

The  liability  of  the  defendant  Rothwell  was  the  only  matter  in  dis- 
pute at  the  trial.  Several  defenses  were  pleaded  by  him  which  failed 
of  proof  at  the  trial ;  but  the  tenth  paragraph  of  the  statement  of  de- 
fense was  as  follows:  [The  learned  judge  read  that  paragraph.]  To 
this  paragraph  the  plaintiff  replied  as  follows :  [This  also  the  learned 
judge  read.] 

It  was  agreed  upon  the  trial  that  certain  affidavits  made  on  behalf 
of  the  'plaintiff  upon  an  application  before  the  district  registrar,  if 
admissible — which,  upon  the  subsequent  argument  before  me  and  upon 
the  authority  of  Brickell  v.  Hulse,  7  Ad.  &  E.  454,  7  Law  J.  Rep.  Q. 
B.  18, -and  other  cases  cited  in  1  Taylor  on  Evidence,  p.  691,  I  held 
them  to  be — should  not  be  read  at  length  upon  the  trial,  but  be  taken 
to  be  in  evidence,  and  referred  to  by  either  party  on  the  argument 
upon  further  consideration.  It  appeared  from  these  affidavits  and 
from  the  evidence  at  the  trial  that  -three  of  the  bills,  amounting  al- 
together to  £272.  4s.  6d.,  were  given  by  Mackle  to  the  plaintiff  for 


506  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

cloths  supplied  by  the  plaintiff  to  Mackle,  andthat  the  name  of  the  de- 
fendant Rothwell  was  given  as  surety.  As  to  another  bdl  for  £16. 
10s.  it  was  given  for  money  lent.  Tlie  remaining  bill  sued  upon— 
namely,  that  for  £05.  10s.— was  given  for  a  debt  due  from  Mackle  to 
plaintitY  for  other  matters.  After  the  giving  of  the  bills  on  the  Tth  of 
September,  18T6,  the  goods  sold  by  plaintiff  to  Mackle  still  remamed 
at  the  plaintiff's  warehouse,  when  Mackle  executed  a  document,  of 
which  the  terms  were  as  follows: 
"To  Messrs.  Campbell  Brothers:  "Liverpool,  Sept.  7,  1876. 

"Gentlemen— In  consideration  of  your  shipping  me  cloths  and 
goods  amounting  to  about  ilOO.,  being  about  £128.  more  than  my 
bills  to  you  (ilOO.,  £75.  10s.,  and  £96.  14s.  6d.— in  all,  £272.  4s.  6d.), 
I  hereby  give  you  a  lien  on  the  said  goods  and  cloth  and  a  carriage  in 
your  possession  for  the  said  balance  due  by  me  to  you,  and  also  for 
cash  lent  by  you  to  mc.  and  I  also  give  you  a  lien  on  the  same  for 
bills  drawn'by  me  on  Messrs.  Daniel  Chadwick  &  Co.,  and  indorsed  by 
Mr.  E.  Rothwell,  as  my  surety  to  you,  until  the  said  bills  are  paid  and 
discharged,  and  all  expenses  incidental  thereto ;  and  I  further  under- 
take to  keep  Mr.  Rothwell  clear  of  all  liability  on  the  said  bills  in- 
dorsed by  him  for  me  to  you  so  far  as  I  am  able. 

"J.  O'Neill  Mackle." 

The  plaintiff's  affidavit  stated  that  Mackle  then  contemplated  going 
to  America  with  the  goods,  and  that  the  goods  still  remained  ready 
for  shipment  at  plaintiff's  office.  On  the  28th  of  October  Mackle 
gave  to  one  Murphy  an  order  on  the  plaintiff'  as  follows : 

"Liverpool,  Oct.  28,  1876. 
"To  Saml.  Campbell,  Esq.,  Campbell  Brothers: 

"I  hereby  authorize  you  to  deliver  the  goods  you  hold  of  mine  and 
settle  up  with  Mr.  John  D.  Murphy,  who  will  act  for  me  and  on  my 
behalf,  and  settle  all  matters  between  us  to  date,  and  pay  your  claim  as 
between  yourselves.  J.  O'Neill  Mackle." 

This  order  was  sent  by  Murphy  to  the  plaintiff,  who  wrotp,  in  rpply 
that  he  held  thc^oodsjp  his  order^J'subject  to  the  condition  therein 
mentioned,"  wliicli  T  understand  to  mean  the  payment  of  the  plain- 
tilTs^tlaim  :  '  i^kle.    Murphy,  whose  affidavit  was  uitd  h\  the 

pTamtiff  l)efi)ic  uic-  district  registrar  and  by  the  defendant  on  the  ar- 
gument l>efore  me,  stated  that  the  plaintiff  had  undertaken  todeliver 
the  him  (Murphy)  on  the  payment  of  £11."!.,  iIk-  amount  he 

clai;  1  Mackle,  exclusive  of  the  bills  for  £272.  4.'^.  Hd. ;    Imr. 

Murphy  not  having  paid  that  amount,  the  goods  still  remained  in  the 
p[aintiff'6  hands  at  the  time  of  action  brought.  Under  these  cTrcum- 
stances,  it  was  contended  for  the  defendant  that  he,  being  a  surety, 
was  discharged  by  reason  of  the  plaintiff  having  dealt  with  an  after-ac- 

.  quired  security  in  a  manner  detrimental  to  his  interests. 

l     The  main  question  which  was  argued  in  relation  to  this  contention 
was  whether  a  security  which  was  not  in  existence  at  the  time-af-the 


Ch.  8)  TRANSACTIONS   OF  CREDITOR  "WITH  PRINCIPAL.  507 

contract_ofsuretyship  is  to  be  taken  into  account  to  relieYe..the^.surety. 
In  Newton  v.  Charlton,  10  Hare,  64:6,  also  reported  in  2  Drew.  333, 
Wood,  V.  C,  in  an  elaborate  judgment,  decided  that  it  could  not; 
and  though  in  a  subsequent  case  of  Pledge  v.  Buss,  1  John.  663,  the 
same  learned  judge  said  that  he  could  no  longer  hold  that  opinion  to 
be  law  after  an  opinion  of  the  Lords  Justices  to  the  contrary,  it  is 
remarkable  that  beyond  a  mere  dictum,  not  necessary  to  the  decision  of 
the  case  in  which  it  was  pronounced — Pearl  v.  Deacon,  only  reported 
in  2  Jur.  839 — as  an  interlocutory  remark  during  the  argument  of  the 
case,  counsel  were  unable  to  find  any  judicial  opinion  overruling  that  of 
Wood,  V.  C,  in  Newton  v.  Charlton,  10  Hare,  646,  also  reported  in 
2  Drew.  333.  The  cases  of  Lake  v.  Brutton,  18  Beav.  134,  8  De 
Gex,  M.  &  G.  440,  25  Law  J.  Rep.  Chanc.  842,  and  Pearl  v.  Deacon 
(as  reported  in  24  Beav.  188,  1  De  Gex  &  J.  461,  and  26  Law  J.  Rep. 
Chanc.  761),  were  referred  to;  but  in  neither  case,  nor  in  the  case 
of  Pledge  V.  Buss,  1  John.  663 — in  which  Wood,  V.  C,  alluded  to 
Newton  v,  Charlton,  10  Hare,  646,  also  reported  in  2  Drew.  333, 
as  above  mentioned — was  it  necessary  to  overrule  that  decision.  Un- 
der these  circumstances,  I  have  felt  great  doubt  whether  I  ought  not  to 
adhere  to  the  doctrine  laid  down  in  Newton  v.  Charlton,  10  Hare,  646, 
also  reported  in  2  Drew.  333 ;  but,  upon  the  whole,  I  think  it  is 
more  probable  that  Pledge  v.  Buss,  1  John.  663,  though  not  raising  the 
same  point,  contains  the  expression  of  the  final  opinion  of  the  courts 
of  equity,  including  that  of  Wood,  V.  C,  than  the  decision  of  New- 
ton V.  Charlton,  10  Hare,  646,  also  reported  in  2  Drew.  333.  I  find 
that  Newton  v.  Charlton,  supra,  has  been  treated  as  overruled  in  the 
last  three  editions  of  White  and  Tudor's  Leading  Cases  (see  5th  ed., 
vol.  n,  p.  1026),  and  I  can  see  nothing  unreasonable  in  the  doctrine 
that_a_surety  is  discharged  if  the  creditor  has  so  dealt  with  any  security 
he_possesses  that  he  cannot,  on  payment  by  the 'surety,  give  him  all 
the  securities  he  possesses,  whether  in  existence  at  the  time  of  the  con- 
tract of  suretyship  or  subsequently,  in  the  same  condition  as  they  were 
when  he  first  acquired  them.  y^ 

'"In  the  present  case  the  plaintiff,  as  appears  by  the  affidavit,  has 
made  an  arrangement  by  which  he  has  bound  himself  at  any  time  to 
give  up  the  goods  which  from  the  7th  of  September,  1876,  he  held  as 
a  SecurlTy^'for  the  whole  of  the  moneys  due  to  him  from  Mackle,  upon 
receiving  £143.  from  A'lurphy.  This  appears  to  me  so  wholly  incon- 
sistent wath  the  security  upon  the~good"s  "given  to  the  plaintiflf  for  the 
express 'benefit  of  the  defendant  Rothwell  by  the  document  of  the 
7tfi'  of  September,  1876,  as  to  have  materially  diminished,  if  not  en- 
tirely destroyed,  the  benefit  of  that  security ;  and  on  that  ground  I 
think  that  the  'defendant  Rothwell  is  released,  and  I  give  judgment 
for  him  accordingly. 
Judgment  for  defendant  Rothwell. ^^ 

3  2  The  earlier  English  cases  of  Newton  v.  Chorlton,  10  Hare.  646  (1853),  per 
"■Wood,  V.  C,  and  Wade  v.  Coope,  2  Simons,  155  (1827),  are  herein  overruled- 


508  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 


MERRITT  V.   HAAS. 

(Supreme  Coart  of  Minnesota.  1908.    lOG  Minn.  275,  118  N.  W.  1023,  119  N.  W. 
247,  21  L.  R.  A,  [N.   S.]  153.) 

Action  in  the  District  Court  for  Ramsey  County  by  the  trustee  of  the 
trust  estate  of  Eugene  St.  Julien  Cox  under 'the  last  will  and  testament 
of  William  S.  Cox,  deceased,  to  recover  $54,  the  unpaid  balance  of  in- 
terest due  November  20,  1905,  on  four  promissory  notes  of  $900 
each,  made  by  Albert  SchcfTcr  in  favor  of  the  trustee  and  indorsed  by 
the  defendants  in  this  form:  "In  consideration  of  our  discharge  from 
liability  as  sureties  on  the  bond  of  Albert  Scheflfer  as  trustee  as  above 
mentioned,  we  and  each  of  us  do  hereby  guarantee  the  payments  of 
the  semi-annual  installments  of  interest  on  tlie  above  note  at  the  time 
and  place  the  same  shall  become  due  until  said  note  is  fully  paid,  and 
do  hereby  waive  notice  of  default,  protest,  and  notice  of  protest." 
There  was  no  proof  of  service  of  summons  on  defendant  McCardy  and 
defendant  Haas  alone  answered.  The  other  facts  are  stated  in  the 
,  opinion.  The  case  was  tried  before  Orr,  J.,  who  found  that  defend- 
\^yf  ir.,^.  - -<;  entitled  to  judgmen't  oh  the  Tnerits.  FrQin_aii_OTder 
'^'ifs.jr.  ..  trial,  plaintiff  appealed.'  Affirmed. 

Ciiuw:;,  J.  The^acts  in  this  case^re  as  follows:  Albert  Scheffer 
was  duly  appointed  trustee  of  the  estate  of  the  late  E.  St.  Julien  Cox 
imder  the  last  will  and  testament  of  William  S.  Cox,  deceased.  There 
came  to  his  hands  as  such  in  money  and  securities  something  over 
$9,000.  Upon  the  acceptance  of  the  trust  Scheffer  executed  in  proper 
form  the  usual  bond  in  such  cases,  which  defendants  signed  and  ex- 
ecuted as  sureties.  In  1899  Scheffer  was  called  upon  for  an  account- 
ing, when  it  was  found  that  he  had  in  some  way  lost  the  entire  estate 
and  had  no  money  or  property  belonging  to  it.  An  action  was  there- 
upon brought  against  him  and  sureties  to  recover  the  amount  due  from 
him.  A  settlement  of  the  action  was  subsequently  effected,  by  the 
terms  of  which  defendants  agreed  to  and  did  pay  to  plaintiff  the  sum  of 
$1,000  in  part  of  the  shortage  of  Scheffer,  and  Scheffer  made  and  de- 
livered to  plaintiff  four  promissory  notes,  of  $900  each,  payable  at 
stated  times  in  the  future,  each  bearing  interest  at  6  per  cent,  per 
annum.  Scheffer  also  conveyed  to  plaintiff"  a  lot  in  St  Petex^jand 
agreed  to  procure  the  issuance  of  a  policy  of  insurance  upon  iaia_ life 
pa>able  to  plaintiff  as  trustee,  as  collateral  to  and  as  security  for-4he 
payment  of  the  notes  and  interest.  The  policy  was  procured  as  agreed 
upon  and  delivered  to  plaintiff.  The  sureties  on  Scheffer's  bond  guar- 
anteed the  payment  of  the  interest  as  it  became  due  upon  the"  notes, 
but  did  not  guarantee  the  payment  of  the  principal.  The  premiuim  on 
the  policy  were  not  paid,  by  reason  of  which  the 'policy  lapsed.  Schef- 
fer died  without  paying  either  the  principal  or  the  interest  due  on  the 
notes,  his  estate  was  insolvent,  and  plaintiff  brought  this  action  to  re- 
cover from  defendants,  guarantors  on  the  notes,  the  unpaid  interest. 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH  PRINCIPAL.  509 

The^ principal  defense  to  the  action  was  that  Scheffer,  by  the  terms 
of  the  settlement,  agreed  to  make  all  payments  of  premiums  to  keep 
the  insurance  policy  in  force  and  that  defendants  were  liable  therefore 
only  in  the  event  of  default ;  that  the  policy  was  permitted  by  plaintiff 
to  lapse  without  notice  to  defendants,  in  consequence  of  which  the  Col- 
lateral was  lost,  and  defendants  discharged  from  further  liability. 
The  allegations  of  the  answer  constituting  this  defense  are  expressly 
admitted  by  the  reply.  The  trial  court  found  the  facts  substantially  as 
stated,  and  ordered  judgment  for  defendants.  Plaintiff  appealed 
from  an  order  denying  a  new  trial. 

The  assjp-nments  of  error  present  the  questions:  _  (1)  Whether  the 
findings  of  fact  to  the  effect  that"  ScheffBT-'was  by  the  terms  of  the 
settlement  to  make  all  payments  of  premiums  due  and  to  become  due 
on  the  insurance  policy,  and  that  defendants  were  to  pay  the  same 
only  in  the  event  of  his  failure  to  do  so,  are  sustained  by  the  evidence ; 
and  (2)_  whether  the  conclusions  of  law  that  plaintiff  cannot  recover 
are  justified  by  the  facts  found. 

The  first  question  is  not  important;  for,  as  urged  by  plaintiff, 
defendants'  guaranty  was  absolute  and  unconditional,  and  the  loss  of 
the  collateral  by  the  lapsing  of  the  policy  for  non-payment  of  premiums 
constituted  no  defense.  It  is  probable,  however,  that  the  facts  found 
by  the  court  on  this  subject,  being  in  harmony  with  the  admissions 
of  the  reply,  were  fully  justified ;  for  the  disputed  fact  was  not  in 
issue  by  the  pleadings,  and  though  the  evidence  is  conclusive  against 
the  finding  it  cannot  be  said  that  it  would  have  been  the  same,  had  the 
fact  been  an  issue  for  trial.  But,  as  stated,  this  question  is  not  of  con- 
trolling importance ;  for,  with  this  special  finding  in  the  case,  the  con- 
clusion of  law  should  have  been  that  plaintiff  was  entitled  to  judgment 
as  prayed  for  in  the  complaint. 

Ordinarily  the  obligation  of  the  guarantor  of  payment  is  determined 
by  the  character  of  the  contract  to  which  the  guaranty  relates.  In  the 
case  at  l)ar  the  promissory  notes  given  by  Scheffer  called  for  the  pay- 
ment of  semi-annual  interest  at  the  rate  of  6  per  cent,  per  annum. 
Defendants',  contract,  indorsed  thereon,  was  that  they  "guaranteed  the 
payment  of  the  installments  of  interest  until  the  note  was  paid  in  full." 
There  is  nothing  in  the  principal  contract,  the  note,  or  in  the  guar- 
anty, to  qualify  the  liability  thus  assumed  by  the  guarantors,  and 
within  the  rule  in  this  state  it  was  absolute  and  unqualified,  and  obli- 
gated them  to  pay  the  interest  as  it  matured.  The  contract  imposed  no 
duty  or  obligation  upon  the  plaintiff,  as  trustee  or  guarantee,  to  protect 
the  guafaiilors  from  loss,  either  by  keeping  the  policy  of  insurance* 
in  force,~6r  in  efforts  to  collect  the  note  and  interest  from  Scheffer, 
andTTf  neglect  on  his  part  in  this  respect  be  conceded,  it  constitutes 
ncL-^ef^n^e,  nor  does  it  relieve  defendants  from  their  unconditional 
agreement  to  pay.  The.xule^is  otherwise  in  some,. of,  the  states^  but  the 
doctrine  suggested  was  laid  down  by  this  court  in  an  early  day 
(Hungerford  v.  O'Brien,  37  Minn.   306,  34  N.  W.   161),  and  has 


510  DEFENSES  OF  SUKETY   AGAINST   CKEDITOR.  (Part    3 

since  been  followed  (Osborne  &  Co.  v.  Gullikson,  6-i  Minn.  218,  GQ 
X.  W.  dCo). 

But,  even_\Yilhout  this.rule,  the  facts  disclosed  by. ihe  record  negative 
anjdutv  on  the  part  of  plaintiff  to  keep  the  policy  in  force  or  to 
notify  defendants  of  the  failure  of  Schcffer  to  pay  Jhe  premmi^is.  The 
answer  alleges  and  the  reply  admitted  the  fact  that  Scheffer  was  to 
make  all  payments  of  premiums,  and  no  stipulation  is  shown  to  im- 
|)Ose  the  duty  upon  plaintiff  to  see  to  it  that  he  performed  his  part  of 
the  agrcemc-nt.  The  law  imposes  no  such  duty,  within  the  rule  of 
absolute  liability  of  guarantors  of  payment;  nor  did  the  contract. 
It  was,  therefore,  as  much  the  duty  of  defendants  to  see  that  the 
premiums  were  paid  as  it  was  the  plaintiff's.    A  ^distinction  isjiiade  in 

^contracts  of  this  kind  between  guarantors  of  collection  and  absblute 
.  :  irantors  of  payment.  As  to  the  former  the  creditor  is  under  i^er- 
i.iiii  obligations  toprotect  the  guarantor.  Nelson  v.  Munch,  28  Minn. 
mH,  9  N.  W.  863;  Peterson  v.  Russell,  62  Minn.  220,  64  N.  W.  555, 
20  L.  R.  A.  612,  54  Am.  St.  Rep.  034 ;  Crane  v.  Wheeler,  48  Minn. 
207,  50  N.  W.  1033.  But  tlie  rule  does  not  apply  to  an  uncoft^ional 
undertaking  to  pay  if  the  principal  debtor  fails  to  do  so.  While  de- 
fendants were  sureties  in  the  first  instance  upon  Scheffer's  bond,  that 
relation  ceased  and  terminated  upon  the  consummation  of  the  settle- 
ment, and  they  then  became  absolute  guarantors. 

'  It  isalso  urged  that  the  contract  of  guaranty  is  unreasonable  and 
voi^l^nd  should  not  be  enforced.  The  precise  point  is  that  by  the 
terms  of  the  guaranty"defendants  obligated  themselves  to  pay  the 
accruing  interest  "until  the  note  is  paid  in  full,"  and  it  is  urged  that, 
because  of  the  fact  that  Scheffer  is  dead  and  his  estate  insolvent,  the 
principal  of  the  note  will  never  be  paid,  and  defendants'  obligation 
to  pay  the  interest  will  therefore  run  on  forever,  and  that  they  can 
only  relieve  themselves  by  paying  the  principal,  which  they  did  not 
contract  or  agree  to  do.  If  the  suggested  condition  be  the  legal  result 
from  the  terms  of  the  contract,  defendants  might  well  complain,  and 
their  contention  that  the  contract  is  unreasonable  and  oppressive  \vould 
come  with  force  and  merit.  But  we  conclude,  after  some  reflection, 
that  the  contract  should  not  be  so  construed  as  to  create  a  liability  ex- 
tending beyond  the  grave.  Whenever  guaranty  contracts  of  this  na- 
ture have  come  up  for  consideration,  the  courts  have  held  that  ~the 
lia'BiHty  of  the  guarantor  ceases  at  the  due  date  of  the  note.  Hamil- 
ton V.  \'an  Rensselaer,  43  N.  Y.  244 ;  Rector  v.  McCar'tKy,  61  Ark. 
420.  33  S.  W.  033,  31  L.  R.  A.  121,  54  Am.  St.  Rep.  271;  Bousquet 
V.  Ward,  116  Iowa.  126,  89  N.  W.  196.  The  rule  has  reasonableness 
and  common  sense  to  support  it,  and  we  apply  it  to  the  case  at  bar. 
Any  other  rule  would  permit  the  creditor  and  principal  debtor  to  pro- 
long the  guarantor's  liability  indefinitely.  The  legal  inference  in  such 
a  case  ought  to  be  that  the  parties  contracted  on  the  supposition  that 
the  maker  of  the  note  would  pay  it  at  maturity,  and,  unless  the  ao-ree- 


Ch.  8)  TRANSACTIONS   OF   CREDITOR  WITH   PRINCirAL.  511 

ment  gave  some  authority  to  the  creditor  to  extend  the  time  of  pay- 
ment, the  guarantor  should  be  reUeved  at  that  time. 

The  interest  claimed  in  this  case  covers  the  period  before  the  notes 
fell  due,  and  for  the  reasons  stated  plaintiff  is  entitled  thereto,  if  on 
a  new  trial  the  facts  are  the  same  as  they  appear  in  the  record  be- 
fore us. 

Order  reversed,  and  a  new  trial  granted.^^ 


SPRINGER  v.  TOOTHAKER. 
(Supreme  Judicial  Court  of  Maine,  1S57.    43  Me.  381,  69  Am.  Dec.  66.) 

Reported  by  May,  J. 

Thisjaction  is  against  a  surety  upon  a  note  of  hand.  An__action  had 
been  brought  and  judgment  recov^l-ecf~agaTnsr''Eie'^rincipal_ debtor 
PruperLy  attached'lipoh'the  writ  had  been  seized  by  virtue  of  an  .ex- 
ecTJEioil  upon  that  judgrnent,  advertised  for  sale,  and  abandoned  by 
order  of"IlTe"  plaintiff,  and  without  consent  of  this  defendant,  where- 
uporftliis^'actiOn  is  brought  to  recover  the  amount  of  the  note  against 
the  surety.^* 

Hathaway,  J.  The  note  upon  which  this  action  was  brought  was 
signed  by  the  defendant  and  H.  P.  Toothaker,  who  were  legally  holden 
thereon  as  joint  and  several  promisors. 

The  defendant,  however,  was  in  fact  only  the  surety  of  H.  P.  Tooth- 
aker, an^tiat  was  known  by  the  plaintiff.  Hence  the  defendant  is  en- 
titIe3~to~all  the  benefits  belonging  to  flie  character  of  a  surety. 

The  evidence  reported  does  not  authorize  the  conclusion  that  there 
was  any  such  agreement  between  the  plaintiff  and  H.  P.  Toothaker 
to  enlarge  the  time  of  payment  as  would  operate  as  a  discharge  of 
the  defendant  from  his  Hability  as  surety  on  the  note.  The  defend- 
ant  offered  to  prove  that  after  the  note  became  due  the  plairTTiff  "Com- 
nienced  a  suit  thereon  against  H,  P.  Toothaker,  the  principal  debtor, 
and  attached  as  his,  a  large  amount  of  personal  property,  and  cer- 
tain interests  in  real  estate ;  that  he  prosecuted  the  suit  to  final  judg- 
ment, on  which  he  duly  obtained  execution,  which  he  neglected  to 

83  T4iis_jjadgnient  was  subsequently  reversed,  but  on  the  ground  tbat  the 
court  in  the  above  opinion  had  been  under  a  misapprehension,  and  had  sup- 
posed  that  the  interest  sought  to  be  recovered  accrued  prior  to  maturity,  when 
in,  tact"  the  interest  accrued  after  maturity,  and  hence  was  outside  the  terms 
of  th9.  fnnfriift_. 

But  if  one  party  to  the  contract  is  required  by  this  contract  with  the  prin- 
ciKaT  to,  keep  certain  property  on  which  the  principal  is  to  be  employed  in- 
siired  au'aiust  loss  bv  fire  an  omission  to  insure  will  discharge  the  suretv  iu 
toto.    Watts  V.  F^huttleworth,  5  H.  &  N.  235  (ISGO)  ;    Id.,  7  H.  &  N.  355  (18G1). 

Accord,  as  to  life  insurance  not  requiring  premiums  to  be  paid  by  creditor 
to  whom  thoy  have  heen  pledged.  Coates  v.  Coates,  33  Beav.  249  (1SG3-G4) ; 
Wiieutley  v.  r,a^t6w,~7"De  G..  M.  &  G.  261  (1855). 

34  The  arguments  of  counsel  are  omitted. 


w< 


A 


512  DEFENSES  OP  SURETY  AGAINST  CREDITOR.  (Part   3 

levy  on  the  personal  property  attached,  and  ordered  the  officer  in  pos- 
session, by  virtue  of  the  attachment,  to  surrender  it,  which  he  did ;  that 
the  equity  of  redemption  attached  was,  by  the  plaintiff's  direction, 
seized  on  the  execution  by  the  officer  holding  it  for  collection,  and 
duly  advertised  for  sale,  at  a  time  and  place  named,  but  that  it  was 
not  exposed  for  sale ;  that  the  sale  was  postponed  from  time  tojime. 
antL  the  attachment  lost  and  abandoned,  by  the  plaintiff's  order,  and 
without  the  defendant's  consent,  and  that  the  equity  oi  redeiiiption 
was  worth  $C00,  and  would  have  sold  for  that  sum,  if  it  had  been 
•exposed  for  sale ;  alLofjwhich  testimony  offered  was  excluded  by  the 
presiding  judge,  and  the  question  presented  to  the  court  is  Whetiier  or 
not~rt  was  properly  excluded.  " 

The  defendant,  the  surety,  is  sued  alone,  and  whatever  would  dis- 
charge the  surety  in  equity  will  be  a  good  defense  in  law.  Baker 
V.  Briggs,  8  Pick.  (Mass.)  128,  129,  19  Am.  Dec.  311,  and  authorities 
there  cited. 

The  contract  of  suretyship  imports  entire  good  faith  and  con- 
fidence in  the  whole  transaction.  In  equity,  a  creditor,  who  has  the 
personal  contract  of  his  debtor  with  a  surety,  and  has  also,  or  takes 
afterwards,  property  from  the  principal,  as  security  for  his  debt,  is 
to  hold  the  property  fairly  and  impartially  for  the  benefit  of  the 
surety  as  well  as  for  himself,  and  if  he  parts  with  it  without  the  knowl- 
edge or  against  the  will  of  the  surety,  he  shall  lose  his  claim  against 
the  surety,  to  the  amount  of  the  property  so  surrendered.  People  v. 
Janson,  7  Johns.  (N.  Y.)  337,  5  Am.  Dec.  275;  Rees  v.  Berrington, 
2  Vesey,  Jr.,  542 ;  Law  v.  E.  I.  Co.,  4  Vesey,  849 ;  Baker  v.  Briggs, 
8  Pick.  (Mass.)  122,  19  Am.  Dec.  311;  1  Story's  Eq.  §§  324-326. 

When- the,  pjaintiff  had  recovered  judgment  against  the  principal 
debtor,  his  right  had  attached  absolutely  to  the  property  which  '  1 
taken  on  the  writ,  and  remained  a  fixed  and  permanent  lien  _  J 

da^s.     In  the  IMatter  of  Cook,  2  Story,  376 ;    Rev.  St.  c.  114,  §  32. 
And  if  he  voluntarily  surrendered  it  without  the  defendant's  consent, 
he  did  so  at  the  peril  of  discharging  the  defendant  as  surety  for  the. 
amount  thus  surrendered. 

Although  the  plaintiff  was  not  legally  bound  to  use  active  diligence 
in  collecting  the  debt  of  the  principal,  and  the  surety  would  not  be 
discharged  by  reason  of  his  delay  in  the  matter,  and  though  the  plain- 
tiff might  have  discontinued  proceedings  against  the  principal  debtor, 
which  he  need  not  have  instituted,  yet  2t_^I0]-ild  be_clearly_  inequitable 
to  allow  him  to  abandon  an  absolute  lien  or  security  upon  the  property 
of  the  principal,  which  he  had  obtained  as  the  result  of  tlios&T^ro- 
ceedings,  and  to  retain  his  hold  upon  the  security  for  the  whole  debt. 
2  Am.  Leading  Cases,  256. 

The  plaintiff  was  not  bound,  at  his  own  risk  and  expense,  to  seize 
and  sell  on  the  execution  the  personal  property  attached  when  the 
title  might  be  doubtful.  Page  v.  Webster,  15  Me.  249,  33  Am.  Dec 
608. 


Ch.  8)  TRANSACTIONS  OF   CREDITOR  WITH   PRINCIPAL.  513 

But,  as  to  the  equity  of  redemption,  the  testimony  offered  and  ex- 
cluded presents  it  as  the  property  of  the  principal  debtor,  upon  which 
the  plaintiff  had  obtained  an  absolute  lien  for  the  payment  of  the  debt, 
and  which,  without  any  risk  or  expense  to  the  plaintiff,  would  have 
been  sold  for  $600,  and  appropriated  for  that  purpose,  unless  he  had 
interfered  and  prevented  the  sale. 

He  had  no  equitable  or  legal  right,  to  the  injury  of  the  surety  (the 
defendant),  thus  to  surrender  and  abandon  such  security. 

The  testimony  excluded  was  legally  admissible,  and  should  have  been 
received. 

In  addition  to  the  numerous  authorities  cited  in  argument,  see  Edg- 
erly  v.  Emerson,  3  Foster  (N.  H.)  555,  55  Am.  Dec.  207,  Adams' 
Eq.  269  and  270,  and  the  opinion  of  Tenney,  J.,  in  Fuller  v.  Loring,  42 
Me.  481. 

As  agreed  by  the  parties,  the  action  must  stand  for  trial.^" 


MT.  STERLING  IMPROVEMENT  CO.  v.  COCKRELE. 
(Court  of  Appeals  of  Kentucky,  1902.    70  S.  W.  842,  2i  Ky.  Law  Rep.  1151.) 

Appeal  from  Circuit  Court,  Montgomery  County. 

Action  by  the  Mt.  Sterling  Improvement  Company  against  M.  O. 
Cockrell  and  others.  From  a  judgrr)ent  in  favor  of  the  defendants, 
plaintiff  appeals.    Affirmed. 

BuRNAM,  J.  In  1.S55  th€  Mt.  Sterling  Improvement  Company  C  % 
recovered  a  judgment  against  J.  H.  Oldham  for  $250,  from  which 
he  prosecuted  an  appeal  to  this  court,  and,  executed  a  supersedeas 
bond,  with  the  appellees  M.  O.  Cockrell  and  H.  K.  Green  as  his^  se- 
curities:' 'The  judgment  of  the  lower  court  was  affirmed,  and  the  im- 
provement company  filed  the  mandate  issued  thereon  in  the  lower 
court,  and  on  tlie^25th  of  June,  1898,  had  an  execution  issued  upon  the 
judgment,  wliich  was  levied  by  the  sheriff  of  Montgomery  county,  on 
the  29tfi"  oF June  1S98,  on  a  tract  of  land  belonging  to  J.  H.  Oldham 
of  sufflci:ent  value  to  have  satisfied  it.  On  the  23d  of  July,  1898,  after 
the  levy  of  the  execution,  Oldham  sold  the  land  for  a  cash  considera- 
tion to  one  Hall;  and  on  the  1st  day  of  August,  1898,  the  improve- 
ment company,  by  its  attorney,  ini^rsed  on  the  execution  these  words : 
"Th_e_  sheriff  is  directed  to  hold  this  execution  until  further  orders. 
Ajugust  i,  1898,  Mt.  Sterling  Improvement  Co."  And  in  January, 
1899,  this  action  was  brought  against  the  appellees  on  the  supersedeas 
bond. 

^~~The  defendants  Cockrell  and  Green  answered,  admitting  that  they    /"-htfi/A-r 
signed  the  supersedeas  bond,  and  set  out  in  detail  the  facts  recited  above, 
with  the  further  allegation  that  neither  the  plaintiff  nor  the  sheriff*  had 

»8  Accord:  Hubbell  et  al.  v.  Carpeuter,  5  Barb.  (N.  Y.)  520  (1849). 
TtENTSUR.— 33 


514  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

/complied  with  the  requirements  of  sub-section  2  of  section  2358a  of 
the  Kentucky  Statutes,  which  provides  that  "no  attachment  or  execu- 
tion hereafter  issued,  n^r  any  levy  or  sale  under  either,  shall  in  any 
manner  affect  the  right,  title  to,  or  interest  of  a  subsequent  purchaser, 
lessee  or  incumbrancer  without  notice  thereof  of  any  real  estate  or 
any  interest  therein  upon  which  such  attachment  or  execution  may 
he  or  may  have  been  levied,  except  from  the  time  there  shall  be  filed 
;ti  the  office  aforesaid  a  memorandum,  showing  the  number  and  style 
of  the  action  in  which  said  attachment  or  execution  issued,  the  court 
from  which  it  issued,  the  number,  if  any,  of  such  attachment  or  ex- 
ecution, the  date  thereof,  and  the  name  of  the  persons  in  whose  favor 
and  against  whom  respectively  it  issued."  And  in  anamended-answer 
'  ^  they  allege  that,  whilst  the  execution  was  in  the  hands  of  the  sheriff 
aniiTh~ruTrTbTcc','lTiey  ordered  the  sheriff,  pursuant  to  an  agreement 
made  with  J.  H.  Oldham,  to  hold  up  said  execution  until  further  or- 
ders, and  that,  by  reason  of  such  agreement  and  direction  givHh  the 
sheriff,  he  failed  to  comply  with  the  requirements  of  sub-section  2  of 
section  2358a  of  the  Statutes. 

The  plaintiff^  in  his  reply^  denied  that  they  agreed  to  hold  up  the 
execution,  or  that  they  had  directed  the  sheriff  to  do  so,  and  pleaded 
that  it  was  the  defendant's  duty  to  have  filed  the  notice  required  by 
■^ub-section  2  of  section  2358a. 

TheJiiaLcourt,  by  its  inji;rucJ;jons,  confined  the  caseJaJjb£_ri£fense 
relied  on  in  the  amended |petItionJ  telling  the  jury  to  find  for  the 
company  unless  they  believed  from  the  evidence  that  after  the  execu- 
tion was  placed  in  the  hands  of  the  sheriff,  and  levied  upon  property 
of  the  defendant  sufficient  to  have  satisfied  same,  it  directed  the  sheriff 
not  to  proceed  with  his  levy,  and  that  in  consequence  of  such  direc- 
tions the  sheriff  failed  to  collect  it  before  the  23d  of  July,  1898. 

'  Tl^e  tejtiinony  is  conflictmg.  Oldham  testified  that  both  the  presi- 
dent and  secretary  of  the  company  consented  to  suspend  the  collection 
of  the  execution  until  there  could  be  a  settlement  of  the  aft'airs  of  the 
company,  and  that,  with  their  consent  and  by  their  direction,  he  com- 
municated this  fact  to  the  sheriff,  and  that  he  thereafter  sold  the  prop- 
erty to  Hall.  The  sheriff,  to  some  extent,  corroborated  the  statement 
of  this  witness,  whilst  Childs,  the  secretary  of  the  company,  emphat- 
ically denies  that  either  he  or  Baum,  the  president,  ever  agreed  that 
the  collection  of  the  execution  should  be  suspended  or  that  they  so 
instructed  the  sheriff.     Upoji-this  issue,  sharply  drawn  both  b^-  the 

ytestim^nj  and  the  instructions,  the  jury  found  for  the  defemiant. 

A  The  law  is  well  settled  that  when  a  plaintiff  issues  an  e::iei:ution 
against  the  defendant,  which  is  levied  upon  property  sufficieut-to  sat- 
isfy itj  a  lien  on  the  defendant's  property  inures  to  the  security ;  and, 
if,UiaLji.cn  is  discharged  or  lost  through  the  negligence"  or  miscon- 
duct of  cither  the  plaintiff  or  the  sheriff,  the  execution  debriT  con- 
sidered paid,  in  so  far  as  the  suretv  is  coneeraed.  See  Dills  vTXecil, 
67  Ky.  579;   Herman,  Ex'ns,  254;  Brandt,  Sur.  (1st  Ed.)  §  373.    The 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH  PRINCIPAL.  515 

appellant  cojnpanv-was.  under  ..no„oJbligation  to  appellees  to  have  sued 
out  the  execution  against  Oldham.  They  could  have  looked,  if  they  so 
elected,  directly  to  the  supersedeas  bond  for  a  satisfaction  of  their 
judgment.  But  having  elected  to  proceed  by  execution,  and  having 
acquired  by  their  levy  a  lien  upon  the  property  sufificient  to  have  sat- 
isffeH^fh'eir  judgment,  they* were  not  at  liberty  to  abandon  the  security 
so  obtained  for  the  payment  of  their  judgment;  and  if  by  their  orders 
the  sheriff  failed  to  proceed  with  the  collection  of  their  execution,  and 
iru-consequence  thereof  their  security  was  lost,  they  cannot  look  to 
app£llees  for  its  payment. 
Judgment  affirmed.^* 


YOUNG  V.  CLEVELAND. 

(Supreme  Court  of  Missouri,  1862.    33  Mo.  126,  82  Am.  Dec.  155.) 

Appeal  from  Ste.  Genevieve  Circuit  Court.^'^ 
Dryden,  Judge,  delivered  the  opinion  of  the  court. 
This  is  a  suit  brought  before  a  justice  of  the  peace,  by  Young 
against  George  W.  Cleveland,  on  a  note  made  by  the  defendant,  Wm. 
Cleveland  and  Dudley  Horn,  for  $205,371/^,  payable  to  the  plaintiff's 
testator,  on  which  several  partial  payments  had  been  made,  reducing 
the  demand  to  a  sum  within  the  jurisdiction  of  a  justice  of  the  peace. 
The  case  was  tried  before  the  justice,  and  taken  to  the  circuit  court, 
where,  upon  a  trial  anew,  after  the  plaintiff  had  read  the  note,  the  de- 
fendant proved  that  Be'ahd  Horn  were  merely  the  securities- of  Wil- 
liam Cleveland ;  that  after  the  note  became  due  Wm.  Cleveland,  the 
principal  debtor,  confessed  a  judgment  before  a  justice  of  the  peace, 
in  favor  of  the  plaintiff,  for  the  balance  due  on  the  note ;  that  the 
plaintiff  took  execution  and  caused  it  to  be  levied  on  personal  pfop- 
ert/of  said  William  of  the  value  of  $50;  that  before  the  sale  of  it 
under   the  execution  an  agreement   was  made  betweeri~lKe'~parties 

3  6  ACCQI^:   Sneed's  Ex'r  v.  White,  3  J.  J.  Marsli.  525,  20  Am.  Dec.  175  (1830). 

In  Griesmere  v.  Thorn,  32  I'a.  Super.  Ct.  13  (1900),  the  court  (per  Porter, 
J.)  said:  "That  the  mere  failure  to  follow  up  the  general  lien  of  a  fi.  fa.  by 
a  levy  upon  and  sale  of  the  property  of  a  principal,  even  where  the  principal 
hadTirt^the  time  the  writ  was  in  the  sheriff's  hands,  sufficient  personal  proi)- 
erty  to  pay  the  judgment,  will  not  release  a  surety  who  has  not  required  the 
crghttDT.to  proceed  on  his  execution,  has  been  definitely  decided.  Morrison  v. 
Hartman,  14  Pa.  55." 

The  Griesmere  Case  was  decided  in  accord  with  this  view,  which  proceeds 
on  the  theory  that  "the  distinctign_between  the  lien  of  the  writ  and  the  lien 
of_the  levy  seems  to  be  that  the  latter  is  a  technical  satisfaction  of  the  judg- 
ment."    Stephens  V.  Bank,  88  Pa.  157,  32  Am.  Rep.  4.^8  (1879). 

'Wtere_the  surety  undertook  that  certain  judgments  against  a  third  person 
shalLfce  paid  in  full,  the  judgments  being  assigned  by  the  surety  to  the  prom- 
isee, the  x)romisee  was  held  to  he  under  no  duty  to  revive  the  judgment  in 
the  absence  of  express  agreement.  C-ampbell  v.  Sherman,  151  Pa.  70,  25  Atl. 
35.  81  Am.  St.  Rep!  735  (1892). 

On  release  of  execution  as  a  discharge  of  siwety,  see  note,  13  H.  L.  R.  415^ 

8  7  Hie  arguments  of  counsel  are  omitted. 


516  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

whereby  the  said  William  gave,  to  tlie  plaintiff  an  order-inr  his  .(said 
William's)  wife's  interest  in  the  estate  of  her  father,  of  the  valu^  of 
$100.  in  lieu  of  the  property  levied  on^^  and  the  plaintiff  thereupon 
caused  the  levy  to  be  discharged  and  the  property  to  be  restored  to 
said  William. 

Xiic  circuit  court  held  that  the  defendant  was  entitled  to  his  defense 
to  the  benefit  as  well  of  the  value  of  the  property  levied  and  resWred, 
$90,  as  to  the  proceeds  of  the  order,  $100,  and.  the  two  sums  exceed- 
ing in  amount  the  unpaid  balance  on  the  note,  found  a  verdict  for  the 
defendant.  Upon  what  principle  the  value  of  the  property  levied  on 
is,  under  the  circumstances  of  the  case,  made  to  discharge" any"  part 
of  the  debt,  is  not  easy  to  see.  If  it  be  said  a  levy  on  perso-nal-pFep- 
crty  is  a  satisfaction  of  the  judgment,  it  is  replied  it  is  so  only  con- 
ditionally; that  where  the  property  is  restored  to  the  possession  of 
the  defendant,  it  is  not  a  satisfaction  in  law  of  the  judgment.  Walker 
V.  McDowell,  4  Smedes  &  M.  (Miss.)  135,  43  Am.  Dec.  476;  Banks 
v.  Evans,  10  Smedes  &  M.  (Miss.)  35,  48  Am.  Dec.  734;  Marshall 
V.  Morris.  13  Ga.  187. 

[Here  the  property  was  returned  to  the  owner.]         ^ 

Noc-is  there  any  ground  of  defense  in  the  assumption  that  the  plain- 
tiff, the  creditor,  has  parted  with  a  security  from  the  principal  debfor 
to  the  prejudice  of  the  defendant,  a  surety  (1  Story,  Eq.  Juris.  "3^2), 
for  the  reason  that  the  security  was  surrendered  in  lieu  of  property 
of  greater  value,  which  could  not  have  been  reached  by  legale  pro- 
cess, and  which  was  thus  applied  in  extinguishment  of  the  debt  pro 
tanto.  The  discharge  of  the  levy  was  beneficial — not  injurious^to 
the  defendant. 

The  circuit  court  committed  error  in  its  declaration  of  the  law,  and 
for  this  cause  its  judgment  is  reversed,  and  the  cause  remanded  for 
a  new  trial;   the  other  Judges  concurring. 


SECTION  3.— VARIATION  BY  CREDITOR  (OR  PROMISEE) 

AND  PRINCIPAL  OF  ORIGINAL  AGREEMENT  AS 

TO  WHICH  SURETY  CONTR.\CTED 


MERSMAN  V.  WERGES  et  al. 

(Supreme  Court  of  the  United  States.  18S4.     112  U.  S.  139.  5  Sup.  Ct  65.  28 

L.   Ed.  641.) 

This  is__si,bill  in  equitv.  filed  in  the  Circuit  Court  of  the  United 
States  for  the  District  of  Iowa  by  Joseph  J.  Mersman,  a  citizen  of 
Missouri,  against  Caspar  A.  Werges  and  wife,  citizens  of  Iowa,  to 


Ch.  8)  TRANSACTIONS   OF   CREDITOR  WITH  PRINCIPAL.  517 

foreclose  a  morfgagp  ni  jier  land  in  Iowa,  executed  on  September  1, 
1870,  by  the  husband  and  wife  to  E.  H.  Krueger,  likewise  a  citizen 
of^Towa,  "to  be  void  upon  condition  that  the  said  Caspar  A.  Werges 
shall  pay  to  the  said  E.  H.  Krueger  the  sum  of  six  thousand  dollars 
as  follows,  viz.,  one  year  from  date,  with  ten  per  cent,  interest  there- 
on, according  to  the  tenor  and  effect  of  his  promissory  note  of  even 
date  herewith." 

The  bill  originally  set  forth  the  note  as  signed  by  both  husband  and 
wife,  but,  after  the  coming  in  of  the  answer,  was  amended  by  leave 
of  court  so  as  to  allege  it  to  be  the  note  of  the  husband  only.     The  y/v.-c^ 
case  was  heard  upon  pleadings  and  proofs,  by  which  it  appeared  to  "Be 
as  Jollovys : 

The  husband  and  Krueger  were  members  of  a  partnership  engaged 
in  carrying  on  a  mill,  Krueger  being  the  active  partner,  and  Werges 
and  his  wife  living  on  a  farm  which  belonged  to  her.  The  plaintiff 
agreed  with  Krueger  to  lend  to  the  husband,  for  the  benefit  of  the 
partnership.  $6,000  on  the  security  of  the  farm ;  and  the  wife  agreed, 
for_the  accommodation  of  the  partnership,  to  execute  a  mortgage  pi 
the  farm.  The  husband  signed  a  note,  payable  to  Krueger  or  order, 
and  corresponding  in  terms  with  the  mortgage,  and  the  husband  and 
wife  executed  the  mortgage,  and  delivered  the  note  and  mortgage  to 
Krueger.  While  they  were  in  Krueger's  hands,  the  name  of  the 
\vif£jv.as  subscribed  to  the^note,  under  that  of  the  husband,  by  Krueger 
or  byJiis.  procurement,  without  the  knowledge  or  consent  of  either 
hiisband  or  wife.  Krueger  indorsed  the  note,  and  delivered  the  note 
and  mortgage  to  the  plaintiff,  who  thereupon,  not  knowing  that  the 
wife  had  not  herself  signed  the  note,  advanced  the  money  to  him  for 
tlie  partnership.  y 

TheJuir.cu.it  Court  held  that  the  addition  of  the  wife's  name  to  the 
husband's  note  was  a  material  alteration  of  the  note,  and  made  void 
the,  mortgage :  and  dismissed  the  bill.  See  Mersman  v.  Werges,  3 
Fed.  378,  1  McCrar)^  528.    The  pjaintiff  appealed.^^ 

Mr.  Justice  Gray  delivered  the  opinion  of  the  ?ourt.  He  stated 
the  facts  in  the  foregoing  language  and  continued : 

Th^s  TOun  is  nf  opir^''~Ti  thpt  th^  decree  of  the  Circuit  Court  cannot 
be  sustained.  The  difference  of  opinion  is  not  upon  the  facts  of  the 
case,  but  upon  their  legal  effect.  A?j,7^tK^ 

Ajnaterial  alteration  of  a  written  contract  by  a  party  to  it  discharges  V  ,—  ►^     .  • 
a  jiarty  who  f]r'('^~r^r:fliuihr,r{7P  or  consent  to  the  alteration,,  because       IT^)^ 
.it   d-pstrnjr';   the  identify  of  the  contract,   and  substitutes   a  dift'erent        '^^  T 
agreement  for  that  into  which  he  entered.     In  the  application  of  this 
rule,  it  is  not  only  well  settled  that  a  material  alteration  of  a  promis- 
sory note  by  the  payee  or  holder  discharges  the  maker,  even  as  against 
a  subsequent  innocent  indorsee  for  value,  but  it  has  been  adjudged  by 
this  court  that  a  material  alteration  of  a  note,  before  its  delivery  to 

«8  The  arguments  of  counsel  are  omitted. 


518  DEFENSES  OF   SLUETY   AGAINST   CREDITOR.  (Part    3 

llie  payee,  by  one  of  two  joint  makers,  without  the  consent  of  the 
other,  makes  it  void  as  to  him,  and  tliat  any  change  which  aUers  the 
defendant's  contract,  whether  increasing  or  diminishing  his  hability, 
is  material,  and  therefore  the  substitution  of  a  later  date,  delaying 
the  time  of  payment,  is  a  material  alteration.  Wood  v.  Steele,  6  Wall. 
SO,  18  L.  Ed.  725.  See,  also,  Angle  v.  Northwestern  Insurance  Co., 
1»3  U.  S.  330,  23  L.  Ed.  55G ;  Greenfield  Savings  Bank  v.  Stowell,  123 
Mass.  19G,  25  Am.  Rep.  G7,  and  cases  there  cited. 

The  present  case  is  not  one  of  a  changein  tlie  terms  of  the  contract, 
.is^to  amount  or  t]me~or"paYIiieiitT"bu"f  simply  of  ^e  eFect  ot  ad^mg 
another  signature,  without  otherwise  altering  or  defacing-  the  ncte. 
An  erasure  of  the  name  of  one  of  several  obligors  is  a  material  altera- 
tion of  the  contract  of  the  others,  because  it  increases  the  amount 
which  each  of  them  may  be  held  to  contribute.  Martin  v.  Thomas,  24 
How.  315,  IG  L.  Ed.  G89 ;  Smith  v.  United  States,  2  Wall.  219,  17 
L.  Ed.  788.  And  the  addition  of  a  new  person  as  a  principal  maker  of 
a  promissory  note,  rendering  all  the  promisors  apparently  jointly  and 
equally  liable,  not  only  to  the  holder,  but  also  as  between  themselves, 
and  so  far  tending  to  lessen  the  ultimate  liability  of  the  original  maker 
or  makers,  has  been  held  in  the  courts  of  some  of  the  states  to  be  a 
material  alteration.  Shipp  v.  Suggett,  9  B.  Mon.  (Ky.)  5;  Henry  v. 
Coats,  17  Ind.  161;  Wallace  v.  Jewell,  21  Ohio  St.  163,  8  Am.  Rep. 
48;  Hamilton  v.  Hooper,  46  Iowa,  515,  26  Am.  Rep.  161.  How- 
ever that  may  be,  yet  where  the  signature  added,  although  in  form 
that  of  a  joint  promisor,~is  in  fact  that  of  a  surety  or  guarantor  only, 
the  original  maker  is,  as  between  himself  and  the  surety,  exclusively 
liable  for  the  whole  amount,  and  his  ultimate  liability  to  pay  Jthat 
amount  is  neither  increased  nor  diminished;  and,  accordmgTo  the 
general  current  of  the  American  authorities,  the  addition"  ot  the  name 
of  a  surety,  whether  before  or  after  the  first  negotiation  of  the  liole. 
is  not  such  an  alteration  as  discharges  the  maker.  Montgomery  Rail- 
road v.  Hurst,  9  Ala.  513,  518;  Stone  v.  White,  8  Gray  (Mass.)  589  ; 
McCaughey  v.  Smith,  27  N.  Y.  39 ;  Brownell  v.  Winnie,  29  N.  Y. 
400,  86  Am.  Dec.  314 ;  Wallace  v.  Jewell,  21  Ohio  St.  163,  172,  8  Am. 
Rep.  48 ;  Miller  v.  Finley,  26  Mich.  249,  12  Am.  Rep.  306. 
I  .  f^      The_English  cases  afford  no  sufficient  ground  for  a  different  con- 

clusion. In  the  latest  decision  at  law,  indeed,  Lord^Campbell  anld 
Justices  Erie,  Wightman  and  Crompton  held  that  the  signing  of  >i 
note  by  an  additional  surety,  without  the  consent  of  the  original 
makers,  prevented  the  maintenance  of  an  action  on  the  note  against 
them.  Gardner  v.  Walsh,  5  El.  &  Bl.  83.  But  in  an  earlier  decision, 
of  perhaps  equal  weight.  Lord  Denman  and  Justices  Littledale,  Pat- 
teson  and  Coleridge  held  that  in  such  a  case  the  addition  did  not  avoid 
the  note,  or  prevent  the  original  surety,  on  paying  the  note,  from  re- 
covering of  the  principal  maker  the  amount  paid.  Catton  v.  Simpson, 
8  Ad.  &  El.  136,  3  Nev.  &  Per.  248.  See,  also,  Gilbert  on  Evidence, 
109.    And  in  a  later  case,  in  the  Court  of  Chancery,  upon  an  appeal 


Ch.  8)  TRANSACTIONS   OP   CREDITOR  WITH   PRINCIPAI-.  519 

in  bankruptcy,  Lords  Justices  Knight-Bruce  and  Turner  held  that  the 
addition  of  a  surety  was  not  a  material  alteration  of  the  original  con- 
tract.   Ex  parte  Yates,  2  De  G.  &  Jon.  191,  27  Law  Journal  (N.  S.) 

1  he  case  at  bar,  being  on  the  equity  side  of  the  court,  is  to  be  dealt 
with  according  to  the  actual  relation  of  the  parties  to  the  transaction, 
which  was  as  follows :  The  note,  though  in  form  made  by  the  husband 
to  his  partner,  Krueger,  and  indorsed  by  Krueger,  was  without  con- 
sideration as  between  them,  and  was  in  fact  signed  by  both  of  them 
for  the  benefit  of  the  partnership.  The  mortgage  of  the  wife's  land 
was  executed  and  delivered  by  her  and  her  husband  to  Krueger  for 
the  same  purpose.  The  name  of  the  wife  was  signed  to  the  note  by 
Krueger,  or  by  his  procurement,  before  it  was  negotiated  for  value. 
The  plaintiff  received  the  note  and  mortgage  from  Krueger,  and  ad- 
vanced his  money  upon  the  security  thereof,  in  good  faith  and  in  ig- 
norance that  the  note  had  been  altered.  If  the  wife  had  herself  signed 
the  note,  she  would  have  been  an  accommodation  maker,  and,  in  equity 
at_leasL  a~s.urety  for  the  other  signers;  and  neither  the  liability  of 
the  husband  as  maker  of  the  note,  nor  the  effect  of  the  mortgage  ex- 
ecuted by  the  wife,  as  well  as  by  the  husband,  to  secure  the  payment 
of^ that  note,  would  have  been  materially  altered  by  the  addition  of 
her  signature..  There  appears  to  us,  therefore,  to  be  no  reason  why 
the  plaintiff,  as  indorsee  of  the  note,  seeking  no  decree  against  the 
wife  personally,  should  not  enforce  the  note  against  the  husband  and 
the  mortgage  against  the  land  of  the  wife.  /^  ^ 

This  suit,  being  between  citizens  of  different  states,  and  founded  r-^'Q^'M^ 
on  a  negotiable  promissory  note,  the  indorsement  of  which  to  the 
plaintiff  carried  with  it  as  an  incident,  in  equity,  the  mortgage  made 
to  secure  its  payment,  was  within  the  jurisdiction  of  the  Circuit  Court, 
under  Act  March  3,  1875,  c.  137,  18  Stat.  470  (U.  S.  Comp.  St.  1901, 
p.  508),  although  Krueger,  the  payee  and  mortgagee,  could  not  have 
maintained  a  suit  in  that  court.  Sheldon  v.  Sill,  8  How.  441,  450,  12 
L.Ed.  1147;  Tredway  v.  Sanger,  107  U.  S.  323,  2  Sup.  Ct.  691,  27 
L.  Ed.  582. 

Decree  reversed.f 


ZEIGLER  V.  HALLAHAN. 

(Circuit  Court  of  Appeals  of  the  United  States,  Third  Circuit,  1904.     131  Fed. 

205,  06  C.  C.  A.  1.) 

In  error  to  the  Circuit  Court  of  the  United  States  for  the  Eastern 
District  of  Pennsylvania. 

Before  Acheson,  Dallas,  and  Gray,  Circuit  Judges. 

t  See  note  in  16  H.  L.  R.  511,  on  "Alteration  of  Principal  Obligation  or 
Variation  or  Risk  as  Defense  to  Surety." 


520  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

Dallas,  Circuit  Judge.  The  decision  of  the  court  below  was  based 
upon  a  case  stated'"  as  follows : 

"The  4ilaiii till,  Aiarx^ejen  Zeigler,  on  April  2,  1901,  made,  ex- 
ecuted, and  delivered  to  one  Moses  H.  Lichten  an  indenture  of  lease 
for  the  prejni;;es  known  and  numbered  as  No.  50  North  Eighth  street, 
in  the  city  of  Philadelphia,  of  which  indenture  a  copy  is  hereto  at-r 
tachcd,  marked  'Exhibit  A,'  and  made  a  part  hereof,  and  the  defend- 
ant,  Peter  T.  Hallahan,  by  writing,  became  surety  for  the  fulfillment 
of  air  the  obligations  of  said  Moses  H.  Licjiten  under  and  by  virtue 
of  said  indenture  of  lease;  said  contract  of  suretyship  being  endorsed 
on  Exhibit  A.  On  or  about  April  29,  VJOl,  an  agreement  supplemental 
to  said  indenture  of  lease,  wItTiout  consultation  with  or  appTUY^jjtAhe 
defendant,  was  executed  by  and  between  the  plaintiff  and  the  said 
Moses  H.  Lichten,  as  follows;  ' 

"  'It  is  hereby  mutually  agreed  between  M.  Helen  Zeigler  and  Moses 
H.  Lichten,  the  parties  to  the  foregoing  indenture  of  lease,  that  the 
following  shall  become  part  and  parcel  thereof  with  like  effect,  as  if 
the  same  were  embodied  in  the  foregoing  agreement. 

"  'It  is  hereby  further  covenanted  and  agreed  in  the  event_of  the 
tot^l  or^artial  destruction  of  the  within  demised  premises,  rendermg 
the  same  untenantable  by  reason  of  fire  or  other  casualty7  this  lease 
shallfrom  such'  time  become  absolutely  null  and  void  and  the  within 
lease  shall  be  surrendered  by  the  lessee  to  the  lessor. 

"  'In  witness  whereof  the  parties  hereunto  set  their  hands  and  seals 
this  29th  day  of  April,  A.  D.  1901. 

'"Mary  Helen  Zeigler.     [Seal.] 
" 'Moses  H.  Lichten.  [Seal.]' 

"Said  Moses  H.  Lichten  violated  the  covenants  and  conditions  of 
^aid  lease,  by  subletting  the  premises  thereby  let  and  demised,  and  by 
assigning  said  lease  without  the  consent  of  the  plaintiff,  and  by  cut- 
ting a  passageway  through  the  south  party  wall  of  said  premises  into 
the  adjoining  premises,  in  consequence  whereof,  on  January  4,  1902, 
the  plaintiff,  by  virtue  of  the  warrant  of  attorney  to  confess  judgment 
in  ejectment  contained  in  said  lease,  entered  a  judgment  in  ejectment 
against  said  Moses  H.  Lichten  in  the  court  of  common  pleas.  No.  3, 
for  the  county  of  Philadelphia,  of  December  term,  1901.  No.  2,180, 
and  issued  a  writ  of  habere  facias  possessionem  against  Moses  H. 
Lichten  for  the  recovery  of  possession  of  said  premises.  *  *  *  Qn 
April  30,  1902,  the  plaintiff  issued  an  alias  writ  of  habere  facias  pos- 
sessionem under  the  aforesaid  judgment  in  ejectment,  and,  by  virtue 
of  said  writ,  recovered  possession  of  said  premises,  which'  until  said 
date  remained  in  the  possession  of  said  Lichten.     *    *    *" 

The  contract  of  suretyship  was  as  follows: 

"For  the  valuable  consideration  heretofore  received,  I,   Peter  T 
Hallahan,  of  the  city  of  Philadelphia,  for  myself,  my  heirs',  executors 

•  »  The  case  stated  has  been  greatly  abridged. 


Ch.  8)  TRANSACTIONS  OP  CREDITOR  WITH   PRINCIPAL.  521 

and  administrators  do  hereby  covenant  and  agree  to  and  with  the 
above  named  lessor,  her  heirs  and  assigns,  that  if  the  foregoing  agree- 
ment entered  into  by  and  between  the  lessor  and  the  lessee  therein 
named,  shall  not  be  well  and  faithfully  performed  on  the  part  of  the 
lessee  for  and  during  the  term  of  three  years,  eight  months  and  fifteen 
days  from  the  first  day  of  May,  A.  D.  1901,  that  then  the  said 
agreement  shall  be  promptly  performed  by  me  and  that  I  will  pay  all 
damages  arising  of  any  breach  of  said  agreement.  And,  further,  that 
if  the  said  lessee,  his  heirs,  executors  or  administrators  or  any  of  them, 
shall  fail  to  pay  the  rent  reserved  in  the  aforesaid  agreement  punctual- 
ly, at  the  days  and  times  the  same  shall  fall  due,  that  then  immediate  re- 
course may  be  had  and  made  to  me  by  demand,  suit  or  otherwise.  *  *  * 

"And  also  I  do  further  agree  that  my  liability  under  the  aforesaid 
agreement  of  Lease  between  the  lessor  and  the  lessee  shall  continue 
according  to  the  terms  thereof  so  long  as  the  liability  of  the  said  lessee 
shall  continue  for  and  during  the  term  above  mentioned. 

"Witness  my  hand  and  seal  the  second  day  of  April,  A.  D.  1901. 

"H.  F.  Turner.  P.  T.  Hallahan.     [L.  S.]" 

The  Circuit  Court  entered  judgment  for  the  defendant,  and,  to 
maintain  the  averment  that  the  judgment  should  have  been  for  the 
plaintiff,  two  propositions  have  been  submitted  to  this  court,  which 
will  be  separately  considered :  V,^        i^  .  ._ 

1.  if  is  said  that  "the  defendant  in  error  was  not  only  not  prejudiced   ^  '^v**^**rv>lfr- 
or  damaged,  but  could  not  possibly  have  been  prejudiced  or  damaged, 
by  the  execution  or  operation  of  the  supplemental  agreement."     This 
assertion  is  not  unquestionable,  but  it  need  not  be  questioned,  for,  in 
our  opinion,  the  true  subject  of  inquiry  in  such  a  case  as  this  is  not  as 
to  whether  the  change  made   in  the  principal   contract  without   the 
suTety's  assent  was  or  could  be  prejudicial  to  him,  but  is  as  to  whether 
it^effected  a  material  alteration  of  the  agreement  to  which  his  under- 
talang  of  suretyship  related.     If  it  did,  as  in  this^asejs  indubitable, 
He"  was  relieved  from  liability,  and  for  the  obvious  reason  that  the  j 
identical  contract  to  which  alone  his  obligation   attached  had  ceased . 
tcrexist.  ^  /S^t^^.*^  l^ 

IrTBonar  v.  McDonald,  3  H.  L.  Cas.  226-238,  the  rule  was  stated 
to  be  "that  any  variance  in  the  agreement  to  which  the  surety  has 
subscribed,  which  is  made  without  the  surety's  knowledge  or  consent, 
which  may  prejudice  him,  or  which  may  amount  to  a  substitution  of  a 
new  agreement  for  a  former  agreement,  even  though  the  original 
agreement  may,  notwithstanding  such  variance,  be  substantially  per- 
formed, will  discharge  the  surety." 

In  Reese  v.  U.  S.,  9  Wall.  14,  19  L.  Ed.  541,  Reese  was  surety  in  a 
recognizance  conditioned  that  one  Limantour  "should  personally  ap- 
pear at  the  next  regular  term  of  the  circuit  court  to  be  held  in  the 
city  of  San  Francisco,  and  at  any  subsequent  term  to  be  thereafter 
held  in  that  city."  At  the  next  subsequent  term  of  that  court  the  dis- 
trict attorney  moved  for  and  obtained  a   postponement  of    Liman- 


522  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

tour's  trial,  to  which  postponement  he  assented.  The  court  below  held 
that  in  this  there  was  no  ground  for  exemption  of  the  bail  from  lia- 
bility on  the  recognizance ;  but  the  Supreme  Court,  in  an  opinion  deliv- 
ered by  Mr.  Justice  Field,  reversing  the  judgment,  said:  "The  pro- 
vision lor  his  appearance  at  any  subsequent  term  had  reference  to 
such  subsequent  term  as  might  follow  in  regular  succession  in  the 
course  of  business  of  the  court.     *     *     *     The  stipulation  to  postpone 

*  *     *     was   inconsistent   with   the   condition   of   the   recognizance. 

*  *  *  The  stipulation,  in  other  words,  superseded  the  condition  of 
the  recognizance.  *  ♦  *  The  stipulation,  made  without  their  con- 
sent or  knowledge,  between  the  principal  and  the  government,  has 
changed  the  character  of  the  obligation.  It  has  released  him  from  the 
obligation  with  which  they  covenanted  he  should  comply,  and  sub- 
stituted another  in  its  place.  *  *  *  And  the  law  upon  these  mat- 
ters is  perfectly  well  settled.  Any  change  in  the  contract  on  which  they 
are  sureties,  made  by  the  principal  parties  to  it  v.ithout  their  assent, 
<lischarges  them,  and  for  obvious  reasons.  When  the  change  is  made 
they  are  not  bound  by  the  contract  in  its  original  form,  for  that  has 
ceased  to  exist.  They  are  not  bound  by  the  contract  in  its  altered  form, 
for  to  that  they  have  never  absented.  "Nor  does  it  matter  hovsi-JxiiuaJ 
the  change,  or  even  that  it  may  be  of  advantage  to  the  sureties.  They 
have  a  right  to  stand  upon  the  very  terms  of  their  undertaking." 

In  Cross  v.  Allen,  141  U.  S.  537,  12  Sup.  Ct.  67,  35  L.  Ed.  843, 
the  court  stated  the  rule,  of  which  it  was  "not  unmindful,"  to  be  "that 
any  material  change  in  the  contract  on  which  he  is  a  surety,  made  by 
the  principal  parties  to  it.  without  his  assent,  discharges  the  surety, 
even  though  he  may  be  benefited  by  such  change  ;  the  reason  being  that 
he  has  not  assented  to  the  contract  in  its  altered  form,  and  has  a 
right  to  stand  upon  the  very  terms  of  his  undertaking." 

There  is  nothing  in  the  opinion  of  the  Supreme  Court  in  Roach  v. 
Summers,  20  Wall.  1G9,  22  L.  Ed.  252,  which,  when  read  with  its 
context,  does  not  appear  to  be  in  harmony  with  the  other  deliver- 
ances of  that  court.  It  was  there  said,  it  is  true,  that  a  certain  ar- 
rangement "could  not  work  a  discharge  of  the  sureties,  unless  it  placed 
them  in  a  different  position  from  that  which  they  occupied  before  it 
was  made";  but  that,  in  saying  this,  it  was  understood  that  the  ar- 
rangement referred  to  would  have  placed  them  in  a  different  position 
if  it  had  changed  the  principal  contract,  is  plainly  shown  by  the  obser- 
vation which  almost  immediately  follows,  that  "it  [the  arrangement] 
was  no  alteration  of  the  original  contract,  and  had  no  effect  ifpon  it." 

Th^  decisions  of  the  Pennsylvania  courts  are  in  accord  with  those 
of^tlie  Supreme  Court  of  the  United  State?,  The  rule  in  that  state 
was  declared,  in  Nesbitt  v.  Turner,  155  Pa.  431,  26  Atl.  750,  to  be: 
•'W  hen  the  principal  party  modifies  his  contract,  it  is  fata!  to  its 
validity,  as  against  the  surety,  whose  assent  has  not  been  obtained  even 
if  It  be  for  his  benefit,  or  if  it  do  him  no  harm."     And  in  Bensinger 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  523 

V,  Wren,  100  Pa.  505,  it  was  said  that :  "Any  alteration  of  a  contract 
by  the  principal  parties,  without  the  assent  of  the  surety,  is  fatal  to  its 
validity,  as  against  the  surety.  Even  if  he  sustains  no  injury  by  the 
change,  or  if  it  be  for  his  benefit,  he  has  a  right  to  stand  upon  the  very 
terms  of  his  obligation,  and  is  bound  no  further.  Any  unauthorized 
variation  in  an  agreement  which  a  surety  has  signed,  that  may  prej- 
udice him,  or  may  substitute  an  agreement  different  from  that  which 
he  came  into,  discharges  him.  Miller  v.  Stewart,  9  Wheat.  680  [6  L. 
Ed.  189]  ;   Smith  v.  United  States,  2  Wall.  219  [17  L.  Ed.  788]."  V 

2.  It  Jia^_bee.n, ..However,  further  contended  that  "the  contract  of  ^  ^'^•*^^^t^<>^ 
suretyship  shows  on  its  face  that  the  general  law,  by  which  such  con-  '«'  '^^^^^  ^  pi 
tracts  are  to  be  construed  strictly  in  favor  of  the  surety,  has  no  appli-  n  ^~»'>'  -A 
cation  to  this  case";  and  Guaranty  Co.  v.  Pressed  Brick  Co.,  191  U. 
S.  416,  24  Sup.  Ct.  142,  48  L.  Ed.  242,  has  been  cited  in  support  of  this 
contention.  But  it  does  not  sustain  it.  The  court  there  said  that  it 
had  been  "argued  with  much  persuasiveness  that  this  rule  of  strictis- 
simi  juris,  though  universally  accepted  as  applicable  to  the  undertak- 
ing of  an  ordinary  guarantor,  who  is  usually  moved  to  lend  his  signa- 
ture by  motives  of  friendship  or  expectation  of  reciprocity,  and  without 
pecuniary  considerations,  has  no  application  to  the  guaranty  companies, 
recently  created,  which  undertake,  upon  the  payment  of  a  stipulated 
compensation,  and  as  a  strictly  business  enterprise,  to  indemnify  or  in- 
sure the  obligee  in  the  bond  against  any  failure  of  the  obligor  to  per- 
form his  contract."  But  the  court  declined  to  express  an  opinion  upon 
this  subject,  and  remarked  that:  "It  is  at  least  open  to  doubt,  however, 
whether  any  relaxation  of  the  rule  should  be  permitted,  as  between  the 
obligee  and  the  guarantor,  which  may  have  signed  the  guaranty  in 
reliance  upon  the  rule  of  strictissimi  juris,  and  with  the  understanding 
that  it  is  entitled  to  the  ordinary  protection  accorded  to  guarantors 
against  changes  in  the  contract  or  extensions  of  the  time  of  payment." 

Hence  it  is  evident  that  it  was  not  really  decided  that  the  rule  in 
question  should  be  relaxed,  even  as  against  a  company  which,  as  matter 
of  business  and  for  compensation,  assumes  obligations  like  that  upon 
which  this  action  was  founded ;  and  we  qre  n"^  preparpH  tn  <^^y  that 
such  companies  are  any  less  entitled  to  rely  upon  the  protection  which 
that  rule  affords  than  is  the  "ordinary  guarantor,"  who  lends  his  sig'na- 
ture  without  pecuniary  consideration.  But  even  if  guaranty  companies,. 
were  excluded  from  that  protection,  it  would  not  follow  that  it  should 
be  denied  to  the  surety  in  this  case.^  He  certainly  is  not  a  guaranty 
company,  nor  does  it  appear  that  he  undertakes  as  a  matter  of  business 
toTecome  surety;  and  there  is  nothing  to  indicate  that  in  this  par- 
ticular instance  he  received  any  compensation  for  doing  so,  unless  it 
be"  the  formal  mention  of  "valuable  consideration"  in  the  instrument 
itself,  and  this,  in  our  opinion,  should  not,  for  the  present  purpose,  be 
regarded  as  proof  that  he  was  in  fact  compensated.  Clearly,  as  it 
seems  to  us,  the  question  discussed,  but  not  decided,  in  Guaranty  Co. 


524  DEFENSES   OF   SURETY   AGAINST   CREDITOR.  (Part    3 

V.  Brick  Co.,  has  no  application  to  such  a  state  of  facts  as  is  disclosed 
by  the  record  before  us. 

The  judgment  of  the  Circuit  Court  is  affirmed.*"* 


BETHUNE.  Plaintiff  in  Error,  v.  DOZIER,  Defendant  in  Error. 

(Supreme  Court  of  Georgia,  1S51.    10  Ga.  235.) 

Debt,  in  ftuscogee  Superior  Court." 

Lumpkin,  J.  Was Jhg_Ciicuit -Court  rigJiUn-hoIdlng  that  tho  Terrys 
I.  ■  '  '  •     '  '    ■  -  res  of  pine  land,  in  lieu  of  the  800  sti£ulated.by 

1  for  the  use  of  the  sawmill,  without -discharging 
Iklhune,  tlic  surety.' 

1.  No  principle  of  law  is  better  settled  at  this  day  than  that  the 
"    «"*  undertaking  of  the  surety,  being  one  stricti  juris,  he  cannot,  either  at 

law  or  in  equity,  be  bound  farther  or  otherwise  than  he  is  by  the 
very  terms  of  his  contract,  and  that,  if  the  parties  to  the  original  con- 
tract think  proper  to  change  the  terms  of  it  without  the  consent  of 
the  surety  (which  is  not  disputed  they  have  a  right  to  do),  the  surety 
is  discharged. 

He  ■  •  "  ^  ^und  by  the  old  contract,  for  that  has  been  abrogated  by 
the_i.  Itct  is  he  bcmnd  by  the  new  contract,  because  lie  is  no 

partv  to  it ;  neither  can  it  be  split  into  parts,  so  as  to  be  his  contract  to 
a  certaTn  extent  and  not  for  the  residue.  He  is  either  bound  in 
toto  or  not  at  all. 

Neither  is  it  of  any  consequence  that  the  alteration  in  the  contract 
is  trivial,  nor  even  that  it  is  for  the  advantage  of  the  surety.  *'Non' 
h.Tc  in  fcedera.veni"  is  an  answer  in  the  mouth  of  the  surety,  from 
which  the  obligee  can  never  extricate  his  case,  however  innocently, 
or  by  whatever  kind  intentions  to  all  parties,  he  may  have  been  ac- 
tuated. Mackay  and  McDonald  v.  Dodge  and  Mackay,  survivors, 
etc,  5  Ala.  388;  Walsh  v.  Bailie,  10  Johns.  (N.  Y.)  ISO;  Leavitt  v. 
Savage,  16  Me.  72;    Bank  of  Washington  v.  Barrington  and  Others, 

2  Pen.  &  W.  (Pa.)  27;  Miller  v.  Stewart,  4  Wash.  C.  C.  26,  Fed. 
Cas.  No.  9,591 ;  United  States  v.  Kirkpatrick,  9  Wheat.  720,  6  L.  Ed. 
199;  United  States  v.  Vanzandt,  11  Wheat.  184,  6  L.  Ed.  448; 
Whctchcr  v.  Hall,  5  B.  &  C.  269  (11  Eng.  Com.  Law,  225) ;  Herd  v. 
Nadh.-im.  1  East.  619;  Campbell  v.  French,  2  H.  Black,  163,  6  T.  R. 
200;  Barker  v.  Barker,  1  T.  R.  289;  Strange  v.  Lee,  3  East,  484; 
Myers  v.  Edge,  7  T.  R.  254. 

«•  In  many  cb5««  the  decisions  depend  npon  ascertaining  bv  Interpretation 
whether  a  stlpalatlon  is  a  material  part  of  the  contract  or  is  m'erHy  HKiianiilaL 
S4^  Evans  t.  Earle.  10  Ex.  1  (1854).  - 

«»  The  stalemtnt  of  facts  is  omitted. 


Ch.  8)  TRANSACTIONS   OF   CREDITOR   WITH   PRINCIPAL.  525 

I  will  refer  briefly  to  the  principles  established  in  several  of  these 
leading  cases,  and  apply  them  to  the  one  before  the  court. 

In  Miller  v.  Stewart,  Mr.  Justice  Washington  stated,  by  way  of 
illustration,  that  if  the  obligee,  by  a  subsequent  agreement  with  his 
debtor,  the  principal  obligor,  agree  with  him  to  enlarge  the  time  stipu- 
lated in  the  bond  for  payment  or  performance,  even  for  a  day,  and 
upon  the  terms  of  the  principal  paying  up  a  part  of  the  debt  immedi- 
ately and  giving  additional  security,  both  of  which  conditions  are  man- 
ifestly advantageous  to  the  surety,  by  diminishing  his  responsibility, 
still  if  such  agreement  received  not  the  sanction  of  the  surety,  he  is 
discharged,  upon  the  ground  that,  the  terms  of  the  contract  to  which 
he  was  bound  being  changed  without  his  consent,  it  is  a  different  con- 
tract from  that  which  he  engaged  to  guaranty,  and  consequently  not 
his  contract. 

In  Mackay  and  ]\IcDonald  v.  Dodge  and  Mackay,  Survivors,  etc., 
the  Supreme  Court  of  Alabama  say:  "It  is  not,  however,  necessary 
that  it  should  appear  that  the  surety  has  been  injured  necessarily  by 
the  alteration,  nor  would  it  make  any  difference  if  it  was  evident  he 
was  to  be  benefited  by  it.  It  is  a  sufficient  answer  that  it  is  not  the 
contract  for  the  performance  of  which  he  was  surety." 

The  case  of  Whetcher  v.  Hall  affords  a  striking  example  of  the 
tenacity  with  which  this  rule  is  adhered  to.  The  facts  were  that  the 
defendant  was  surety  for  another  to  the  plaintiff,  for  the  milking  of  30 
cows,  at  f7.  10s.  each,  per  annum.  Subsequently  an  agreement  was 
entered  into,  without  the  consent  of  the  surety,  that  the  hirer  was  to 
have  28  cows  for  one-half  of  the  year,  and  32  for  the  remainder.  The 
court  held  that  it  was  a  new  bargain,  which  was  not  binding  on  the 
surety,  who  had  a  right  to  insist  on  a  literal  performance  of  the  con- 
tract; that  there  might  be  but  little  difference  between  the  two  con- 
tracts, but  that  the  true  question  was  whether  the  contract  sought  to  be 
enforced  against  the  surety  was  the  one  for  the  performance  of  which 
he  was  bound. 

Judge  Ormond  thinks  that  this  case  may  have  been  pushed  to  the 
very  verge  of  propriety.  He  nevertheless  very  properly  adds  that  it 
places  in  a  strong  point  of  view  the  inflexibility  of  purpose  with  which 
the  rule  that  no  change  shall  be  made  in  the  terms  or  mode  of  per- 
formance of  a  contract,  without  consent  of  the  surety,  is  adhered  to  by 
the  courts. 

But,  while  the  learned  judge  who  decided  this  case  concedes  the  rule, 
he  holds  that  it  is  in  the  power  of  the  principal  to  accept  of  something 
less  than  was  stipulated  to  be  done  by  the  other  party,  without  con- 
sulting the  surety,  and  that  this  is  in  fact  no  new  agreement,  but  a 
continuance  of  the  original  bargain. 

But  we  hold  it  to  be  the  duty  of  the  obligee  to  aver  and  prove  the 
performance,  not  substantially,  but  literally,  of  the  original  agreement. 
It  is  a  condition  precedent  to  his  right  of  recovery.    But  the  court  held 


)^  Zy-Ci^U'.^J^.^ 


52G  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

Otherwise,  both  by  its  decision  upon  the  demurrer  to  the  declaration 
and  its  charge  to  the  jury. 

2.  If  J  covenant  with  an  individual  that,  in  consideratio-  *^'^'^'-  he 
will  lease  Ine  SOO  acres  of  land,  to  be  used  for  cutting  stocks  ly 
a  sawmill,  I  will  allow  him  so  much  lumber  as  rent^  and  I  sub:aequently 
acc?pT~of  a  less  quantity,  i.  e.  GSO  acres,  is  not  this  necessarily  a  new 
contract?  And  does  it  require  any  other  stipulation  in  order  that  it 
sKlItl  talce  the  place  of  the  original  bargain  ?  Is  it  not  substituted  by 
legal  implication?  If  the  principal  may  accept  680  acres  in  the  present 
case,  why  not  100  or  any  other  quantity?  And  if  he  could  alter  the 
contract,  by  waiving  the  fulfillment  in  this  particular,  why  not  in  any 
other?  Shall  it  be  left  to  the  other  parties,  or  even  to  the  courts,  to 
determine  whether  the  alteration  is  to  the  benefit  or  prejudice  of  the 
surety?  Better,  in  this  state  especially,  where  everything  has  been 
done  which  the  ingenuity  of  the  Legislature  could  devise  to  protect 
sureties,  to  adhere  rigidly  to  the  rule  that  w^here  any  alteration  is 
made  in  the  contract,  whether  by  a  new  agreement,  either  express  or 
implied,  and  although  the  situation  of  the  surety  may  hot  therdji^y  Jie 
made  worse,  that  still  he  shall  be  discharged. 

Ideo  consideratum  est,  that  the  judgment  below  be  reversed. 

3.  As  to  the  question  of  notice,  we  think  the  law  was  properly 
submitted  to  the  jury.*" 


HARPER  V.  NATIONAL  LIFE  IXS.  CO.  OF  MONT- 
PELIER,  VT. 

(Circuit  Court  of  Appeal.s  of  the  United  States,  Third  Circuit,  1893.    17  U.  S. 
A  pp.  4S.  5G  Fed.  2S1,  5  C.  C.  A.  505.) 

Error  to  the  Circuit  Court  of  the  United  States  for  the  Eastern 
District  of  Pennsylvania. 

Wales,  District  Judge,  delivered  the  opinion  of  the  court. 
^  This  was  an  action,  brought  in  the  Circuit  Court  of  the  United 
States  for  the  Eastern  District  of  Pennsylvania,  against  William  V. 
Harper  as  principal,  and  Alexander  Harper  and  Benjamin  W.  Blake- 
ley,  as  sureties  of  said  WilHam  V.  Harper,  on  their  joint  and  several 
lK.nd  in  the  penal  sum  of  $20,000,  dated  November  19,  1888,  and  given 

♦-  '     rage  V.  Krekey,  137  .N.  T.  307.  33  N.  E.  sil,  21  L    R    \    409  33 

Am    -  T.'H  (1S:«:H),  ante,  p.  S2.                                                           ■  -  ■         , 

l'-  is  disoharKitl  l.y  a  material  alteration  of  the  contract   he  mav 

ne\.  waive  the  alt.nition,  and  then  will  t>ecome  houn-cT.     lu  some  jJ- 

^':%.     ,.  ^,     ••waiver  n.u^t  \f  supported  by  a  fresh  conpia"eraUon.—TVarren 

•  ,^-^V^s Jf-"-"^^^-  '^  Ky.  1  (1879).    But  in  others  no  new  consideration  is  r^ 

quir(«,l.  Felton  v.  I'rescott.  13  Iowa.  567  (18G2)                             ^lueiauon^is  re- 

B^'       '       '  '^  lit^t^TTTn  'S''  '■"''""°  '-'  ^  newagreement, 

open^Ung  to  dlsch;r^^J;r'::eS:i  ff  K'g^.^"  ^"^^^^--^^SS^t. 


Ch,8)  TRANSACTIONS   OF   CREDITOR  WITH   PRINCIPAL.  52T 

to  the  National  Life  Insurance  Company  of  Montpelier,  Vt.  Process 
was  served  upon  the  sureties  only,  and  there  was  no  appearance  for 
William  V.  Hal-per;  '"Tlierrecitals  and  condition  of  the  bond  are  as 
follows : 

"Whereas,  in  and  by  a  certain  agreement  in  writing  by  and  be- 
tween the  said  National  Life  Insurance  Company  and  said  William  V. 
Harper,  bearing  date  the  28th  day  of  July,  1888,  said  Harper  was  ap- 
pointed the  general  agent  of  said  company  for  the  states  of  Maryland, 
Virginia,  Delaware  and  the  District  of  Columbia,  and  did  agree  to 
perform  as  such  general  agent  for  said  company  certain  duties  in  the 
said  agreement  specified; 

"And  whereas,  the  said  National  Life  Insurance  Company  is  also 
about  to  advance  the  sum  of  fifteen  thousand  dollars  as  a  special  loan 
to  the  said  William  V.  Harper,  at  the  request  of  all  the  parties  hereto 
and  upon  his  promissory  note  for  that  amount,  dated  November  19, 
1888: 

"Now  the  condition  of  this  obligation  is  such  that  if  said  Harper 
shall  and  do  well  and  truly  comply  with  all  the  terms,  conditions  and 
covenants  contained  in  said  agreement  on  the  part  of  said  Harper  to 
be  kept,  done  and  performed,  and  shall  account  for  and  pay  over  to 
said  company,  when  and  as  required  by  said  company,  all  commissions 
arising  to  him  the  said  Harper  under  said  contract,  save  only  the  sum 
of  two  hundred  and  fifty  dollars  ($250)  per  month,  and  shall  also  pay 
over  when  and  as  received  by  him  the  whole  renewal  interest  due  said 
Harper  by  the  Equitable  Life  Assurance  Society  of  the  United  States, 
(it  being  expressly  guaranteed  and  agreed  by  said  Harper  that  the 
money  so  paid  over  by  him  in  each  month  shall  not  be  less  than  the 
sum  6f  five  hundred  [$500]  dollars),  and  shall  also  pay  or  cause  to  be 
paid  to  said  company  all  balance  of  indebtedness  that  may  be  due  and 
owing  to  said  company  by  said  Harper  upon  any  termination  of  said 
above  recited  agreement,  or  upon  said  promissory  note  of  fifteen' 
thousand  dollars  as  hereinabove  recited,  or  for  any  other  indebtedness 
between  said  parties,  and  shall  and  will  in  all  respects  save,  indemnify 
and  hold  harmless  said  company  of,  from  and  against  any  and  all  loss, 
cost,  damage  or  expense  by  reason  or  on  account  of  any  default  or 
failure  on  the  part  of  said  Harper  so  fully  to  perform  all  the  conditions 
hereof  without  fraud,  or  further  delay,  then  this  obhgation  to  be  void ; 
otherwise  to  be  and  remain  in  full  force  and  effect." 

At  the  trial  it  was  proved  that  William  V.  Harper,  the  principal  in 
thebond.  became  indebted  to-  the  insurance  company^  jpn^  a  shortage 
in  his  accounts  as  its  agent  and  the  non-payment  of  his  promrssbry 
note,  in  a  sum  of  not  less  than  $30,000.  This  indebtedness  was  not 
denied,  but  the  sureties  claimed  tliat  they  "vv^ere  not  liable  for  the-de- 
fault  of  their  principal  because  of  certain  acts  done  by  the  insuraniie 
company  without  their  consent,  subsequent  to  the  date  of  the  bond: 
First^^n  changing  the  rates  of  commission  to  be  allowed  to  William 
V.  Harper,  as  provided  for  in  the  agreement  of  July  28,  1888;   and. 


528  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

s<jcond,  in  giving  an  extension  of  time  to  the  said  Harper  for  the  pay; 
nient  of  his  indetTtedness  to  the  company.  The  learned  judge  of  the 
Circuit  Court  charged  the  jury  that  "the  evidence  did  not  sustain 
cither  branch  of  the  defense,  and  instructed  them  to  find  a  verdict 
for  the  plaintiff.  Eleven  assignments  of  error  have  been  filed,  but  all 
of  them  may  be  substantially  embraced  in  two,  which  will  be  noted 
in  their  order. 

Qn  April  G,  1889,  a  Mipplemental  agreement  was  entered  into  by  the 
insurance  company  and  WHliam  V.  Harper,  by  which  certain  changes 
were  made  in  the  rates  of  commissions  to  be  allowed  him  "on  all  new 
business  and  its  renewals  written  on  and  after  April  15,  1889."  The 
average  result  of  these  changes  was  rather  favorable  to  the  a^ent, 
unless  the  new  business  should  be  limited  to  a  particular  sub-class  of 
V  life  policies.  It  was  contended  on  behalf  of  the  sureties  that  any 
change  in  the  agent's  compensation,  made  without  their  consent,  dis- 
charged them ;  and  a  fortiori  would  they  be  entitled  to  their  discharge 
if  the  effect  of  the  change  increased  their  risk.  In  support  of  this 
proposition  it  was  argued  that,  as  all  the  commissions  allowed  to 
Harper,  over  and  above  $250  per  month,  were  to  be  paid  over  to  the 
company  in  reduction  of  his  note,  any  change  in  the  rates  by  which 
the  amount  of  the  commissions  would  be  reduced  would  increase  the 
balance  of  his  indebtedness  and  thus  increase  the  risk  of  his  sureties. 
It  is  true  that,  under  the  original  agreement  between  the  company  and 
their  agent,  the  former  reserved  the  right  to  offset  against  his  commis- 
sions any  debt  due  or  owing  to  them  from  him,  but  there  is  nothing  in 
the  agreement,  or  in  the  conditions  of  the  bond,  which  can  be  con- 
strued to  mean  that  the  company  was  obliged  to  compel  the  appropri- 
ation of  the  agent's  commissions  to  the  payment  of  his  debt.  It  was 
optional  with  the  company  to  make  such  appropriation  or  not,  but  it 
was  the  duty  of  the  agent  to  pay  over  the  excess  of  the  commissions 
"when  and  as  required  by  said  company." 

The  amount  of  commissions  earned  by  the  agent,  whether  large  or 
small,  would  depend  on  his  industry  in  soliciting  and  obtaining  pre- 
miums on  policies  of  insurance ;  but  he  was  at  all  times  bound  by  his 
agreement  and  by  the  conditions  of  the  bond  to  account  for  the  pre- 
miums and  to  pay  the  loan  of  $15,000.  The  omission  or  neglect  of  the 
company  to  require  its  agent  to  pay  over  the  excess  of  his  commissions 
did  not  deprive  it  of  the  right  to  compel  him  to  account  for  the  pre- 
miums, and  to  pay  the  balance  of  his  indebtedness;  nor  does  such 
omission  or  neglect  exonerate  his  sureties.  There  is  no  stipulation  in 
the  original  agreement,  or  in  the  bond,  that  the  agent's  com^555Son 
should  remain  fixed  and  unaltered.  Commissions  were  allowed  to  him 
m  the  place  of  a  stated  s-a!afy  in  order  to  stimulate  his  services  in 
sohcitmg  business  for  his  employer.  The  condition  in  the  bond  that 
he  should  comply  with  all  the  terms  and  covenants  in  the  recited 
agreement,  and  the  further  condition  that  he  should  pay  all  balance  of 
mdebtedness,  are  separate  and  distinct  conditions,  and  neither  of  these 


> 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH   PRINCIPAL.  529 

conditions  was  intended  to  be  governed  or  affected  by  the  rates  of 
compensation  allowed  to  him  at  the  date  of  the  bond,  or  afterwards.       ^  ^. 

The  obligation  of  a  surety  is  supposed  to  be  a  gratuitous  one,  in  con-'  _  '*"  "^ 
sequence  of  which  he  has  been  held  liable  on  his  bond  only  when  its  ^'***"^>--*^ 
terms  have  remained  inviolate.  If  there  has  been  a  material  change 
in  the  contract  of  suretyship,  the  surety  will  be  released ;  but,  as  it 
was  pertinently  said,  in  United  States  v.  Hodge,  6  How.  279,  283, 
12  L.  Ed,  437 :  "The  principle  on  which  sureties  are  released  is  not 
a  mere  shadow  without  substance.  It  is  founded  upon  a  restriction  of 
the  rights  of  the  sureties,  by  which  they  are  supposed  to  be  injured." 
In  Benjamin  v.  Hillard,  23  How.  149,  165,  16  L.  Ed.  518,  the  court 
said  that  in  order  to  discharge  a  surety  there  must  be  another  con- 
tract substituted  for  the  original  contract,  or  some  alteration  m  a  point 
so  material  in  effect  as  to  make  a  new  contract,  without  the  surety's 
consent. 

As  to  the  effect  produced  by  a  change  in  the  compensation  of  the 
principal  in  a  surety  bond,  the  rule  is  thus  stated  in  Brandt  on  Surety- 
ship and  Guaranty  (1878)  §  341 :  "Where  the  compensation  which 
shall  be  paid  the  principal  in  an  employment  is  not  a  part  of  the  con- 
tract of  the  surety  for  his  good  behavior  therein,  a  change  in  the 
amount  of  such  compensation,  which  does  not  change  the  duties  of- 
the  principal,  nor  vary  the  risk  of  the  surety,  does  not  generally  dis- 
charge the  surety." 

An  instructive  illustration  of  this  rule  is  found  in  Amicable  Mutual 
Life  Insurance  Company  v.  Sedgwick,  110  Mass.  163.  There  the  in- 
surance company  had  appointed  an  agent  to  be  paid  by  certain  com- 
missions, with  a  guaranty  by  the  company  that  the  commissions  should 
amount  to  a  specified  sum  monthly.  The  agent  gaVe  bond  for  the 
faithful  performance  of  his  duties.  The  sureties  in  the  bond  knew  of 
the  terms  of  the  appointment  of  their  principal  when  they  became 
bound.  Subsequently  the  agent  and  the  company  agreed  that  the  agent 
should  receive  increased  commissions,  but  give  up  all  claim  on  the 
guaranty.  It  was  held  that  the  sureties  were  not  thereby  discharged, 
the  new  agreement  did  not  affect  the  identity  of  the  office  nor  the 
duties  of  the  agent,  he  was  not  an  agent  at  a  fixed  salary  either  before 
or  after  the  new  agreement,  and  there  was  nothing  in  the  bond  or  in 
the  letter  of  appointment  importing  that  the  guaranty  as  to  the  amount 
of  commissions  should  prevent  the  company  from  withdrawing  from 
the  contract  of  guaranty  if  it  proved  burdensome.  The  effect  of  the 
change  was  therefore  to  continue  the  same  appointment,  requiring  the 
same  duties  as  before,  but  at  what  might  prove  a  reduced  compensation 
or  an  increased  one,  according  to  the  amount  of  business  done.  There 
was  no  evidence  that  the  change  as  to  remuneration  subjected  the 
sureties  to  any  greater  or  other  risk  than  they  intended  to  assume. 

In  Frank  v.  Edwards,  8  Ex.  214,  where  the  salary  of  an  officer  had 
,been  reduced,  the  court  refused  to  discharge  his  sureties,  on  the  ground 
Hem. Sue.— 34 


530  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

that,  if  the  sureties  had  considered  the  amount  of  the  salary  to  be  an 
essential  ingredient  in  the  contract,  they  should  have  had  a  stipula- 
tion inserted  in  the  condition  of  the  bond  that  they  would  be  liable  only 
so  long  as  the  officer  was  continued  at  the  same  salary. 

Applying  these  principles  to  the  evidence  in  the  present  case,  it  is 
clear  that  there  was  no  error  in  the  instruction  given  to  the  jury-that 
the  supplemental  agreement  of  April  G,  1SS9,  did  not  discharge  the 
sureties.**     *     ♦     ♦ 

Affirmed.** 


ZIMMERMAN  v.  JUDAH. 
(Supreme  Court  of  Indiana.  1859.    13  Ind.  2S6.) 

Appeal  from  the  Marion  Circuit  Court. 

Perkins,  J.  Suit_"PQ"  ^  promissory  note  for  $2,000,  dated  Octo- 
ber 13,  1855,  given  by  C.  H.  Brown,  with  C.  Zimmerman  as  surety,  to 
Samuel  Judah,  payable  one  day  after  date. 

It  appears  by  the  answer  of  the  defendant,  Zimmerman,  that  at  the 
<^ame  time  that  this  note  was  executed,  Judah  and  Brown  entered  into 
a  contract  by  which  Brown  was  to  erect  for  Judah  a  certain  building, 
to  be  wholly  completed  ready  for  occupancy  by  the  1st  day  of  No- 
vember, 185G.,  The  agreement  fixes  the  amount  to  be  paid,  the  time  of 
payment,  etc.    The  last  clause  of  the  agreement  is  as  follows : 

"(5)  As  to  the  balance,  $2,000,  it  is  agreed  as  follows:  Said  Judah 
herewith  advances  to  said  Brown,  as  and  for  a  loan  on  a  note  payable 
one  day  after  date,  the  said  sum  of  $2,000,  which  note  shall  be  satis- 
fied by  the  completion  of  said  building  as  in  this  contract  is  provided. 
and  which  note,  also,  shall  not  become  or  be  payable  so  long  as  said 
Brown  shall  progress  with  the  preparation  of  materials,  and  with  the 
erection  of  said  building,  so  as  to  warrant  the  said  superintendent 
in  the  reasonable  expectation  of  the  progress  and  completion  of  the 
work,  as  is  hereinbefore  provided.    October  13,  1855. 

"[Signed]      Charles  H.  Brown. 

"C.  Zimmerman  (Surety). 
"Samuel  Judah." 

It  thus  appears  that  the  $2,000  specified  in  the  note  sued  on  was  sub- 
stantially a  penalty.  If  the  building  was  proceeded  with  and  com- 
pleted according  to  contract,  the  $2,000  note  was  never  to  be  paid. 
If  not,  it  was  to  be  paid. 

T)je_answer  further  shows  that  on  the  5th  day  of  June.  185G,  the 
followTngnfufnfef  "agreement  was  made  without  the  knowledg'e'br 
consent  of  Zimmerman,  viz.:  That_said  Brown  and  one  Stokes  sil^ld, 

**  A  portion  of  the  opinion,  dealing  with  the  question  whether  a  bindln? 
extension  of  time  was  given,  has  been  omitted. 

««  Accord:  Sanderson  v.  Aston,  L.  R,  8  Bs.  73  (1873),  variation  in  time  of 
notice  to  teriuiuate  the  contract. 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH   PRINCIPAL.  531 

by4li£_lsL_dav__of  November,  1856,  put  an  additional  story  on  the 
building  then  under  contract  between  Brown  and  Judah,  for  the  fur- 
tlierj:_onsideration  of  $1,700,  to  be  paid  on  the  completion  thereof. 

The,-an*wer  claims  that  this  agreement  was  such  an  alteration  of 
the  o_rig^inal  agreement  as  discharged  Zimmerman,  the  surety.  ..^ 

The'plaintiff  demurred  to  the  answer,  the  court  sustained  the  de-  V  looi*^ 
murrer^  and  the  plaintiff  had  judgment.  V 

Tlie  record  discloses  nothing  by  which  we  can  determine  whether  ^ 
the  contracts  for  erecting  the  building  were  fulfilled  or  not.  The  in- 
ference from  this  second  contract  is  that  the  execution  of  the  first  had 
satisfactorily  progressed  up  to  the  5th  of  June,  1856.  And  there  is 
another  letter  from  Mr.  Judah,  set  out  in  the  answer,  dated  September 
10,  1856,  which  admits  due  exertion  on  the  part  of  Brown  in  the  ex- 
ecution of  his  undertaking.  But.th_e  decision. of  the  case  here  must 
rest_  on  the  single  point  as  to  whether  the  second  contract  above 
set-out  was  such,  an  alteration  of  the  first  as  to  discharge  the  surety 
f QrJJl£..perf ormance  of  it ;  and  we  thus  conclude : 

The  second  contract  required  an  additional  story  to  be  put  upon  the 
building.  The-building  could  not  be  finished  under  the  first  contract 
until  after  that  story  was  put  on,  as  it  could  not,  till  after  that,  be 
rQQ.f.ed.  That  contract  did,  therefore,  increase  the  difficulty  and  _ex- 
pense  of,  and  tend  to  delay  the  completion  of,  the  first  contract,  and 
did,  therefore,  materially  affect  its  execution,  though  it  states  that  it  is 
nQt  to  do  so.  It,  in  fact,  made  Zimmerman  surety  for  the  completion  by 
the  1st  of  November,  1856,  of  the  walls  of  the  additional  story  provid- 
ed for  by  the  second  contract.  See  Chit,  on  Cont.  529,  530;  Ind.  Dig. 
703. 

Per  Curiam.  The  jiidgment_is  reversed  with  costs.  Cause  re- 
manded, etc. 


WOODCOCK  v.  OXFORD  &  W.  RY.  CO. 

(High  Court  of  Chancery,  1S53.     1  Drew.  521.) 

On  the  8th  of  June  The  Vice  ChanceeIvOR  delivered  judgment.*^ 

After  stating  the  facts  his  honor  continued : 

Now  it  is  contended  by  the  plaintiffs  that  all  these  circumstances  put 
together — first,  the  transfer  of  the  contract  to  Williams  &  Marchant ; 
theji,  the  company  dealing  with  Williams  &  Alarchant  as  they  did, 
entering  into  arrangements  with  them,  altering  the  contract,  the  time 
af  which  it  was  to  be  carried  into  effect,  the  terms  and  mode  of  pay- 
ment to  the  contractors — all  these  circumstances,  they  say,  bring  this 
case  within  the  principle  that,  if  a  creditor  so  deals  with  his  principal 
debtor  as  to  alter  the  position  of  the  surety,  he  discharges  the  surety, 

45  The  facts  sufficiently  appear  in  the  opinion.  The  statement  of  facts  and 
the  arguments  of  counsel,  together  with  a  portion  of  the  opinion,  are  omittecL 


532  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

Butj  as  the  defendants'  counsel  suggest,  that  principle  applies  only 
when  the  transaction  i  t  the  concurrence  of  the  suretyr-shd 

the  plaintiffs  have  felt  li..  ....j.rtance  of  that  ingredient  in  the  matter, 

that  it  must  be  without  the  concurrence  of  the  surety;  for  the  bill 
contains  again  and  again  passages  charging  that  the  sureties  knew 
notliing  of  the  transaction — were  neither  parties  nor  privies  to  any 
of  the  transactions  subsequent  to  the  giving  of  the  bond.  The  whole 
of  tlie  equit}'  of  the  bill  is  founded  upon  that. 

Now,  from  the  answer,  and  not  merely  by  the  statements  of  the 
answer,  but  by  correspondence  referred  to,  this  appears:  Woodcock 
&  Part,  being  in  partnership  as  solicitors  with  Scott,  the  firm  being 
Woodcock,  Part  &  Scott,  were  solicitors  for  Williams,  Ackroyd  & 
Price.  They  prepared  the  contract  and  the  bond.  They  continued  to 
be  the  solicitors  of  the  contractors  when  Ackroyd  and  Price  with- 
drew, and  Marchant  was  substituted.  They  continued  to  act  as  the 
solicitors  of  Williams  &  Marchant.  They  were  the  solicitors  who  as- 
sisted in  the  preparation,  if  not  of  every  one,  at  least  of  most,  of  the 
subsequent  instruments,  and,  to  show  beyond  doubt  that  the  allegations 
of  the  bill,  as  to  the  transactions  having  taken  place  without  the  knowl- 
edge or  concurrence  of  the  sureties,  have  no  foundation,  correspond- 
ence is  set  out  between  the  firm  of  Woodcock,  Part  &  Scott,  as 
solicitors  for  Williams  &  Marchant,  with  the  company,  on  the  subject 
of  the  arrangements  by  which  all  the  matters  in  difference  under 
the  first  submission  were  referred  to  the  arbitration  of  Mr.  Brunnel, 
and  by  which  the  company  adopted  Williams  &  Marchant  as  con- 
tractors, and  dealt  with  them  as  such,  being  the  very  arrangements 
which  the  plaintiff's  say  discharged  them. 

Under  these  circumstances,  without  going  any  further,  I  think  the 
equity  claimed  by  the  bill  rests  on  allegations  wholly  unfoundjed_irL-fact, 
It  does  not  rest  merely  on  the  statements  of  the  answer,  but  it  ap- 
pears by  the  correspondence,  not  only  that  the  transactions  on  which 
they^  rely  for  their  discharge  were  known  to  the  plaintiffs',  but  Jhat 
they  assisted,  as  the  solicitors  of  the  principal  debtor,  in  the  prepara- 
tion of  instruments  for  carrying  into  effect  the  arrangements  oFw^ich 
they  complain.    I  must  therefore  dissolve  the  injunction.     *     *     *  *« 

4«  Accord:  Chvens  v.  Ta^e.  3  Ind.  App.  245.  29  N.  E.  7&4  (1892),  holdinz 
that  where  a  surety  Is  discharged  by  the  alteration  of  an  instrument,  his 
subsequent  assent  to  the  alteration  requires  no  new  consideration.  ' 


Ch.  8)  TRANSACTIONS  OF   CREDITOR  WITH  PRINCIPAL.  533 

TAYLOR  V.  SCOTT  et  al. 
(Supreme  Court  of  Georgia,  1S78.    62  Ga.  39.) 

Bleckley,  Justice.*^  1.  Where  the  evidence  is  in  salient  conflict, 
as  in  this  case,  we  must  look  to  the  verdict  to  see  which  side  gave  the 
true  version  of  the  transaction.  Taking  the  facts  as  the  evidence  for 
the  defendants  presents  them,  the  sureties  both^  signed  on  the  faith 
of  the  creditor's  promise,  made  to  one  of  them  and  by  him  communi- 
cate^ tcT  the  other,  that  he,  the  creditor,  would  apply  the  principal 
debtor's  crop  of  the  current  year  to  these  particular  notes.  As  fae- 
tweea-the-surelies.and  the  creditor  this  promise  was  a.  part  of  the  con- 
sideration of  the  contract  of  suretyship.  Jones  v.  Keer,  30  Ga.  93 ; 
Matheson  v.  Jones,  Id.  306,  76  Am.  Dec.  647.  Moreover,  each  of  the 
notes,  by  its  terms,  was  a  crop  lien  upon  the  Avhole  of  said  crop;  and 
these  notes  were  the  first,  and  therefore  the  highest,  incumbrance  which 
the  record  discloses  to  which  the  crop  was  subject.  The  very  face  of 
the  papers  which  the  sureties  signed  appropriated  the  crop  to  these 
obligations,  and  it  was  not  in  the  creditor's  power  to  change  that  ap- 
propriation without  the  consent  of  the  sureties.  Ross  v.  Saulsbury, 
52  Ga.  380.  See,  also,  Atlanta  Js^at.  Bank  v.  Douglass,  51  Ga.  205, 
21  Am.  Rep.  234.  The  crop  was^bf  sufficient  value  to  pay  all  the  note?, 
and  the  principal  debtor  delivered  it  to  a  partnership  of  whfch  the 
creditor  was  a  member.  The  partnership  appropriated  it  to  prior  liens 
of  like  kind  Tn  their  favor,  except  a  small  surplus,  which,  through 
them,  reached  this  creditor  and  was  applied  on  these  notes.  In  our 
opinion  the  sureties  were  discharged. 

2.  It  seems  to  us  that  the  creditor  cannot  put  off  the  sureties  with  the 
excuse  that  the  prior  liens  were  not  taken  by  him,  but  by  the  partner- 
shrg_forjidvances  which  the  partnership  furnished  to  produce  the  crop, 
and  that  delivery  of  the  crop  was  not  made  to  him,  but  to  the  partner- 
ship. He  had  stipulated  with  the  sureties  that  the  crop  should  go  to 
their  protection ;  and  as  a  partner  he  should  not  have  entered  into  an 
arrangement  with  the  debtor  which  conflicted  with  his  prior  obligation, 
as_air'rndividual,  to  the  sureties. 

Judgment  affirmed. 


HILLIBOE  V.  WARNER  et  al. 
(Supreme  Court  of  North  Dakota,  1908.     17  N.  D.  594.  118  N.  W.  1047.) 

Appeal  from  District  Court,  Bottineau  County;  Edward  T.  Burke, 
Special  Judge. 

Action  by  P.  S.  Hilliboe,  as  administrator  of  the  estate  of  Elias 
Ertresvaag,  deceased,  against  N.  J.  Warner,  W.  R.  Mcintosh,  and 

*"!  The  facts  sufficiently  appearing  in  the  opinion,  the  statement  of  them 
has  been  omitted. 


534  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

Others.  Judgment  for  Mcintosh  and  such  others,  and  HiUiboe  appeals. 
Affirmed. 

Morgan,  C.  J.**  The  plaintifif,  as  administrator  of  the  estate  of 
E.  Ertresvaag.  deceased,  brings  tliis  action  against  the  defendants 
to  recover  damages  for  the  alleged  breach  ofa  bond  giveTTby  IMm  for 
the  faithful  performance  of  a  building  contract  between  Ertresvaag 
ih  his  lifetime  as  the  owner  of  the  building  and  the  defendant  Is\_X. 
Warner,  the  contractor.  The  other  defendants  are  sureties  upon  said 
bond. 

Tlic  complaint  alleges  the  execution  of  the  bond  and  the  purposes  for 

which   it  was  executed.     *     *     *     The  plaintiff   demands  judgment 

against  the  .said  Warner  and   against  the  sureties   for  the  sum  of 

.$2.nS7.  besides  costs.    The  defendants,  except  Warner,  answered.    The 

sureties  by  their  answer  mterpose  iiine  defenses  to  the  cOmp!STnt._JThe 

principal  defense  relied  upon  is  that  the  bond  was  materially  altered 

after  its  execution  by  them,  and  that,  by  such  alteration,  the  contract 

was  changed  and  their  liability  increased  by  reason  of  such  changes. 
*     *     ♦  ' 

A  jury  was  waived  and  the  issues  were  submitted  to  the  court  for 
/determination.     After  taking  testimony,  the  trial  court  made  findings 
'of  fact  and  conclusions  of  law  in  favor  of  defendants,  and  ordered 
the  action  dismissed  as  to  the  answering  defendants.     Judgment  was 
^  \ntercd  pursuant  to  such  findings,  and  the  plaintiff  has  appealed  from 
such  judgment,  and  assigns  numerous  errors  in  respect  to  the  suffi- 
ciency of  the  evidence  to  sustain  the  findings  and  in  respect  to  errors 
In  the  admission  of  evidence.     *     *     * 
X      The  record  shows  that  the  name  of  Woods  was  upon  the  bond  by 
evidence  which  is  sufficient  to  sustain  the  findings  of  the  trial  court, 
and  the  finding  in   respect  to  the  matter  of  the  signature  of  T.   F. 
Woods  is  as  follows :  "That  said  bond  was  first  signed  by  N,  J.  War- 
ner, the  next  by  one  T.  F.  Woods,  and  then  by  the  other  sureties,  and 
that  at  the  time  the  defendants  other  than  the  said  N.  J.  Warner  signed 
said  bond  the  name  of  T.  F.  Woods  was  attached  thereto  as  one  of 
the  sureties;   thaLthe  name  of  said  T.  F.  Woods  was^-efased-iroiQ. 
said  bond,  and  his  liability  as  surety  thereto  canceled,  after  the  de- 
fendants,  other  than  N.  J.  Warner,  had  signed  said  bond,  and  without 
the  knowledge  or  consent  of  said  sureties,  and  that  sail  erasure  was 

made  by  and"on"behaIf  of  said  E.  Ertresvaag."     *     *     * 

It  is  not  seriously  disputed  by  the  appellant  on  this  appeal  that  the 
erasure  of  the  name  of  Woods  from  the  bond  is  a  complete  defense 
to  tiie  other  sureties  who  signed  the  bond  after  said  Woods  had  signed 
the  same  and  before  his  name  was  erased.  In  this  case  there  was  no 
agreement  as  to  the  number  of  sureties  that  should  sign  the  bond,  nor 
as  to  who  the  sureties  should  be.    It  is  claimed  that  the  erasure  of  the 

«•  Tbe  opinion  has  been  abridged  by  omitting  the  suramiirv  of  the  plead- 
ings and  the  discussion  of  the  admissibility  of  certain  evidence. 


Ch.  8)  TRANSACTIONS  OP  CREDITOR  WITH  PRINCIPAL.  535 

name  under  such  circumstances  changed  the  implied  contract  of  con- 
tribution among  the  sureties,  and  that  the  sureties  who  signed  the 
bond  after  said  Woods  had  signed  the  same  as  a  matter  of  law  signed 
it  on  the  understanding  that  Woods  would  be  liable  to  them  in  contri- 
bution should  they  be  required  to  pay  the  bond.  In  other  words  they 
signed  it,  relying  upon  Woods'  responsibility,  and  that  the  erasure  was 
therefore  a  material  alteration  of  the  bond. 

In  these  contentions  we  concur.  In  two  cases  the  principle  has  been 
adopted  by  this  court.  Cass  Co.  v.  American  Exchange  Bank,  9  N. 
D.  263,  83  N.  W.  12 ;  Id.,  11  N.  D.  238,  91  N.  W.  59.  It  is  claimed 
by  the  appellant  that  there  is  no  evidence  in  the  record  that  the 
erasure  was  made  by  Ertresvaag  or  by  his  authority  or  with  his  con- 
sent. There  is  no  direct  evidence  bearing  upon  this  question.  It  ap- 
pears, however,  that  the  bond  was  in  the  custody  of  Ertresvaag,  and 
this  fact,  together  with  the  fact  that  the  action  is  not  brought  against 
Woods,  is  sufficient  prima  facie  to  sustain  the  finding  that  the  erasure 
was  made  with  the  consent  of  Ertresvaag. 

In  view  of  these  conclusions,  it  is  unnecessary  to  consider  the  other 
defenses  raised  by  the  answer. 

The  judgment  is  affirmed.    All  concur.** 


JACKSON  et  al.  v.  COOPER. 
(Court  of  Appeals  of  Kentucky,  1S97.    39  S.  W.  39,  19  Ky.  Law  Rep.  9.) 

A^tion.on  a  note  by  Joseph  Jackson,  guardian,  etc.,  against  William 
Cooper.  There  was  a  judgment  for  defendant,  and  plaintiff  appeals. 
Reversed. 

BuRNAM,  J.  Tlus_siiit  was  instituted  upon  a  note  for  $979.12,  pur- 
porting to  have  been  executed  to  the  plaintiff  Jackson,  as  guard- 
ian, by  John  Bobbitt  and  appellee,  William  Cooper.  ,  The  note,  after 
the  execution,  was  assigned  to  the  plaintiffs  Barnett  and  Trimble,  to 
indemnify  them  as  securities  upon  the  guardian's  bond  of  Jackson, 
executed  by  Jackson  as  guardian  of  the  children,  for  whom  the  money 
was  obtained  for  which  the  note  in  contest  was  executed.  The  orig- 
inal  answer  of  the  appellee  sets  up  a  plea  of  non  est  factum,  but  at 
the  next  term  of  the  court  the  appellee  offered  to  file  an  amended  an- 
swe_r,  in  which  he  admitted  he  signed  the  note  in  contest,  but  averred 
thajt_he  signed  it  as  surety  for  Bobbitt,  and  that  the  word  "guard- 
ian" did  not  appear  in  the  note,  and  that  this  word  was  inserted  after 

49  On  alteration  of  contract,  either  before  or  after  breach,  see  2  American 
Leading  Cas^~~n5tti  Ed.)  432,  Haie  &  Wallace's  notes  on  United  States  v. 
Howell,  4  Wash.  C.  C.  G20,  Fed.  Cas.  No.  15,405  (1S2G). 

See  Ellesmere  Brewing  Co.  v.  Cooper,  L.  R,  1  Q.  B.  Div.  75  (1896)  where 
one  surety,  who  signed  but  not  in  accordance  with  the  amount  of  liability 
mentioned  in  the  bond  as  assumed  by  him,  thereby  rendered  the  bond  un- 
enforceable against  all  the  sureties  w'ho  had  signed. 


536  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

he  delivered  same,  and  without  his  knowledge  or  consent,  alleging 
thaTlHis  was  a~material  alteration,  and  released  him' 7rom  liability. 
The  appellant  objected  to  the  filing  of  this  amendment,  which  the 

[court  overruled;    and  he  also  filed  a  demurrer  to  same,  wliiulf'the 
(^^  Jcourt,  being  advised,  overruled,  and  to  this  ruling  of  the  court,  the 

/appellant  excepted. 

\\'e_are  of  the  opinion  that  the  court  was  correct  in  overruling  the 
demurrer  to  the  amended  answer.     The  contract  by  which  a  surety 

''1)ecomes  bound  upon  an  obligation  is  voluntary,  and  without  having 
any  view  in  prospect  of  gain.  It  is  an  act  of  kindness  to  the  obligor, 
and  a  convenience  to  the  obligee,  and  of  use  to  both ;  and  the  former 
should  be  dealt  with  with  absolute  fairness,  and  in  a  spirit  of  the  ut- 
most good  faith.  "It  is  a  universal  rule  that  where  a  contract,  the 
performance  of  which  has  been  guaranteed  by  a  surety,  has  been  al- 
tered or  modified  or  changed  without  his  consent,  that  he  is  discharged 
from  liability  on  the  contract;  and  \vhil5t  the  alteration  must  b£  in 
some  material  point,  yet  very  slight  change  in  the  contract  is  sufficient 
to  discharge  the  security."  In  this  case  the  addition  of  the  word 
"guardian"  changed  entirely  the  character  oT  the  payee  in  thT5~ob- 
Ijgation.  A  ^security  might  be  perfectly  willing  to  sign  a  paper  to  a 
party  as  an  individual,  who  would  not  be  willing  to  sign  it  for  la  pa'rty 
in  a  fiduciary  capacity.  In  a  paper  of  this  sort,  which  was  non-nc^- 
tiable  in  its  character,  he  would  have  had  the  right  of  set-oft'  or  coun- 
terclaim against  the  note,  if  same  had  been  taken  in  the  name  of  the 
payee  as  an  individual,  while,  taken  to  him  as  a  fiduciary,  his  rela- 
tions were  altogether  changed.  We  think  this  was  undoubtedly  a 
material  alteration  of  the  note,  which  would  have  resulted  in  dis- 
charging the  security  on  same,  if  true.'"     *     *     * 

For  the  reasons  indicated,  this  cause  is  reversed,  and  is  remanded 
for  proceedings  consistent  with  this  opinion. 


SECTION  4.— EFFECT  OF  CONNIVANCE  AT  BREACHES  OF 

PRINCIPAL'S  DUTY,  NOT  AMOUNTING  TO 

DISHONESTY 


SANDERSON  v.  ASTON. 

(Conrt  of  Exchequer,  nilary  Term.  1873.     L.  R.  8  Exch.  73.) 

^claration  on  a  bond  given  by  the  defendant  to  the  plaintiff,  the 

condition  of  wTiicB  fe"aTe^^that,  by  an  agreement  of  even  date,  the 

plaintiff  had  agreed  to  admit  into  his  service,  as  clerk  and  traveler, 

»•  The  remainder  of  the  opinion  has  been  omitted- 


Ch.  8)  TRANSACTIONS  OF  CREDITOR  WITH  PRINCIPAL.  537 

^r^  Job"  Tytrxmoc  jr.rir.qr^n^  np'^p  Johnson's  obtaining  two  sureties 
"for  his  duly  and  faithfully  accounting  to  the  plaintiff,  his  executors, 
etc.,  and  other  the  person  or  persons  who  should  or  might  become 
partners  with  the  plaintiff  in  his  business  of  a  lead,  glass,  and  color 
merchant,  in  manner  thereinafter  mentioned,  and  for  his  faithful  and 
honest  conduct  during  the  time  of  his  continuance  in  the  said  service" ; 
the  condition  of  defeasance  being  that  Johnson  should  from  time  to 
time,  an3~at"ari  times,  well  and  satisfactorily  account  for  -and  pay 
over  and  deliver  to  the  plaintiff'  all  and  every  sum  and  sums  of  money, 
etcl7~wRTch  he  should  receive  for  the  use  of  the  plaintiff'  or  the  plain- 
tiff and  any  person  who  might  become  his  partner,  and  the  breach 
alleged  being  that  Johnson  did  not  well  and  satisfactorily  account  for 
or  _pay  over,  or  deliver  to  the  plaintiff,  or  to  the  plaintiff  and  his.^art- 
ner,  certain  sums  of  money  (amounting  to  £84.  9s.)  received  by  hirn 
for  the  use  of  the  plaintiff  and  his  partner  during  his  service  with 
them.^^  *  *  * 
""[Defendant's  third  plea  alleged:] 

(3)  Un  equitabIe""groirfldsTirhat  Johnson,  before  the  commission  of 
the  said  defaults,  had  committed  during  the  said  service  divers~ather 
defaults  ot  tfie"  same  kind,  and  that  the  plaintiff,  though  well  knaw- 
in^  the  saiH^  last-mentioned  defaults,  wholly  omitted  and  neglected  Jo 
inform  the  defendant  thereof,  and,  notwithstanding  the  said  last-men- 
tioned defaults,  continued  to  employ  and  retained  Johnson  in  the  'said 
service,  and  that  the  defaults  alleged  were  committed  by  Johnson 
during  the  said  continuance  and  retention  of  him  by  the  plaintiff  in 
the  said  service. 

Demurrers  and  joinder.^^ 

KiLLY,  C.  B.^^  *  *  *  g^^t  the  third  plea  raises  a  different  ques- 
tion. .  The  case  of  Phillips  v.  Foxall,  L.  R.  7  Q.  B.  666,  clearly  shows 
that,  if  any  defaults  or  breaches  of  duty,  whether  by  dishonesty  or  not, 
have  been  committed  by  the  employed  against  the  employer,  under 
such  circumstances  that  the  employer  might  have  dismissed  the  em- 
plo'yed,  the  surety  is  entitled  to  call  on  the  employer  to  dismiss  him. 
The  question  therefore  is  whether  the  allegation  of  the  plea  shows  such 
breaches  of  duty  as  would  have  entitled  the  plaintiff  to  dismiss  John- 
son, and  would,  therefore,  have  entitled  the  surety  to  call  upon  him 
to  do  so.  It-is_saidjthat  no  dishonesty  is  shown  by  the  plea.  That 
may  well  be:  and^-yet  the  employed,  by  failing  to. pay  over  money 
which  he  has  received,  may  commit  a  breach  of  his  duty,  which  would 
entitle  his  employer  to  dismiss  hirn.  Now  we  must  take  it  on  the  plea, 
reading  it  with  the  declaration,  that  Johnson  had  received  for  the 
plaintiff  certain  sums  of  money  which  it  was  his  duty  to  pay  over, 

51  The  second  plea,  relating  to  the  variation  of  the  contract,  has  been  omit- 
ted. 

52  The  arguments  of  counsel  are  omitted. 

5  3  Only  so  much  of  the  opinion  is  printed  as  relates  to  the  question  of  con- 
cealment of  the  principal's  defaults. 


538  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

and  which  he  did  not  pay  over,  and  the_qucstiQa.J5. ..whether  tliat  is^no^ 
prima  facie  a  breach  of  duty  which  would  entitle  the  plaintiff  to  m?^ 
niiss  him.     I  am  ot-opiiaioa  that  it  is,  and  that  it  is  sufficient  if  the 
plea  raises  such  a  prima  facie  case.  , 

M.\RTiN.  B.     I  think  the  third  plea  is  good  on  the  authority  ot 
Phillips  V.  Foxall,  L.  R.  7  Q.  B.  GGii.    *    *    *  " 

PicoTT,  B.    *     *    *     As  to  the  third  plea,  I  agree  that  it  is  good 
for  the  reasons  already  given. 

Pollock,  B."    I  also  agree  that  the  third  plea  is  quite  within  Phil- 
lips V.  Foxall.    *    *    * 

lud^nent   for     ♦     ♦     *     the  defendant  on  the  demurrer  to  jhe 
third  plea." 


SECTION  5.— NEGLECT  OF  CREDITOR  TO  UTILIZE  MEANS 

OF  PAYMENT 


FEGLEY  et  al.  v.  McDONALD. 
(Supreme  Court  of  Pennsylvania,  1S79.     89  Pa.  128.) 

Error  to  the  Court  of  Common  Pleas  No.  3  of  Philadelphia  County ; 
of  January  Term,  1876,  No.  253. 

Joseph  McDonald  became  surety  for  one  Rose,  as  treasurer  of  Ste- 
pherTCirard  Lodge,  No.  450,  A.  Y.  M.,  giving  to  the  lodge,  with  Rose, 
a  joint  and  several  bond,  with  warrant  of  attorney,  in  $1,000,  for  the 
faithful  performance  by  Rose  of  the  duties  of  his  office.  Judgment 
wasenterfid  thereon  June  25,  1874,  which  judgment  was  subsequently 
opened  as  to  McDonald,  who  was  let  into  a  defence. 

At  the  triaTTbefore  FinletterJ^^J;tJ'PPea];ed  that  Rose  was  ordered 
bj^  tiic  lod-c,  on  l^ebruary  28,  'I87i,  to  pay  the  Grand  Lodge,  F."^- 
A.  M.,  t:  if-ijif^^JO^.-the  amount  of  rent  and  dues  owing  for  the 

yea'r  187...  iv. -c  made  no  attempt  to  obey  the  order  of  the  lodge 
until  May  27,  1874.  On  that  day,  after  3  o'clock,  he  sent  his  persona] 
check  for  $920  to  the  secretary  of  the  Grand  Lodge,  drawn  on  the 

•  «  Only  the  portion  of  the  opinion  Is  printed  relating  to  the  third  plea. 

»»  Only  the  portion  of  the  opinion  is  printed  relating  to  the  third  plea. 

••.Vcc-ord:  Confederation  Life  Ass'n  v.  Brown  et  al.,  35  Nova  Scotia,  94 
(ItXn.T—" 

roiitra :  Watortowu.  etc..  Co.  v.  Simmons,  131  Mass.  So.  41  Am.  Rep.  196 
(ISSnT  iMltMburR.  etc-..  Ry.  Co.  v.  Shaefifer,  .59  Pa.  350  (1869) ;  obiter.  Banli 
T.  Txuiibler  Co..  172  Pa.  026.  33  Atl.  748  (1896). 

In  .Murry'8  Kstate.  3  Pa.  Dlst.  R.  278  (1804).  the  Philadelphia  orphans' 
court  attempted  to  restrtct  Pittsburg  Ry.  Co.  v.  Shaefifer  to  cases  of  employ- 
ment by  conmratlons. 


Ch.  8)  TRANSACTIONS  OP  CREDITOR   WITH   PRINCIPAL.  539 

UriiQn.,_Banking  Company,  of  Philadelphia.  This  check  was  not  pre- 
sented until  June  4,  1874,  when  it  was  dishonored.  On  the  day  the 
ch'ecFwas  given,  Rose  had  no  funds  in  bank  to  meet  it ;  but  the  next 
day^_May  28,  1874,  he  deposited  the  amount  of  the  check  to  his,  m- 
dividual  account  in  the  Union  Banking  Company.  The-4uads-so  de- 
posited, however,  had  been  appropriated  by  said  bank,  June  4,  187i^, 
before  the  check  was  presented,  to  pay  a  note  then  due,  indorsed  by 
Rose,  which  the  bank  had  discounted  for  his  benefit.  The  lodge  was 
subsequently  compelled  to  pay  the  said  $920  to  the  Grand  Lodge 
with  accumulated  interest.  Rqsc  never  accounted  to  Stephen  Girard 
Lodge  for  said  amount,  or  paid  any  part  of  the  same. 

Th£_x:Qiill_directed  the  jury  to  find  for  the  plaintififs,  reserving  the^ 
question  of  law  as  to  whether  McDonald,  the  surety,  was  discharged  / 
from  liability  on  his  bond  to  Stephen  Girard  Lodge  by  the  delay  of  (  /Vo,,^. 
the  Grand  Lodge  in  presenting  the  check.  1         ^ 

Th^^v^ldLct.  was  for  the  plaintiffs.  l 

Subsequently  judgment  was  entered,  hv-_the  r^nrt  in  banc,  for  the    J 
defendant  on  the  point  reserved.  ' 

The  case  was  first  argued  in  the  Supreme  Court  on  February  27, 
1878,  and,  the  court  being  equally  divided  (Woodward,  J.,  being  ab- 
sent), the  judgment  was  affirmed.  A,  rear^ument  was  subsequently 
ordered. 

Mr.  Justice  Mercur  delivered  the  opinion  of  the  court,  May  5,  1879.  ^  j_.  yri h^ 
The  plaintiffs  represent  the  Stephen  Girard,  a  subordinate  lodge  of  '^^^^^^■'^^^'7  f^ 
A.  Y.  M.  The  defendant  was  surety  for  one  Rose,  as  treasurer 
of  the  lodge.  The  claim  is  against  the  surety  for  the  alleged  default 
of  the  treasurer.  It  appears  that  the  Girard  Lodge  was  indebted  to 
the  Grand  Lodge  for  rent  and  dues  in  the  sum  of  $920.  Rose  was, 
by  resolution  of  his  lodge,  ordered  to  pay  that  sum  to  the  Grand 
Lodge.  After  banking  hours,  on  the  27th  May,  1874,  he  drew  his 
private  check  for  that  amount  on  the  Union  Banking  Company,  sent 
it  to  the  secretary  of  the  Grand  Lodge,  and  received  from  him  a  re- 
ceipted bill  for  the  amount.  It  would  appear  that  this  sum  of  the 
plaintiff's  money  was  either  actually  or  constructively  in  the  hands  of 
the  treasurer  when  he  drew  the  check.  Th_e_  Grand  Lodge  omitted  to 
present  the  check  for  payment  until  the  4tH  of  June,  1874,  although 
fHe"bank  and  all  the  parties  were  located  in  the  city  of  Philadelphia. 
When  presented,  payment  thereof  was  refused  by  the  bank ;  Rose 
having  no  funds  there  to  meet  it.  The  Grand  Lodge  retained^  the 
check  for  more  than  a  year  thereafter,  when  the  Girard  Lodge,  with- 
out suit,  voluntarily  paid  it.  The  latter  now  seeks  to  recover  the 
afnount  thus  paid  out  of  the  defendant  as  surety.  There  is  no  dis- 
plite  about  the  facts.  It  appears  that  when  Rose  drew  the  check  he 
had  no  funds  in  bank  to  meet  it;  but  the  next  day  he  deposited  the 
amount  of  the  check  to  his  individual  account  in  the  bank.  The  mon- 
ey so  deposited  remained  there,  subject  to  his  check,  until  the  4th 
of  June.    On  this  day,  but  before  the  check  was  presented,  the  money 


540  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

was  appropriated  by  the  bank  to  pay  another  obHgation  of  Rose  which 
matured  on  that  day. 

The  court  directed  the  jury  to  find  for  the  plaintiffs,  reserving  the 
question  of  law  as  to  whether  the  defendant  surety  was  discharged 
from  liability  on  his  bond  to  Stephen  Girard  Lodge  by  the  delay  of 
the  Grand  Lodge  in  presenting  the  check.  Afterwards  the  court  en- 
tered judgment  in  favor  of  the  defendant  on  the  point  reserved.  This 
is  assigned  for  error. 

,r  The^ri^e  is  well  settled  that  when  a  creditor  has  in  his  hands  the 
means  of  paying  his  debt  out  of  the  property  of  his  princip  or, 

and  does  not  use  it,  but  gives  it  up,  the  surety  is  discharge  a,  ^l  ;  Lcd 
not  be  actually  in  the  hands  of  the  creditor,  if  it  be  within  Ms  control, 
so'  that  by  the  exercise  of  reasonable  diligence  he  may  have  realized 
his  pay  out  of  it,  yet  voluntarily  and  by  supine  negligence  relinquished 
it,  the  surety  is  discharged.  Commonwealth  v.  Vanderslice,  8  Serg. 
&  R.  452 ;  Ramsey  v.  Westmoreland  Bank,  2  Pen.  &  W.  203 ;  Everly 
V.  Rice,  20  Pa.  297 ;  Boschert  v.  Brown,  72  Pa.  372. 

The  question  now  before  us  is  not  in  regard  to  the  liability  of  Rose 
on  the  check,  nor  the  validity  of  the  claim  against  him.  It  is  the 
right  of  the  surety  only  with  which  we  are  now  dealing.  In  contem- 
3  plation.of  law  the  check  was  received  by  the  Girard  Lodge  and  paid 
'to  the  Grand  Lodge.  Onjlie  first  day  after  its  receipt  the  money, was 
in  bank  to  meet*it,  and  so  remained  there  for  one  full  week,  if  the 
check  had  been  presented  on  any  business  day  of  the  seven,  it  would 
have  been  paid^  and  the  surety  would  have  been  discharged  from  all 
liability.  It  was  given  by  Rose  to  discharge  his  liability  to  the  Girard 
Lodge.  If  presented  at  bank  in  due  time,  it  would  have  paid  the  de- 
mand against  him.  Then  the  responsibility  of  the  surety  would  un- 
questionably have  been  discharged.  If  not  discharged,  it  is  solely 
through  delay  in  the  presentation  of  the  check.  Whether  that  delay 
was  the  immediate  act  of  the  Girard  Lodge,  which  received  it,  or  the 
act  of  the  Grand  Lodge,  to  which  it  was  transferred,  makes  no  sulo^ 
stantial  difference  to  the  surety.  The  creditor  had  the  means  of  pay- 
ment in  its  own  hands. 
V,     A . chfick  is  generally  designed  for  immediate  payment,  and  not  for 

^  "'  circulation.  It  is  the  duty  of  the  holder  to  present  it  for-paymeaTas 
soon  as  he  reasonably  may,  and,  if  he  does  not,  he  keeps  it  at  his  own 
risk.  The  Girard  Lodge  accepted  it  as  a  payment  from  Rose.  In 
like  manner  the  Grand  Lodge  accepted  it  from  the  subordinate  lodge. 
In  order  to  charge  the  latter  by  reason  of  the  non-payment,  it  should 
have  been  presented  for  payment  within  a  reasonable  time.  Had  it  been 
so  presented  it  would  have  been  paid.  A  delay  of  seven  days  was  an 
unreasonable  time.  While  so  holding  the  clieck  unpresented,  th£  Gran4 
Lodge  had  no  legal  claim  against  the  Girard,  nor  the  latter  against 
the  surety  of  Rose.  When  it  was  presented  and  dishonored,"TE'!was 
too  late  for  the  Grand  Lodge  to  cast  the  loss  which  it  had  sustamed 
through  its  own  default  on  the  Girard,  and  for  the  latter,  by  voluh- 


Ch.  8)  TRANSACTIONS  OF   CREDITOR  WITH   PRINCirAL.  541 

tarily  paying  the  check,  to  impose  a  legal  liability  therefor  on  the 
defeng^r""The  learned  Judge  was  right  in  entering  judgmeril  in  fa- 
vor  of  the  defendant  on  the  question  reserved. 
Judgment  affirmed.^  ^ 


VOSS  V.  GERMAN-AMERICAN  BANK  OF  CHICAGO. 

(Supreme  Court  of  Illinois,  1876.    83  111.  599,  25  Am.  Rep.  415.) 

Appeal  from  the  Superior  Court  of  Cook  County. 

Mr.  Chief  Justice  Sheldon  delivered  the  opinion  of  the  court. 

Thjs  was  a  suit,  brought  August  18,  1874,  upon  a  promissory  note 
of  which  the  following  is  a  copy : 

"Chicago,  Oct.  4,  1873. 

"Fifteen  days  after  date  we  promise  to  pay  to  the  order  of  the 
Germania  Bank  of  Chicago  three  hundred  dollars,  at  their  office,  with 
interest  at  the  rate  of  ten  per  cent,  per  annum  after  due,  until  paid. 
Value  received. 

"[Signed]  Albert   Michelson. 

"A.  Voss. 

Indorsed : 

"Received  on  account,  $72.     November  21,  1873. 

"Received  on  the  within  note,  $25.    July  28,  1874." 

Upon-tml-iiLlhe  caiirtJi£lQ.w,.  without  a  jury,  the  plaintiff  recovered 
a  judgment  for  $246.10.  '      — 

The  note  appears  to  have  been  made  for  Michelson's  benefit,  and 
Voss  to  have  been  only  a  surety,  as  between  himself  and  Michelson ; 
and  as  Michelson  is  sliown  to  have  had  funds  on  deposit  in  the  bank,  iSlo  c«>/v<Ki«v 
from  time  to  time,  after  the  maturity  of  the  note,  and  before  the  bring- 
ing  of  the  suit,  to  an  amount  exceeding  that  of  the  note,  it  is  insisted 
die  bank  was  bound  to  apply  such  funds  to  the  payment  of  the  note, 
and,  that,  not  having  done  so,  Voss  was  discharged.  And  the  cases  of 
McDowell  V.  Bank  of  Wilmington  and  Brandywine,  1  Har.  (Del.)  369, 
and  Law  v.  East  India  Co.,  4  Vesey,  824,  are  cited  as  authorities  that, 
under  such  circumstances,  a  surety  will  be  discharged.  )(^t^ci^^^ 

Without  remark  upon  or  consideration  of  these  authorities,  we  do  ^*^<>y.f-^!' 
not  regard  them  as  having  application  to  the  case  in  hand.    We  do  not 
recognize,  in  such  a  case  as  is  here  presented,  the  existence  of  any 
such  obligation  as  the  one  which  is  asserted  by  appellant's  counsel.        ^         _ 

It  is  further  set  up  that  there  was  an  extension  of  the  time  of  the  ■    '^'''*^-^W--.t«,  •^(t!; 
payment  of  the  note  granted  by  the  bank  to  Michelson,  whereby  Voss 

5  7  The  creditor  is  under  no  duty,  before  suing  the  surety,  to  realize  on  the 
■collateral  given  him  by  the  principal.  Daniel  v.  Vinson,  10  Tex.  Civ.  App.  439, 
31  S    W.  421  (1895). 

On  duty  of  creditor  to  prove  against  estate  of  principal  In  bankruptcy, 
see  note,  20  H.  L.  R.  502. 


542  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

was  discharged.    It  is  sufilcient  to  say  that  we  find  no  sufficient  evi- 
dence of  any  binding  agreement  for  such  extension. 

The  judgment  is  affirmed. 

Judgment  affirmed."*' 

•  •The  mnjorlty  of  AmerfenTi  dedslonB  are  In  accord  with  the  principal  case. 

In  Poniisj-lvnnla.  the  deposit  of  nn  Indorser  at  maturity,  though  siibTect  to 
application  at  the  ojitlon  of  the  holding  bank,  imposes  no  duty  to  so  malve  ap- 
pii.-iition.     r.nnk  v.  IVltz.  ITC  Pa.  r,U.  ?,',  Atl.  218  (ISOf)). 

If  the  note  Is  pnyahle  at  the  holdinjr  hank,  and  the  drawer  has  funds  therf 
at  uiaturity,  tliere  Is  a  duty  to  the  suretA'  to  make  application.  Conitdercial 
.Vat.  nank  v.  Ilennlnper.  105  Pa.  40G  (18S4).  obiter;  Home  Nat.  Bank  v.  New- 
ton. 8  III.  .\pp.  riCP,  nSS11:  r.orman  Nat.  P.ank  v.  Foreman,  138  Pa.  474,  21 
.At!.  2<».  21  Am.  St.  He?).  rH)8  (1S!)1). 

See  note  on  "Bauker's  Lien'-'  In  9  H.  L.  R.  146. 

^^^le^f>  payment  is  niadt»  by  the  debtor,  without  designating  to  what  debt 
jipplli-atlon  shall  be  made,  the  creditor  may  apply  the  payment  to  a  debt  an- 
KHlntlne  that  iniarantee<i  fKIrby  v.  Duke  of  Marlborough.  2  M.  &  S.  18  [181.^1: 
Williams  V.  Rnwllnson.  3  Ping.  71  [182."!).  or  even  to  one  subsequently  created 
an  re  Sherry.  25  Ch.  Dlv.  092  [18S4]),  without  impairment  of  his  rights  against 
the  surety. 


Ch.  9)        TRANSACTIONS  OP  CREDITOR  WITH  SURETY.  543 


CHAPTER  IX 

TRANSACTIONS    OF    THE    CREDITOR    (OR    PROMISEE) 

WITH   SURETY 


SECTION  1.— REQUEST  OF  SURETY  TO  CREDITOR   (OR 
PROMISEE)  TO  SUE  PRINCIPAL 


CROUGHTON  v.  DUVAL. 
(Court  of  Appeals  of  Virginia,  1801.     3  Call,  69.) 

Duyal  filed  a  bill  in  the  High  Court  of  Chancery^,  .statiag^  That  he 
hadHbecome  surety  for  Campbell  in  some  bonds  to  Croughton.  That 
the  plaintiff  had  requested  the  defendant  to  sue  Campbell,  but  never 
could  prevail  upon  him  to  do  so.  That  after  CamptJSU's  death  the 
plaintiff  solicited  the  defendant  to  take  administration  on  his  estate, 
and  offered  to  be  his  security;  but  this  also  was  declined.  The  bill, 
therefore,  prays  that  the  bonds  may  be  delivered  up.  The__ansvver 
denies  any  peremptory  request  to  sue ;  but  two  witnesses  prove  the 
request,  and^  one  speaks  of  the  probable  ability  of  Campbell  to  have 
pSt^Tsibout  that  time.  The  court  of  chancery  granted  a  perpetual  in- 
junction to  any  further  proceedings  on  the  said  bonds;  and  Crough- 
ton appealed  to  this  court.  ^ 

Pendleton,  President,  delivered  the  resolution  of  the  court  as  fol- 
lows :  -       J,  w  . 

This  is  an  appeal  from  the  decree  of  the  court  of  chancery,  where  ^^"^  r**^ 
Mr.  Duval  exhibited  his  bill,  stating:  That,  on  the  23d  of  April,  1793, 
he,  as  security  for  Mr.  Alexander  Campbell,  entered  into  three  bonds 
to  Mr.  Croughton,  for  £113.  4s.  4d.  each,  one  payable  in  October, 
1793,  another  in  January,  1794,  and  the  third  in  April,  1794,  all  bear- 
ing interest  from  October,  1790.  That,  Mr.  Campbell's  circumstances 
being  in  a  declining  state,  Duval,  in  October,  1794,  when  all  the  bonds 
had  become  due,  applied  to  Croughton,  who  well  knew  Campbell's 
circumstances,  and  requested  him  to  bring  suits  on  the  bonds,  which 
he  declined  doing,  till  after  Mr.  Campbell's  death,  insolvent,  in  1796, 
his  inducement  for  which  forbearance  was  Campbell's  being  his  coun- 
sel in  an  important  suit  then  depending,  and  his  expectation  that  Camp- 
bell would  be  able  to  pay  him  from  the  fruits  of  a  suit,  then  depending 
in  this  court.     That,  after  Campbell's  death,  Duval  again  applied  to 

1  The  arguments  of  counsel  are  omitted. 


\ ,-( 


-,44  DEFENSES  OF  SURETY  AGAINST  CREDITOE.  (Part   3 

Croughton  to  administer  on  his  estate,  by  which  the  debts  might  have 
been  secured;  but  he  refused  to  do  so,  and  Duval,  not  being  a  cred- 
itor, could  not  obtain  such  administration.  That,  in  1798,  he  received 
a  letter  from  the  appellant  Southcomb,  intimating  his  claim  to  the 
bonds,  which  he  answered,  assigning  reasons  against  his  liability. 
Croughton  and  Southcomb  are  made  defendants,  and  required  to 
answer  the  bill ;  and  the  prayer  is  that  the  bonds  may  be  canceled  so 
far  as  respects  the  plaintiff,  or  that  other  relief  may  be  afforded.  _ 
The  proofs  fix  the  request  to  sue  in  1794,  but  go  no  further.  It  is 
not  proved  that  any  new  arrangements  are  made  between  the  cred- 
itor and  the  principal  to  obtain  a  forbearance  of  the  suits;  for,  al- 
though it  is  stated  that  Campbell  expected  to  pay  from  the  effect  of 
a  suit  depending,  it  does  not  appear  that  Croughton  had  bound  him- 
self to  wait  till  the  event  of  that  suit.  It  is,  therefore,  a  naked  case 
>(  for  the  question  whether  a  creditor,  by  delaying  to  commence  suit, 
when  requested  by  a  surety,  without  anything  done  on  his  part  w]5i]?h 
may  amount  to  a  new  contract  with  the  principal,  shall  lose  his  remedy 
agninst  the  surety.  The  question  is  new,  and,  indeed,  important,  as 
there  may,  perhaps,  be  hundreds  of  bonds,  dated  prior  to  the  act  of 
December,  1794  (Mar.  1795,  R.  C.  [Ed.  1819]  c.  IIG,  §  6),  existing 
in  the  state,  and  probably  not  one  of  them  in  which  the  creditor  has 
not  forborne  to  sue  for  a  considerable  time  beyond  the  day  of  pay- 
ment, which,  it  is  urged,  will  amount  to  a  discharge  of  the  surety. 
It  would,  indeed,  be  much  more  important,  if  that  act  of  1794  had 
not  settled  the  question  from  that  period.  The  act  does  not  take 
away  any  remedy  which  the  surety  was  entitled  to  before;  and  we 
come  to  consider  what  that  remedy  was. 

( 'It  is  clear, that- the  plaintiff  might  have  paid  the  money,  and  proceed- 
cd  to  a  suit  himself,  ot,*^if  that  was  inconvenient,  he  might  have 
brought  his  bill  oFquia  timet,  to  have  compelled  the  principal  tn  p;^y. 
and  the  creditor  to  receive  the  money/^^but  that  the  creditor  should 
lose  his  debt,  because  he  was  merely  passive,  in  forbearing  a  j^uit 
wfiich  the  surety  requested  him  to  bring,  without  anything  active 
between  him  and  the  principal,  tending  to  show  a  new  contract  for 
forbearance,  is  not,  and  the  court  believe  cannot  be,  proved  by-any 
of  the  cases  produced,  or  existing.  In  the  case  quoted,  from  2  Bro.  C. 
C.  579,  the  creditor  commenced  suit,  and,  upon  the  principal  giving  a 
note  to  confess  judgment,  agreed  to  stay  execution  for  three  years, 
which  the  Chancellor  considered  as  a  new  contract  and  compromise 
with  the  principal,  without  the  consent  of  the  surety,  and  which  de- 
prived him  of  his  remedy  by  the  bill  of  quia  timet,  and,  therefore, 
that  the  surety  was  discharged.  In  the  case  in  2  Ves.  Jr.  540,  the 
creditor  took  from  the  principal  several  notes  and  drafts,  which  were 
returned,  and  new  ones  given  from  time  to  time,  which  amounted 
to  a  new  contract,  and  all  this  without  consulting  the  surety,  who 
had  this  further  equity  in  that  case,  that  while  those  notes  were  trans- 
acting, considering  himself  as  discharged,  he  had  paid  over  to  the 


Ch.  9)        TRANSACTIONS  OF  CREDITOR  WITH  SURETY.  545 

principal  more  money  than  the  amount  of  the  debt,  which  had  come 
to  the  surety's  hands;  and  the  Chancellor  adjudged  that  that  surety 
was  discharged.  The  circumstances  discussed  in  those  cases,  so  far 
from  proving-  that  the  surety  is  discharged  by  a, bare  request  to  sue, 
not  complied  with,  tend  to  establish  the  contrary,  that  such  request 
and  a  bare  forbearance  to  sue,  does  not  amount  to  a  discharge. 

Sureties  are  so  far  favored  in  equity  that  the  court  will  never  ex- 
tend relief  against  them  further  than,  by  their  contract,  they  are 
bound  at  law ;  but  fair  creditors  are  also  favorites  in  that  court,  and 
will  not  be  deprived  of  their  legal  rights,  without  some  fraud  or  neg- 
lect in  doing  what  they  were  bound  to  do.  It  was  certainly  unkind 
in  Croughton  not  to  sue  when  he  was  requested  by  the  surety,  which 
was  so  far  a  breach  of  his  moral  duty ;  but  it  was  truly  said  that  this 
duty  was  such  as  the  civilians  describe  as  an  imperfect  obligation, 
the  performance  of  which  was  merely  voluntary,  and  could  not  be  en- 
forced by  a  court  of  justice,  many  instances  of  which  were  mentioned, 
and  many  more  might  have  been  added.  The  parties  here  had  plain 
remedies:  The  creditor  to  sue,  if  he  chose  it;  and,  as  he  did  not,  Mr. 
Duval's  remedy  is  before  pointed  out,  which  he,  neglecting  to  pursue, 
was  at  least  as  much  in  fault  as  the  creditor,  and  where  equity  is  equal 
the  law  must  prevail. 

The  decree  is,  therefore,  to  be  reversed,  with  costs,  by  the  unani- 
mous opinion  of  the  court;  and,  in  consequence  of  Mr.  Duval's  con- 
sent, entered  in  the  record,  he  is  decreed  to  pay  the  several  sums  ac- 
cording to  the  bonds.  The  costs  in  that  court  to  be  equally  borne  by 
the  parties,  as  it  seems  to  have  been  by  consent,  to  settle  a  new  point. 


TOWNSEND  v.  GAWEN  RIDDLE. 

(Supreme  Court  of  New  Hampshire,  1822.    2  N.  H.  448.) 

This  was  assumpsit  on  a  promissor_y  note,  dated  February  22,  1814, 
for  $188.70,  on^deniand,  ■with,  interest.  It  was  signed  by  the  defend- 
ant and  one  John  Riddle,  as  joint  and  several  promisors. 

At  the  trial  in  April  here  last,  under  the  general  issue,  it  appeared 
in  evidence  that  the  note  was  given  for  the  sole  debt  of  John  Riddle ; 
that  the  defendant  was  in  fact,  a  mere  surety;  t]iat._said_J,ohn  died 
some  years  since ;  that,  his  estate  having  been  represented  insolvent, 
commissioners  were  appointed,  to  whom  the  plaintiflF  exhibited  'this 
liote;  that  the  note  was  rejected  or  disallowed;  and  that  he  never 
claimed  an  appeal  from  their  decision. 

On  tlieie_,facts  a  verdict  was  taken  for  the  plaintiff,.  suhj.edLlo_iur- 
thec  consideration . 

Woodbury,  J.  The  proceedings  before  the  commissioners  operated 
as  a  discharge  of  one  of  the  joint  and  several  promisors  in  the  note 
Hen.  Sub. — 35 


f^/- 


546  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

now  in  suit.  1  X.  H.  Laws,  210.  Death  discharged  the  person  of 
John  Riddle ;  and  no  action  can  be  instituted  against  his  estate,  when 
represented  insolvent. 

,  The  first  question,  then,  is  whether  a  decision  in  favor  of  John 
Tvidillc's  estate  by  the  commissioners  must,  by  operation  of  la^Y^Jie 
'A\::icd  a  bar  to  this  action  against  the  other  promisor.  When  con- 
tracts are  joint,  any  kind  of  discharge  of  one  promisor  on  the  merits 
of  the  contract  is  in  law  a  discharge  of  all  the  promisors.    1  Lev.  63 ; 

1  Sid.  76;  1  Bos.  &  Pull.  G30;  Cairns  v.  Smith,  8  Johns.  (N.  Y.) 
339 ;  Clason  v.  Morris,  10  Johns.  (N.  Y.)  538.  Because  the  contract, 
once  fulfilled,  released  or  satisfied  on  its  merits,  should  not  again  be 
enforced.  But  if  the  discharge  do  not  relate  to  the  merits  of  the  con- 
tract, and  only  concerns  the  person  of  one  of  the  promisors,  as  in- 
fancy, bankruptcy,  etc.,  the  other  promisors  are  still  holden.  2  Maule 
&  Selw.  23,  44-1;  Hartness  v.  Thompson,  5  Johns.  (N.  Y.)  160;  Rob- 
ertson V.  Smith,  18  Johns.  (N.  Y.)  478,  9  Am.  Dec.  227;  Ward  v. 
Johnson,  13  Mass.  151.  "For,"  in  the  language  of  the  Mirror  of  Jus- 
tice (page  215),  "satisfaction  hath  respect  to  the  debt  and  not  to  the 
person." 

Indeed,  where  the  contract  is  joint  and  several,  as  in  the  present  case, 
a  judgment  against  one  promisor,  followed  by  a  commitment  to  prison 
and  a  discharge  of  his  person,  which  amounts  to  a  technical  satis- 
faction, does  not  operate  as  a  satisfaction  of  the  debt  itself,  and  bar 
another  action  against  another  promisor,  but  operates  merely  as  a 
formal  or  modal  satisfaction  in  respect  to  the  individual  imprisoned. 
3  Mod.  36;  Yclv.  67,  note;  5  Co.  86,  Blumfield's  Case;  2  Bos.  & 
Pull.  62  ;  6  D.  &  E.  525 ;  6  Co.  46,  a  ;  3  East,  255 ;  Cro.  Jac.  74,  338 ; 
5  East,  147 ;  5  Bos.  &  Pull.  475 ;  4  D.  &  E.  825,  McDonald  v.  Bow- 
ington ;  Bl.  Rep.  1235,  Hayling  v.  Mullhull ;  Chitt.  Bills,  254 ;  Liv- 
ingston V.  Bishop,  1  Johns.  (N.  Y.)  291,  3  Am.  Dec.  330;  1  Gall.  32, 
Fed.  Cas.  No.  6,900,  Hunt  v.  United  States;  Ward  v.  Johnson,  13 
Mass.  151. 

There  would  be  little  advantage  in  having  two  promisors,  unless 
cither  could  be  prosecuted  till  the  debt  itself  was  actually  satisfied. 

2  Bl.  Rep.  1235.  \\'here  the  contract  is  joint,  it  would  seem  that, 
from  some  technical  principle,  a  different  rule  prevails.  Yelv.  68,  b, 
note;  Sheehy  v.  Mandeville,  6  Cranch,  253,  3  L.  Ed.  215-  Ward  v' 
Johnson,  13  Mass.  148;  18  Johns.  (N.  Y.)  483,  9  Am.  Dec' 227]  Rob- 
ertson V.  Smith. 

But  in  either  case,  where  the  judgment  against  one  promisor  has 
been  actually  satisfied  by  land,  goods,  or  money,  then  of  course  no 
action  can  be  sustained  against  the  other  promisors.  Cro.  Jac.  338; 
Strange,  515.  Whetherjhe  cominissioners  disallowed  this  not£.  be- 
cause It  had  beenlTius  satisfied,  or  because  it  had  been  di^cha'rcred 
as  to  the  person  only  of  John  Riddle,  does  not  appear.  Cro  TaT 
187,  Husconibe  v.  Standing. 


Ch.  9)        TKANSACTIONS  OF  CREDITOR  WITH  SURETY.  547 

But,  to  bar  this  action,  the  grounds  of  their  decision  should  appear, 
and  sHoiiTd  relate  to  the"  merits  of  the  contract.  As  the  present  dfe- 
fendant  was  no  party  to  the  doings  before  the  commissioners,  and 
consequently  not  bound  by  them,'  he  cannot  bind  the  plaintiff  by  them ; 
and  if  their  decision  rested  on  evidence  of  payment,  illegality  in  the 
consideration,  or  some  other  such  ground,  it  is  the  duty  of  the  de- 
fendant now  to  prove  it.  6  Cranch,  265,  3  L.  Ed.  215,  Sheehy  v. 
Mandeville.  /\  jWb'cf'-n/^*^ 

The  defendant  next  contends  that  he  ^vas  in  fact  only  a  surety  in  y»*^^  mAamp/  ^i 
the  contract,  and  ought  now  to  be  "discharged,  in  full  or  in -part-,,  oa  v^^^  LJL,  (^  Jl 
account  of  negligence  in  the  plaintiff  respecting  the  principal  debtor.  ^^"^^^  L^,^ 
THe  principal  debtor  was  deceased ;    his  estate  was  insolvent ;    these  c-L^  ' 

facts  known  to  the  plaintiff;  his  claim  exhibited  to  the  commis- 
sioners; and,  after  being  rejected,  no  appeal  from  their  judgment 
claimed  and  prosecuted.  A_ neglect  to  appeal,  it  is  said,  has  injured 
the^  defendant  to  at  least  the  amount  of  the  dividend,  which  would 
have  been  allowed  had  the  claim  been  supported  in  the  court  of  ap- 

But-Jthe,  groiind  on  which  the  commissioners  acted  may,  as  before 
remarked,  have  concerned  only  the  person  of  the  principal  debtor,  and 
might  have  prevailed  as  well  in  the  appellate  tribunal  as  before  the* 
commissioners.  Moreover,  the  doctrine  at  law  concerning  the  dis-- 
charge  oFTureties  does  not  now  go  to  the  extent  which  the  defendant 
apprehends.  Xf^^rf'^ 

By  Magna  Charta,  c.  8:  "Neither  shall  the  pledges  of  the  debtor  ^'  i  Px\, 
be  distrained  as  long  as  the  principal  debtor  is  sufficient  for  the  pay-  ^^^T^  ^ 


ment  of  the  debt."    And  in  Fitz.  Na.  Br.  p.  137,  a  writ  is  said  to  lie    ^  ^^2^i^^ 
for  sureties  to  protect  them  from  distress  while  the  principal  debtor  ^  «*>*'*'*^^/^' 
has  anything.     "We  command  you,  that  you  distrain  C.   [the  princi- 
pal] to  pay  the  said  money,  and  that  you  thereupon  permit  his  pledges 
to  have  peace,"  etc. 

But  in  more  modern  times  the  surety  is  either  by  the  terms  of  the 
contract  liable  at  the  same  time  and  in  the  same  manner  with  the 
principal,  or  by  its  terms,  as  in  the  case  of  indorsers  of  writs  and 
bail,  they  do  not  become  liable  till  judgment  is  obtained  against  the 
principal,  and  execution  upon  it  is  returned  unsatisfied.  In  the  last 
class  of  cases,  if  "distrained"  or  sued  too  soon,  they  can  defend  with- 
out resort  to  a  remedial  writ,  as  in  Fitzherbert ;  in  the  other  class, 
they  are  by  the  terms  of  their  contract  liable  or  not  liable  at  the  same 
time  with  the  principal ;  and  consequently,  when  sued  before  the 
principal,  but  after  liable  by  their  contract,  they  seem  at  law  to  be 
without  remedy  against  the  creditor,  either  by  defense,  by  a  separate 
writ,  or  otherwise.  The  safety  to  such  sureties  consists  in  their  ob- 
taining ample  indemnity  from  their  principals,  or  in  making  express 
provision  in  their  contracts  that  the  principals  are  to  be  first  and  dil- 
igently prosecuted.  Accordingly  it  has  been  held  that  mere  delay  or 
forbearance  to  sue  a  principal  debtor  does  not  exonerate  his  surety. 


548  DEFENSliS  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

Poth.  on  Ob.  262 ;  1  Dod.  Ad.  Rep.  1,  7 ;  James  v.  Mayrant,  4  Des- 
saus.  (S.  C.)  GOl;  Dehuff  v.  Turbett,  3  Yeates  (Pa.)  160;  1  Holt's 
N.  P.  84 ;  People  v.  Jansen,  7  Johns.  (N.  Y.)  338,  5  Am.  Dec.  275 ; 
Tulton  V.  Matthews,  15  Johns.  (N.  Y.)  433,  8  Am.  Dec.  261;  Powell 
V.  Waters,  17  Johns.  (N.  Y.)  176;  Hunt  v.  United  States,  1  Gall.  34, 
Fed.  Cas.  Xo.  G,900 ;  6  Taunt.  379. 

At  tlie  same  time  it  has  been  held  that  if  this  delay  happens  after 
an  express  request  by  the  surety  for  an  action  to  be  instituted  against 
the  principal,  and  if  thereby  the  surety  has  lost  all  benefit  of  any  rem- 
edy over  for  the  debt,  he  becomes  exonerated.  Pain  v.  Packard,  13 
Johns.  (N.  Y.)  174,  7  Am.  Dec.  369;  King  v.  Baldwin,  17  Johns. 
(N.  Y.)  384,  8  Am.  Dec.  415.  But  this  position  has  in  other  cases 
been  denied,  and,  though  supported  by  some  apparent  equity,  is  on 
principle  questionable.    King  v.  Baldwin,  2  Johns.  Ch.  (N.  Y.)  563. 

Again,  it  has  been  held  that  if  the  delay  happen  under  a  new  and 
distinct  engagement  between  the  principal  creditor  and  the  debtor,  and 
the  surety  suffer  by  the  delay,  he  ought  to  be  discharged.  3  Atk.  96 ; 
2  Ves.  Jr.  540;  2  Brown's  Ch.  529 ;  Holt's  N.  P.  84,  Orne  v.  Young; 
Rathbone  v.  Warren,  10  Johns.  (N.  Y.)  595;  Fulton  v.  Matthews, 
15  Johns.  (N.  Y.)  433,  8  Am.  Dec.  261. 

This  last  position  seems  on  principle  more  tenable;  and  the  deci- 
sions in  favor  of  it,  though  mostly  in  chancery,  do  not  profess  to  rest 
on  any  principles,  not  consistent  with  the  common  law,  when  the  char- 
acter of  the  surety  is  disclosed  in  the  contract.  People  v.  Jansen,  7 
Johns.  (X.  Y.)  3:?2,  5  Am.  Dec.  275;  2  Ves.  Jr.  542;  Holt's  N.  P. 
84.  Vid.  etiam  Hunt  v.  United  States,  1  Gall.  33,  Fed.  Cas.  No.  6,- 
000;  Rathbone  v.  Warren,  10  Johns.  (N.  Y.)  595;  King  v.  Baldwin, 
17  Johns,  (N.  Y.)  384,  8  Am.  Dec.  415;   6  Taunt.  379. 

It  deser\es  remark,  however,  that  most  of  the  cases  above  cited 
a-  where  the  sureties  were  liable,  not  as  joint  or-joint  and  sev- 

^'  OTS,  but  as  mere  indorsers,  or  as  guarantors  on  a  separate 

''  ',  in  which  cases  it  has  been  supposed  that  greatef~dTH=-" 

eL....  „...;  strictness  are  imposed  on  the  creditor.  2  Taunt.  20a;_a, 
East,  445;  Lanuse  v.  Barker,  10  Johns.  (N.  Y.)  327;  Rathbone  v. 
Warren,  10  Johns.  (N.  Y.)  587.  Where  the  character  of  the  suretv 
appeared  on  the  face  of  the  contract,  and  by  law  the  creditor  was 
obliged  to  make  periodical  settlements  with  the  principal,  and  neglected 
it,  the  surety  has  been  exonerated.  People  v.  Jansen,  7  Johns  (N 
Y.)  332,  5  Am.  Dec.  275;  1  Bos.  &  Pull.  419;  10  East,  40,  Tr.  River 
C.  V.  Harley. 

On  the  points  above  mentioned,  see,  further,  1,9  Ves  200  •  6  Ves 
809;  2  Marsh.  Rep.  91;  3  Binney,  520;  2  Hen.  Bl.  613;  Lanusse  v. 
Barker,  3  Wheat.  155,  note. 
/,,  How  far  we  should  feel  warranted  in  the  adoption  of  any  of  the 
above  positions  to  exonerate  a  surety  need  not  be  decided  till  a  case 
arises,  which  requires  an  absolute  expression  of  our  opinion  But  it 
is  very  certain  that  we  should  not  go  beyond  all  those  positions;   and 


Ch.  9)        TRANSACTIONS  OF  CREDITOR  WITH  SURETY.  549 

it  is  equally  certain  that  the  present  case  comes  within  the  principle 
of  none  of  them. 

Here  the  character  of  the  defendant  as  a  surety  did  not  appear  on 
the  face  of  the  contract,  nor  was  it  proved  that  the  plaintiff  knew  him 
to  be  only  a  surety.  Here  he  was  not  liable  as  a  mere  indorser  on 
the  same  instrument,  or  as  a  guarantor  on  a  separate  one.  No  time 
for  an  adjustment  with  the  principal  was  fixed  by  law ;  no  delay  was 
given  to  him  after  a  request  by  the  surety  for  a  prosecution ;  no  new 
engagement  for  forbearance  appears  to  have  been  entered  into  be- 
tween the  creditor  and  debtor ;  and,  though  the  remedy  over  by  the 
defendant  is  now  lost,  yet,  it  was  not  after  a  request  to  prosecMe,  or 
an "ehgagement  to  forbear.  15  Johns.  (N.  Y.)  433,  8  Am.  Dec."  261, 
iMirton'vTTratthews. 

Perhaps  a  review  or  new  trial  might  disclose  new  and  important 
facts ;   but  on  the  case  as  now  stated  there  must  be 

Judgment  on  the  verdict. 


'     THOMPSON  V.  BOWNE. 
(Supreme  Court  of  New  Jersey,  1876.    39  N.  J.  Law,  2.) 

On  error  to  the  Monmouth  Pleas. 

Argued  at  June  Term,  1876,  before  Beasi^ey,  Chief  Justice,  and 
Justices  ScuDDER,  Dixon,  and  Reed. 

The  opinion  of  the  court  was  delivered  by 

Beasley,  Chief  Justice.  This  was  a  suit  against  the  two  joint 
makers  of  a  promissory  r^ote.  The  plaintiff  in  error  was  one  of  these 
makers,  having  signed  the  note  as  surety  for  his  companion. 

Theobiection  to  the  trial,  which  is  elaborately  discussed  in  the 
brief'of"  the  counsel  for  the  defense,  is,._that  the  court  overruled  an 
offer  to  show  that  the  defendant,  as  surety,  gave  notice  to  the  holder 
of  the  note  that  he  was  required^to  sue  the  principal,  and  that  such 
notice  was  disregarded,  and  the  principal  afterwards  became  insolvent. 
Numerous  decisions  in  the  courts  of  other  states  are  cited  in  support 
of  the  validity  of  the  objection. 

But  the  question  with  us  is  not  an  open  one.  A  series  of  judgments 
in  this  court  and  in  the  Court  of  Errors  has  entirely  established  the 
law  in  a  manner  opposite  to  this  contention.  The  following  are  the 
cases :  Pintard  v.  Davis,  20  N.  J.  Law,  205 ;  Id.,  21  N.  J.  Law,  632, 
47  Am.  Dec.  172;  Grover  v.  Hoppock,  26  N.  J.  Law,  191;  Morris 
Canal  v.  Van  Vorst,  21  N.  J.  Law,  100;  Freehold  Banking  Co.  v. 
Brick,  37  N.  J.  Law,  307.^    *    *    * 

-  2  The  remainder  of  the  opinion,  holding  that  the  mere  passive  conduct  of 
the  creditor  does  not  discharge  the  surety,  is  omitted. 

V-pQI-fl :    Hogaboom  v.  Herrick,  4  Vt.  131  (1832). 

Smith  V.  Freyler,  4  Mont.  489.  1  Pac.  214,  47  Am.  Rep.  358  (1882). 

The  New  Yorli  doctrine  to  the  contrary  of  the  principal  case  (Pain  v.  Pack- 
ard, 13  Johns.  174,  7  Am.  Dec.  309  [181 G] ;   King  v.  Baldwin,  17  Johns.  384.  8  I 


550  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

FIRST  NAT.  BANK  OF  BUFFALO,  Respondent,  v.  WOOD, 

Appellant. 
(Court  of  ApiH'uLs  of  New  York.  1877.     71  N.  Y.  405.  27  Am.  Rep.  66.) 

•Appeal  from  judg-mcnt  of  the  General  Term  of  the  Superior  Court 
of  the  city  of  Buffalo,  affirming' a  judgment  in  favor  of  plaintiff,  en- 
tered upon  a  decision  of  the  court  on  trial  without  a  jury. 

This  action  was  brought  against  defendant  as  indorser  of  certain 
promissory  notes  made  by  one  Uevenport  and  discounted^ by  plaln- 
tjff.  The  defendant  was  an  accommodation  indorser,  which  the  plain- 
tiff knew~wTicn  it  discounted  the  notes. 

Xhe  answer  sets  up  that  previous  to  the  making  of  the  notes  Deven- 
port  had  been  a  customer  of  the  plaintiff,  keeping  a  large  account  with 
it,  and  procuring  loans  and  discounts  of  the  plaintiff  upon  notes  and 
other  paper;  that  in  ISGO  Devenport  made  an  arrangement  for  a  line 
of  discount  with  plaintiff  to  the  amount  of  $4,000,  and  executed  to 
the  plaintiff  a  mortgage  upon  real  estate  to  secure  the  payment  of  such 
discounted  paper  as  he  then  owed  the  plaintiff,  and  such  as  should 
l>e  hereafter  discounted  for  him  by  the  plaintiff,  not  exceeding  $4,000 
at  any  one  time,  and  for  all  renewals  or  extensions  of  such  paper, 
•luring  the  term  of  five  years,  from  February,  1869 ;  that  the  then 
existing  debt  of  Devenport  to  plaintiff  "was  nominally  and  in  form 
paid  and  retired  by  the  assumed  and  pretended  discount  of"  paper 
made  by  Devenport.  or  by  him  procured  to  be  made  and  indorsed  by 
others  for  his  accommodation,  the  proceeds  of  which  were  credited  him 
on  plaintiff's  books  as  an  ordinary  deposit;  that  the  paper  last  men- 
tioned was  "nominally  and  in  form  paid"  by  the  discount  of  other 
similar  paper  by  plaintiff,  which  was  credited  on  its  books  to  Deven- 
port as  a  flc[K»sit,  against  which  he  drew  "for  the  purpose  of  going 
through  the  form  of  paying"  the  previous  paper,  his  indebtedness  to 

Am.  Dec.  415  [ISIDD  ov£ixuJed  Chancellor  Kent's  decision  iu  Kiiig  v.  Bald- 
win. 2  .Tohim.  Ch.  5.^4  (TSTT).  

"^ '"  ['?  V"'"/-  I'-'i'-'^nrd.  ::  Am.  I^ad.  Cas.,  270,  by  Hare  &  Wallace. 

\ork  rule  t^tal.li.<.lied  in  1817  was  due  to  the  deciding  vote  of  the 
I  <...verm.r  of  New  York.  John  T.iyler.  who  was  not  a  lawyer,  but 

n  .|.i.t,-  pn.,„in.>nt  trader,  hanker,  politician,  and  man  of  affairs  Roe  G  V 
NS..r»h«  ••!:•.„.!..,„  H.M^lle.tions  of  Albany,  ]S(W>-1S0S."  This  New  York  doV 
,  '  '"♦"  Pennsylvania  iu  Wetzel  v.  Sponsler's  ExTs    IS  Pa 

•  lueutly  the  lindtatlon  was  tacked  on  to  this  doctrine  thai 

j  ;^5"  the  effec-t  that  unless  suit  is  brought  the  surety  will 

I.  ~es  ,.,h   Eljr  p^^to^""'"  *°  '  ^'''  ^  ^^"^^^'^  ^---^" 

..t  h.-is  l>een  dealt  with  In  various  statutes.     See  Ames'  Cases  on 

-3:    Moormann  v.  Voss.  77  Ohio  .St  270.  Si  N.  e.   70  (IOH7V 

b-.    ,  ,,.  .    u' uleZJ^lnr'TV'''''^  P'^"^^?^  that,  after  written  notice 

charge  the  Murefy  °  commence  action,  non-compliance  wiirdis- 

InXr^h"  uVo^A^^n^;  title  "Securities."  construed  in  Hickam  v.  HoU- 
ingswortn.  17  .Mo.  47.)  (l.S.,3).  not  to  apply  where  the  principal  is  dead- 


Ch.  9)        TRANSACTIONS  OF  CREDITOR  WITH  SURETY.  551 

plaintiff  being  about  the  same  amount  at  all  times ;  that  this  course 
of  business  continued  for  five  years,  until  February,  1874,  when  Dev- 
enport,  being  largely  indebted  to  plaintiff  on  the  paper  discounted  for 
him  under  said  arrangement,  made  another  arrangement  with  the 
plaintiff,  by  which  his  line  of  discount  was  to  be  extended  to  $8,000, 
and  he  made  a  new  mortgage  to  plaintiff  upon  the  same  real  estate  as 
the  first,  as  security  for  his  then  existing  indebtedness  to  the  plain- 
tiff, and  for  future  discounts,  to  the  extent  of  $8,000 ;  that  thereafter 
the  plaintiff  continued  to  discount  for  Devenport  paper  made  or  in- 
dorsed by  others  for  his  accommodation  from  time  to  time,  the  pro- 
ceeds of  which  were  credited  him  on  the  plaintiff's  books,  and  used 
to  take  up  other  like  paper  which  had  been  discounted  for  him  by 
plaintiff;  that  the  amount  of  his  debt,  though  it  may  have  varied 
from  time  to  time,  yet  was  not  materially  reduced;  that  the  de- 
fendant, knowing  the  facts  aforesaid,  and  relying  on  the  security  of 
said  mortgages,  indorsed  the  notes  in  suit  at  Devenport's  request,  and 
for  his  accommodation,  without  consideration,  to  be  used  by  him  in 
his  dealings  with  the  plaintiff;  that_said  notes-_a^£i:£_,'-'in  form-^is- 
countedl'Jiy.lhe.  plaintiff ,  and  the  proceeds  credited-  to  Devenport  on 
Its  books  "as  a  mere  colorable  deposit  of  money,"  from  which  other 
paper,_  discounted  previously  for  Devenport  by  plaintiff,  was  "in  form. 
paTcT^and  retired";  that,  when  said  notes  in  suit  were  discounted, 
planitiff  knew  that  defendant  was  a  mere  accommodation  -indorser ; 
that  Devenport  was  insolvent,  and  known  to  plaintiff  to  be  so,  and  he 
continued  insolvent  until  his  death ;  that  said  mortgages  continued  to 
be  held  by  plaintiff,  and  are  ample  security  for  the  payment  of  said 
notes  and  all  other  indebtedness  of  Devenport  to  plaintiff ;  that  be- 
sides said  notes  a  large  amount  of  other  paper  has  been  discounted  for 
Devenport  by  the  plaintiff,  upon  which  other  persons  are  accommo- 
dation makers  or  indorsers  for  him,  and  which  is  unpaid,  and  is  se- 
cured by  said  mortgages.  The  answer  also  alleges  that  the  plaintiff, 
in  the  course  of  its  dealings  with  Devenport,  took  and  received,  upon  ' 
the  discounts  made  for  him  as  aforesaid,  interest  at  the  rate  of  10 
per  centum  per  annum.  ^  ^i.  ,■!  L^ 

On  trial  the  defendant,  having  proved  the  execution  and  delivery 
of  the  two  mortgages,  offered  to  prove  the  other  facts  so  set  up  in 
hTs  answer  as  a  defense  to  this  action;  but  the  court  decided  that  such 
facts  did. nol, prove  or  tend  to  prove  any  defense,  or  entitle  the^  de- 
fendant to  any  relief,  and  excluded  the  evidence  offered,  to  which 
ruling  the  defendant  duly  excepted.  Defendant  gave  in  evidence  an 
instrument  executed  by  him,  releasing  certain  premises  from  the  prior 
lien  of  a  mortgage  to  him,  so  as  to  give  a  preference  to  the  lien  of 
one  of  the  mortgages  above  mentioned,  executed  by  Devenport  to 
the  plaintiff,  upon  the  same  premises,  and  offered  to  prove  that  prior 
to  the  execution  of  said  instrument,  and  as  part  oT^The  negotmtion 
which  resulted  in  its  execution,  and  in  consideration  of  the  release 
therein  contained,  it  was  by  parol  stated  and  agreed  by  plaintiff  that 


CJi:  DEFENSKS   OF   SURETY   AGAINST   CREDITOR.  (Part    3 

it  would  resort  to  said  mortgage  made  by  Devenport  be  fore_  suing  de- 
fendant upon  any  note  secured  by  that  mortgage  which  defejidant 
might  indorse.  This  parol  evidence  was  rejected  by  the^urt,  on  the 
ground  that  it  would  contradict  and  vary  the  terms -xxDhP  ipstru- 
mcnt  of  rclc^^e  as  well  as  the  notes  themselves.' 

Miller,  J.  The  defendant  was  an  indorser  upon  the  notes  in  suit 
for  one  Devenport,  who  kept  an  account  with  the  plaintiff,  and  had 
arranged  for  a  line  of  discounts,  which  was  secured  by  mortgages 
upon  real  estate.  The_dei£Dil3nt  set^p  in  his  answer,  and  offered  to 
prove,  that  he  indorsed  said  notes  for  the  accomrriOdaLiun  of  th«!-<naker, 
without  any  security  or  protection  whatever,  except  such  as  was  af- 
forded by  the  mortgages  above  mentioned,  which  by  their  terms  were 
executed  and  delivered  as  security  for  paper  of  this  character;  that 
the  plaintiff  had  full  knowledge  of  the  character  of  the  indorsement, 
and  knew  that  the  defendant  relied  upon  the  mortgages  as  the  primary 
fund  out  of  which  the  debt  represented  by  the  notes  was  to  be  paid; 
that  the  plaintiff  did  not  actually  lend  or  advance  any  money  to  the 
said  Devenport  on  the  pretended  discounts  of  the  said  notes,  or  any 
of  them,  but  they  were  passed  to  the  credit  of  said  Devenport  as  a 
mere  colorable  deposit  of  money,  out  of  and  from  which  other  paper 
was  in  form  paid  and  retired;  and  that  the  liability  and  mdebted- 
ness  was  a  mere  extension  and  renewal  of  the  original  indebtedness 
^secured  by  said  mortgage. 

'/'  We  think  that  the  testimony  offered  established  no  defense  to  the 
action,  and  did  not  entitle  the  defendant  to  the  equitable  rehe^ 
demanded  by  the  answer.  The  defendant  claims  that  the  mortgage 
wa5__the  primary  security  for  the  indebtedness,  and  the  "notes  mere 
collateral  promises  to  pay  the  same  debt  or  liability  secured  by~3.~n"en 
on' the  real  estate,  and  no  action  can  be  maintained  on  the  notes,"  but 
the  remedy  must  be  confined  to  the  mortgage  as  the  higher  security. 

f-  The  authorities  relied  upon  to  sustain  this  position  do  not  uphold  the 
doctrine  contended  for  in  cases  where  commercial  paper  is  discoQnted 
and  collaterals  taken  to  secure  the  same.  The  character' "oTTuch 
paper  is  well  understood,  and  it  would  be  overthrowing  long-estab- 
lished rules,  seriously  affecting  the  rights  and  liabilities  of  parties, 
to  hold  that  resort  must  be  first  had  to  a  mortgage  or  other  instru- 
ment taken  as  a  collateral  to  secure  the  same.  In  such  cases  the 
money  is  not  loaned  on  the  mortgage,  but  it  is  given  merely  to  make 
the  notes  discounted  more  safe  and  secure,  and  according  to  the  in- 
tention of  the  parties  is  not  to  be  considered  as  the  principal  debt. 
Much  embarrassment  and  perplexing  complications  would  arise,  if 
holders  of  such  instruments,  who  had  discounted  paper  upon  the  faith 
of  such  security,  should  be  compelled  to  resort  to  the  same  primarily 
for  the  collection  of  their  demands.  It  would  in  fact  throw  the  bur- 
den of  a  litigation  upon  the  party  who  was  intended  to  be  relieved 

•  The  arguments  of  counsel  have  been  omitted. 


Ch.  9)        TRANSACTIONS  OF  CREDITOR  WITH  SURETY.  553 

from  the  same,  and  tend  to  thwart  the  purpose  in  view.  We  have  been 
referred  to  no  authority  which  upholds  and  sustains  any  such  principle. 

While  an  accommodation  indorser  may  be  regarded  as  surety  in 
some  cases  and  under  certain  circumstances,  and  has  all  the  rights 
applicable  to  that  relationship,  yet  as  between  him  and  a  bona  fide 
holder,  where  his  liability  has  become  fixed,  he  becomes  the  principal 
debtor,  and  if  he  desires  the  benefit  of  any  security  held  by  the  cred- 
itor he  must  pay  up  the  debt,  fulfill  the  contract,  and  enforce  the  right 
of  subrogation  to  the  holder  as  to  the  securities  held  by  him.  See 
Ross  V.  Jones,  22  Wall.  576,  592,  22  L.  Ed.  730;  In  re  Babcock,  3 
Story,  393,  398,  399,  Fed.  Cas.  No.  393. 

The  indorser  cannot  compel  the  holder  to  sue  the  maker  first,  or 
to  enforce  his  security,  and  in  the  absence  of  an  additional  and  con- 
trolling equity  to  resort  to  a  collateral  security.  The  uniform  cur- 
rent of  authority  fully  sustains  the  views  expressed,  and  most  of  the 
leading  cases  bearing  upon  the  question  discussed  are  so  fully  con- 
sidered in  the  opinion  of  the  General  Term  that,  with  perhaps  some 
few  exceptions,  further   examination  of  the   cases   is  not   required.* 

Several  cases  are  cited  by  the  appellant's  counsel,  which  were  not  ,^  ^     , 

especially  considered  by  the  General  Term,  to  sustain  the  doctrine  '  "  /  - ' 
that  a  surety  may  compel  the  creditor  to  sue  for  and  collect  the  debt 
of  the  principal  debtor,  or  to  exhaust  his  collateral  before  resort  is 
had  to  the  surety.  Wright  v.  Austin,  56  Barb.  13 ;  Soule  v.  Ludlow, 
6  Thomp.  &  C.'24;  Mathews  v.  Aikin,  1  N.  Y.  595.  _ln  each_of 
those._there  was  some  special  equity  or  some  agreement  which  took, 
them  out  of  the  general  rule  herein  before  referred  to,  and  which  does 
not  in  any  way  interfere  with  the  same.  Under  circumstances  like 
those  here  presented,  it  can  scarcely  be  claimed  that  the  surety  would 
be  entitled  to  the  enforcement  of  the  rule  contended  for,  without  an 
offer  on  his  part  to  pay  the  expenses  which  might  necessarily  be  in- 
curred by  this  course  of  procedure.  X  jT  \   ^t,  / 

The  remedy  of  the  defendant,  in  accordance  with  the  views  ex-  ,  r  i-  * 
pressed,  clearly  was  to  pay  up  the  indebtedness  to  the  plaintiff,  thtis  '  P 
asserting  his  right  to  be  subrogated,  and  to  take  under  his  control 
and  enforce  the  securities  in  question.  The  fact  that  other  parties 
besides  the  defendant  occupied  the  same  position  as  he  did,  and  were 
interested  to  the  same  extent  or  in  a  similar  manner  in  enforcing  the 
security,  presents  no  valid  objection  to  requiring  that  the  defend- 
ant should  adopt  such  a  course  ;  for  he  could  only  avail  himself  of 
such  benefit  as  is  really  conferred  by  the  securities,  and  that  they 
are  an  advantage  to  some  one  else  besides  himself,  does  not  impose 
upon  the  plaintiff  the  cost  and  expense  of  prosecuting  them  before 
bringing  an  action  against  the  indorser.  The  defendant,  in  claim- 
ing the  right  of  subrogation,  can  only  take  the  securities  as  they  ac- 

*  The  opinion  lias  been  slightly  abridged. 


554  DEFENSES   OF  SUHETY   AGAINST   CREDITOR.  (Part    3 

lually  arc,  with  tlicir  burdens  and  advantajT^es,  and  beyond  this  he  has 
no  rights  and  no  vahd  claim  for  protection. 

/^  The  offer  of  the  defendant  to  prove  the  taking  of  excessive  in- 
terest in  the  transactions  between  the  plaintiff  and  Devenport,  and 
a  greater  rate  than  is  allowed  by  the  laws  of  this  state,  was  properly 
refused.  The  proposition  embraced  transactions  with  which  the  de- 
fendant  was  not  connected,  and  therefore  the  offer  was  too  broad 
and  comprehensive.  Had  it  been  confined  to  transactions  "between 
the  plaintiff  and  Dev*enport,  with  which  the  defendant  was  connected, 
and  to  the  notes  indorsed  by  him,  a  more  serious  and  difficult  ques- 
tion would  arise ;    but  in  the  form  in  which  the  offer  was  made  the 

•^  |)oint  raised  is  not  in  the  case. 

'  The  alleged  parol  agreement  in  regard  to  the  release,  prior  to  its 
execution,  was  properly  excluded  by  the  court,  for  the  reason  that 
it  would  contradict,  and  vary  the  terms  of  the  release  as  well  as  the 

y  notes. 

/       No'  other  question  raised  demands  discussion,   and  the  judgment 
should  be  affirmed,  with  costs.     All  concur,  except  Church,  C.  J., 
absent. 
Judgment  affirmed.' 


SECTTOy  ?.— XOTICK  OF  CRKDITOR  COR  PROMISEE)  TO 

SURETY  TH.\T  CREDITOR  (OR  PROMISEE)  WILL 

LOOK  ONLY  TO  THE  PRINCIPAL  FOR 

PERFORMANCE 


HARRIS  V.  BROOKS,  Jr. 

(Supreme  Judicial  Court  of  Massachusetts,  1S38.     21  Pick.  195,  32  Am. 

Dec.  2o4.) 

Assuin^sit  on  the  following  promissory  nol;e :  "Boston,  August  16, 
1832.  For  value  received,  we  promise  to  pay  Abel  Parker,  or  order, 
five  hundred  dollars  m  thirty  days  and  grace.  Reuben  Damon.  Isaac 
Brooks,  Jr."    The  note  was  indorsed  by  Parker,  the  payee. 

At  4he  trial,  before  Morton,  ].,  the  defendant  introduced  evidence 
tending  to  show  that  the  note  was  in  the  hands  of  one  Barnard  from 
about  the  tmie  when  it  became  due  until  1835;  that  it  was  an  ac- 
commodation note,  made  for  the  benefit  of  Damon  to  enable  him  to 
va.se  money,  or.  if  such  was  not  the  original  agreement  between  Da- 
mon and  the  defendant,  yet  that  is  the  result.  Damon  had  received 

•  Aorord:  Third  XationnI  Bank  of  Malone  v    Shields    ^n  PTnn    o~±    q  xt   v 
Supp.  208  0889);   Sterue  v.  Talbott.  SO  Hun!  308^35 'n!' ^ S^pp.'  lH'Ss^o)^' 


Ch.  9)        TRANSACTIONS  OF  CREDITOR  WITH  SURETY.  555 

the  whole  benefit  of  the  note,  so  that  the  defendant  had  assumed  the 
character  of  a  surety;  that  soon  after  the  note  became  due  the  de- 
fendant called  on  Barnard  for  the  note,  and  said,  if  he  had  to  pay 
it,  he  wished  to  attend  to  it  soon,  as  he  then  could  get  security  of 
Damon ;  that  Barnard  replied  that  Damon  received  the  money  on 
the^note,  he  ought  to  pay  it,  and  he  (Barnard)  would  look  to  him 
fo£  payment,  and  that  the  defendant  need  not  give  himself  any  trouble 
about  the  note,  for  he  should  not  be  injured.  -^ 

CJpon  this  evidence  the  judge  instructed  the  jury  that  if  the  de-  "^^^^^^  <>^u)v*rf 
fendant  was  a  surety,  and  this  was  known  to  Barnard  when  the  above 
declaration  was  made  by  him,  and  if,  in  consequence  thereof,  the  de- 
fendant omitted  to  take  up  the  note  and  secure  himself  out  of  the 
property  of  Damon,  he  was  legally  discharged  from  his  liability ;  and 
that  the  defendant  might  be  deemed  a  surety,  if  the  original  agree- 
ment between  him  and  Damon  was  that  the  note  should  be  used  for 
the  sole  benefit  of  Damon,  or  if  it  was  subsequently  agreed  between 
them  that  he  should  have  the  sole  benefit  of  the  note,  and  he  did  in 
fact  receive  the  whole  proceeds  of  the  note.  i 

The  jury  returned  a  verdict  for  the  defendant.  ry^^'^f 

Th€-plaintiff. excepted  to  the  above  instructions.  If  the  court  should 
be  of  opinion  that  they  were  wrong,  a  new  trial  was  to  be  granted ; 
otherwise  judgment  was  to  be  rendered  on  the  verdict, 

Shaw,  C.  J.,  delivered  the  opinion  of  the  court.  w 

We  are  now  to  take  it  as  found  by  the  jury,  under  the  instruc-*^  Fou."'^  >*">-«>iy 
tionr'given  them,  that  for  several  years  after  this  note  became  due, 
Barnard  was  the  indorsee  and  holder  of  it;  that  as  between  the  two 
promisors  it  was  an  accommodation  note,  that  is,  that  the  money 
raised  upon  it  was  raised  for  the  benefit  of  Damon  and  went  to  his 
use ;  that  this  was  known  to  the  holder ;  that  after  it  became  due 
Brooks  expressed  a  willingness  to  pay  it,  and,  if  he  was  to  pay  it  at 
all,  wished  to  pay  it  then,  because  he  could  then  get  security  of  Da- 
?iion ;  and  that  the  holder  then  verbally  discharged  him,  and  agreed 
to  look  to  Damon  alone,  recognizing  him  as  principal. 

Th.c  court  are  of  opinion  that  the  instruction  was  correct,  and  that 
upon  these  facts  the  defendant  was  not  liable. 

It  is  very  true  that  an  agreement  between  two  promisors  of  a  note 
that  the  one  shall  take  the  whole  of  the  proceeds  and  pay  the  whole 
note  when  due  cannot  affect  the  rights  of  the  holder,  unless  he  will 
take  notice  of  it  and  act  upon  it. 

The  presumption  that  two  or  more  promisors  of  a  note  are  equally 
responsible  for  its  ultimate  payment,  so  that  if  one  pays  the  whole 
he  shall  have  contribution,  may  be  rebutted  by  showing  that  one 
signed  for  the  accommodation  and  as  surety  for  the  other.  So  in 
this  case,  if  upon  the  facts  now  proved  Brooks  had  paid  the  note, 
he  would  have  had  a  remedy  against  Damon,  not  for  a  contribution 
only,  but  for  an  entire  reimbursement.  So,  if  Damon  had  paid  it,  he 
would  have  had  no  claim  on  the  defendant  for   contribution.     So, 


556  DEFENSES  OF  SUUKTY  AGAINST   CREDITOR.  (Part    3 

where  one  of  two  promisors  annexes  the  word  "principal"  to  his  sig- 
nature, and  the  other  "surety,"  these  descriptions  do  not  affect  the 
terms  or  legal  effect  of  the  contract.  They  are  equally  bound  to  the 
promisee  or  indorsee  as  if  such  words  of  description  had  not  been 
annexed.  They  indicate  the  relation  in  which  the  parties  stand  to 
each  other,  and  notice  of  such  relation  to  the  holder. 

But  the  fact  of  such  relation,  and  notice  of  it  to  the  holder,  may, 
we  'thTn]c,~be  proved  by  extrinsic  evidence.  It  is  not  to  ^-ffect-tb* 
terms  of  the  contract,  but  to  prove  a  collateral  fact  and  rebut  a  pre- 
sumption. It  goes  to  show  that  the  defendant  was  in  fact  a  surety, 
and  the  rights  of  contribution  result  accordingly.  Had  the  parties 
appeared  on  the  note,  the  one  as  principal,  and  the  other  as  surety,  a 
jiarol  declaration  of  the  holder  to  the  surety  that  he  would  exonerate 
him  and  look  to  the  principal  only  is  a  good  defense,  on  the  ground 
tliiat  it  lulls  the  party  into  security  and  prevents  him  from  obtaining 
liis  indemnity";  and  it  would  be  fraud  on  the  part  of  the  holder  after- 
wards,  contrary  to  such  assurance,  to  call  upon  such  surety.  We 
think  the  same  result  follows  where  the  fact  is  proved  by  other  "evi- 
dence. Here  the  assurance  was  given,  after  the  note  waF~due,  by 
Barnard,  who  was  the  holder  of  the  note,  with  full  power  of  disposing 
of  it.  The  present  plaintiff,  having  taken  the  note  by  indorsement, 
long  after  it  was  due,  took  it  as  a  dishonored  note,  and  liable  to  any 
defense  which  could  be  made  to  it,  had  the  suit  been  brought  by 
Barnard. 

Judgment  on  the  verdict  for  the  defendant." 


SECTION  3.— MISINFORMATION  GIVEN  TO   SURETY  BY 
CREDITOR  AS  TO  STATE  OF  TRANSACTIONS  BE- 
TWEEN PRINCIPAL  AND  CREDITOR 
(OR  PROMISEE) 


FRANK  FEHR  BREWING  CO.  v.  MULLIGAN  et  al. 
(Court  of  Appeals  of  Kentucky,  1902.    G6  S.  W.  G27,  23  Ky.  Law  Rep.  2100.) 

Appeal  from  Circuit  Court,  Daviess  County. 

HoBSON,  J.  This  was  an  ordinary  action  brought  by  appellant 
agamst  appellees  on  a  bond  signed  by  them  as  sureties  for  L.  TTMtil- 

•Aesord:  Bank  v  Klln^ensmith,  7  Watts  (Pa.)  523  (1838).  But  where 
Buret V  has  m>t  a.f.nl  on  the  promise,  he  is  not  discharged  BrubalSfV  Ok^ 
■on.  3(1  Pa.  519  flsnO).  ^  -Diuudaei  v.  \jb.*i- 

Se^Hnre  A  WMllace's  note  to  Harris  v.  Brooks.  21  Pick.  (Mass)  195  32 
Am.  Dec.  2:A  (lb3b),  in  2  Au.erican  Leading  Cases  (5th  Ed)  pp.  4lt4S2. 


Ch.  9)        TRANSACTIONS  OF  CREDITOR  WITH  SURETY.  557 

* 

lican.     The  case  was  tried  before  the  court,  who  filed  the  following 

findings  of  fact:  ~~  _        _  . 

*  "ill  e""cmiTf  finds  from  the  record  and  evidence  in  this  action  that  t^a^^W,  .// ^f^ 
on  the  12th  of  July,  1898,  the  plaintiff  entered  into  a  contract  with 
L.  T.  Mullican  to  furnish  beer  at  a  stipulated  price,  etc.,  which  he 
was  to  sell  and  account  for.  H^e,  among  other  things,  was  to  pay  for 
all  beer  sold  at  the  prices  stipulated  thirty  days  after  delivery,  and 
sooner  if  the  relations  between  them  should  terminate.  The  contract 
contained  divers  other  stipulations,  and  the  defendants,  J.  S.  Mullican 
and  J.  A.  Lyddane,  became  the  sureties  of  L.  T.  Mullican  for  the 
faithful  performance  of  his  contract.  I  find  from  the  evidence  that 
L.  T.  Mullican  failed  from  the  very  beginning  of  his  contract  to  pay 
as  stipulated,  and  proceeded  to  violate  that  part  of  his  undertaking 
to  pay  for  all  beer  sold  him  at  the  end  of  thirty  days,  and  th9t_on  the 
17th  _of  November.  1898.  four  months  after  entering  into  the  contract, 
he  liad  fallen  behind  in  the  sum  of  $1,661,36,  and  that  plaintiff,  with- 
out notification  to  the  sureties  of  L.  T.  Mullican,  entered  into  an  ar- 
rangement with  him  by  which  he  obtained  from  him  a  nearly  paid  up 
life  policy  for  $3,000,  and  entered  into  a  writing,  a  copy  of  which  is 
filed  with  the  answer  of  J.  S.  Mullican  and  J.  A.  Lyddane.  I  find 
fronTThe  evidence  that,  as  part  inducement  to  this  contract  of  No- 
vember 17th  and  the  transfer  of  the  policy,  plaintiff  agreed  with  L. 
T.'  Mullican  that  his  sureties  were  to  be  released  from  further  lia-!/ 
Eiirry.  I  find  that,  on  the  28th  day  of  December,  J.  A.  Lyddane,  be- 
coming uneasy ,~wrofe~plaintiff  for  information  as  to  how  L.  T.  Mul- 
lirgji  wa^~gpftTrior  on  with  them,  and  on  the  next  day,  the  29tli  of 
December,  received  an  answer  from  plaintiff  that  he  was  O.  K.,  mak- 
ing  no  reference  to  his  previous  indebtedness,  and  disclosing  nothing 
of  the  transaction  of  November  17th."  V  Mii'Xi^bun  »/1>w t^ 

Qfl  these -facts-the.  court  found,  as  a  matter  of  law,  that  the  sure- 
ties  were  released  by  the  concealment  on  the  part  of  plaintiff  ~6f" the 
default  of  the  principal,  although  he  had  arranged  and  paid  out  of  his 
own  means,  on  the  ground,  as  stated  by  the  court,  that  they  would  not 
likely  "have  continued  on  his  bond,  or  been  willing  to  any  further 
risk  after  November  17th,  had  they  known  of  the  large  sum  in  which 
the  principal  had  fallen  behind,  and  a  disclosure  became  a  positive 
duty  when  Lyddane  wrote  to  inquire."  ^SjtJ^ 

The  letters  on  which  this  finding  is  based  are  as  follows: 

"Owensboro,  Ky.,  Dec.  28th,  1898.  Frank  Fehr  Brewing  Co.,  Lou- 
isville, Ky. — Gentlemen :  I  write  you  confidentially  to  inquire  wheth- 
er L.  T.  Mullican  is  keeping  his  accounts  square  with  you.  I  am  on 
his  bond  to  your  company,  and  have  a  right  to  ask  this  information. 
Please  send  me  a  statement  of  his  accounts,  so  that  I  may  be  advised 
as  to  his  standing  with  you.  This  letter  is  confidential  between  your 
company  and  me,  and  by  furnishing  me  the  information  desired  you 
will  greatly  oblige.    Yours  truly,  J.  A.  Lyddane." 


558  DEFENSES  OF  SUUETY   AGAINST   CREDITOK.  (Part    3 

"Louisville,  Ky.,  Dec.  29th,  1898.  Mr.  J.  A.  Lyddane,  Owensboro, 
Ky.— Dear  Sir:  Replying  to  yours  of  the  28th  instant,  beg  to  state 
that  at  the  present  writing  Mr.  L.  T.  Mullican  owes  us  only  for  last 
>hipnicnt.  which  amounts  to  $291.50,  and  shipment  gone  forward  to- 
day, anwunting  to  $107.00.  The  above  is  statement  in  full  to  date, 
and  we  feel  that  everything  is  O.  K.  Yours  truly,  Frank  Fehr  Brew- 
ing Co.,  by  G.  \V.  Kremer,  Treas." 

L>jddane  showed  this  letter  to  his  co-surety,  and  they  both  testify 
that  thcv  were  misled  by  it,  and  induced  to  take  no  steps  tp_£i:aiect 
then  apposing  fRat  the  principal   was   faithfully  perforrmng 

v/hlS    C<.iiUav  I. 

•^  It- is  insisted  foiL appellant  that  the  letter  showed  on  its  face  that 
the-principal  was  in  debt  to  it  m  flie  sum  of  $4-58.50,  and  t1iat.at  the 
termination  of  the  agency  the  indebtedness  was  only  $632.34 ;  that  the 
principal  had  then  the  same  property  as  in  December;  and  that  in 
fact  the  prior  indebtedness  had  been  settled,  and  there  was  no  mis- 
representation. But  the  fact  is  appellant  concealed  from  the  sureties 
the  large  amount  that  the  principal  had  fallen  behind — a  fact  sulti- 
cie'nt  to  show  that  he  had  violated  his  T^ontract,  and  to  induce  them 
to  take  steps  to  protect  themselves.  Had  they  known  that  the  principal 
had  not  made  his  monthly  payments,  but  had  used  the  money,  and 
had  covered  the  deficiency  by  an  assignment  of  his  life  policy,  it  is 
but  reasonable  that  they  would  be  unwilling  to  remain  longer  on  his 
IxDnd,  when  they  were  already  uneasy  from  information  thev  had 
received  that  his  habits  were  not  good.  In  Story,  Eq.  Jur.  §  324,  it 
is  said:  "The  contract  of  suretyship  imports  entire  good  faith  and 
confidence  between  the  parties  in  regard  to  the  whole  transaction. 
Any  concealment  of  material  facts,  or  any  express  or  implied  mis- 
representation of  facts,  or  any  undue  advantage  taken  of  the  surety 
by  the  creditor,  either  by  surprise  or  by  withholding  proper  informa- 
tion, will  undoubtedly  furnish  sufficient  ground  to  invalidate  the 
contract."  These  principles  were  followed  by  this  court  in  Burks  v. 
Wonterline,  09  Ky.  20 ;  Graves  v.  Bank,  73  Ky.  23,  19  Am.  Rep.  50 ; 
Insurance  Co.  v.  Scott,  81  Ky.  540;  Bank  v.  Mattingly,  92  Ky.  650, 
18  S.  W.  9  JO ;  Association  v.  Jeckel,  104  Ky.  159,  46  S.  W.  482.  Up- 
on the  principles  settled  in  these  cases,  the  court  properly  held  the 
sureties  not  liable. 
p  Qpunsel  for  appellant  rely  on  the  following  stipulation  in_tli£_con- 
tract:  "It  is  further  agreed  that  the  said  brewing  company  is  to  have 
the  exclusive  right  at  all  times  during  the  existence  of  this  contract 
to  determine  the  amount  of  credit  that  shall  be  extended  by  it  to 
the  said  Mullican  for  beer  ordered  or  purchased  by  him,  and  at  any 
time  to  refuse  to  sell  or  deliver  to  said  Mullican,  i'f  at  said  time  the 
said  Mullican  has  failed  to  pay  any  bill  or  account  due  by  him  "  It 
is  urged  that  this  clause  gave  the  appellant  discretion  to  extend  credit 
for  an  unhmited  tmie.  Hut  we  do  not  so  understand  it.  It  relates 
alone  to  the  amount  of  credit.     It  was  not  intended  to  modify  the 


Ch.  9)        TRANSACTIONS  OF  CREDITOR  WITH  SURETY.  559 

previous  stipulation,  requiring  payment  at  the  end  of  every  30  days ; 
and,  even  if  it  was  susceptible  of  this  meaning,  it  was  the  duty  of 
appellant,  in  answering  Lyddane's  letter,  not  to   conceal  the    facts 
from  him,  but  to  apprise  him  fairly  of  the  situation. 
Judgment  affirmed. 


3GU  Dia  KNSUS  OF  SUUEIX  AGAINST  CREDITOR.  (Part   3 


CHAPTER  X 

EFFECT  OF  ABSENCE  OF  NOTICE  TO  SURETY  OR  GUAR- 
ANTOR OF  THE  DEFAULT  OF  THE  PRINCIPAL 


ORME  V.  YOUNG. 

(Conrt  of  Common  Pleas,  at  Nisi  Prius,  1815.    1  Holt,  N.  P.  84,  3  E.  C.  L.  35.) 

Debt  on  bond,  dated  25th  November,  1807,  in  the  penal  sum  of 
iii^uOO.,  to  SWure  the  payment  of  .£22,000.,  payable  by  instalments 
of  il,000.  half-yearly,  from  the  29th  of  September,  1807,  to  the  29th 
of  September,  1812,  when  the  residue  of  the  sum  secured  was  to  be 
payable. 

The  defendant  pleaded: 

First.    Non  est  factum. 

Second.  That  he  entered  into  the  bond  as  surety  for  one  William 
Orme,  and  that  the  plaintiff,  on  the  28th  of  September,  1812,  without 
the  privity  and  consent  of  the  defendant,  forbore  and  gave  day  of 
payment  of  the  sum  of  £13,000.,  residue  of  the  principal  money,  then 
due,  to  William  Orme,  Jr.,  beyond  and  after  the  29th  of  September, 
1812,  when  the  same  became  payable. 

There  were  other  pleas  to  the  same  effect. 
p^^  Thf  ^^'^''  ^•^'^  thi"'    The  plaintiff  assigned  his  business  to  his  son, 

upon  his  giving  him  a  bond  executed  by  himself  and  ten  sureties,  one 
of  which  was  the  defendant,  to  secure  to  the  father  the  value  of  the 
stock  and  business.  The  bond  was  given  for  £22,000.,  payable  by 
instalments  of  £1,000.  half-yearly,  until  £9,000.  should  be  paid,  at 
which  time,  the  29th  of  September,  1812,  the  residue  was  to  be  paid. 
The_son  paid  the  instalments  regularly,  till  the  £13,000.  became  due. 
at  which  time  he  made  default  in  paying  the  principal  smiv-hu±»  con- 
tinued to  pay  his  father  sums  of  £1,000.  each,  at  different  periadv^^J^d 
in  five_difTerent  payments,  down  to  January,  1815;  in  all  £5J)00.  In 
March,  1815,  William  Orme,  Jr.,  became  a  bankrupt.  No  notice  had 
been  given  to  the  sureties  of  the  default  of  William  Orme  ialthe  pay- 
ment  ol  il3»Q0iL,  and  it  did  not  appear  that  they  were  privy  to  the 
mode  in  which  the  payments  had  been  made.  The  plaintiff  had  in- 
dorsed receipts  for  them  upon  the  back  of  the  bond,  giving  credit  for 
them  as  half-yearly  receipts,  and  not  making  any  distinction  betw^een 
the  payments  before  the  £13,000.  became  due,  and  those  made  after- 
wards. They  were  all  entered  as  half-yearly  payments  by  the  son  to 
the  father;  but  no  agreement  of  forbearance  was  in  evidence/ 

»  Arffuments  of  counsel  are  omitted. 


Ch.  10)  ABSENCE  OF  NOTICE  OF  DEFAULT  OF  PRINCIPAL.  561 

GiBBS,  C.  J.  The  defense  upon  the  record  is  that  the  plaintiff  be- 
fore the  29th  September,  1812,  forbore  and  gave  day  of  payment  to 
WiUiam  Orme,  Jr. ;  in  other  words,  that  the  obhgee  has  extended 
the  terms  of  the  obligation  without  the  privity  of  the  sureties.  This 
defense  is  borrowed  from  a  court  of  equity.  There,  if  day  of  pay- 
ment be  given  to  the  debtor,  the  sureties  are  discharged.  It  is  the 
equitable  right  of  sureties  to  come  into  a  court  of  equity  and  de- 
mand to  sue  in  the  name  of  the  creditor.  Now,  if  the  creditor  have 
given  time  to  his  debtor,  the  surety  cannot  sue  him;  but  the  fact  to 
be  tried  is,  was  time  of  payment  given  without  the  privity  of  the 
sureties?  What  is  forbearance  and  giving  time?  It  is  an  engage- 
ment which  ties  the  hands  of  the  creditor.  It  is  not  negatively  re- 
fraining, not  exacting  the  money  at  the  time ;  but  it  is  the  act  of  the 
creditor,  depriving  himself  of  the  power  of  suing  by  something  oblig- 
atory, which  prevents  the  surety  from  coming  into  a  court  of  equity 
for  relief,  because  the  principal  having  tied  his  own  hands  the  surety 
cannot  release  them.  Here  there  is_JiQ_-C.Qiitract  to  forbear;  no  im- 
pediment to  ^he  suit.  A  neglect  to  give  notice  to  the  surety  that  the 
debtor  has  made  default  does  not  discharge  him.  But  the  pre^ejit 
issue  is,  was  there  an  agreement  to  forbear?  I  am  of  opinion  there 
was  none. 
"Verdict  for  plaintiff,  for  i8,508.» 


PHILIPS  v.  ASTLING  et  al. 

(Court  of  Common  Pleas,  Michaelmas  Term,  1809.    2  Taunt.  206.) 

Assumpsit.  The  declaration  stated  that  in  consideration  that  the 
plaintiff  would  sell  and  deliver  to  Davenport  and  Finney  certain  goods, 
to  the  amount  of  £500.,  to  be  paid  by  a  bill  for  the  amount  drawn  by 
Davenport  and  Finney  on  Houghton  at  six  months,  and  also  in  con- 
sideration of  a  certain  premium  at  the  rate  of  £5.  per  cent,  thereon, 
to  be  therefore  paid  by  the  plaintiff  to  the  defendants,  the  defendants 
undertook  to  guarantee  the  payment  of  the  sum  for  which  the  bill 
should~He~~sondrawn  when  the  same  should  become  due ;  and  the 
plaintiff  averred  that  he  afterwards  sold  and  delivered  the  goods  to 
Davenport  and  Finney,  to  the  amount  aforesaid,  to  be  paid  for  as 
aforesaid,  and  that  such  bill  of  exchange  was  afterwards,  when  it 
became  due,  duly  presented  to  Houghton  for  payment ;  but  that  he 
refused  to  pay,  whereof  Davenport  and  Finney  and  the  defendants 

8  Aficord:  Goring  v.  Edmonds,  6  Bing.  M  (1829). 

Ottierwise  if  notice  is  stipulated  for  in  the  contract.  Nat.  Surety  Co.  v. 
Lon-,  125  Fed.  887,  60  C.  C.  A.  623  (1903); 

See  the  paper  entitled  "Demand  on  Principal  before  Action  against  Guar- 
antor," 6  Columbia  Law  Review,  229,  by  William  P.  Rogers,  Dean  of  Law 
Dept.  University  of  Cincinnati. 

On  notice  of  default  to  guarantor,  see  note,  15  H.  L.  R.  65. 
Hen.  Sub. — 36 


5G2  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part    3 

respectively  had  notice,  and  were  requested  to  guarantee  the  pay- 
ment of,  and  pay  the  amount  of,  the  bill ;  but  that  they  did  not  nor 
would  guarantee  or  pay  the  same. 

Upou  ihe  trial  of  this  cause  at  the  Guildhall  sittings  after  Trinity 
term,  1S09,  before  Mansfield,  C.  J.,  it  appeared  that,  Davenport  and 
Finney  being  desirous  to  obtain  credit  with  the  plaintiff  for  provisions 
for  the  use  of  the  ship  Providence,  the  defendants  gave  an  under- 
taking, written  with  a  pencil,  in  the  following  terms :  "Memorandum. 
— We  jointly  and  severally  undertake  to  guarantee  a  payment  of  ioOO. 
at  io.  per  cent.,  say,  by  a  bill  drawn  on  G.  Houghton  by  Davenport 
and  Finney  for  £.500.  Dated  10tlijan,,_1^808.'l  The  provisions  were 
furnished,  and  a  bill  was  given  in  payment  for  them,  dated  the  11th 
of  January,  and  drawn  by  Davenport  and  Finney  on  G.  Houghton 
at  six  months'  date,  for  i515.  lis.  lOd.,  payable  to  their  own  order. 
It  appeared  that  at  the  time  when  the  bill  became  due  Houghton  was 
at  sea,  and  remained  absent  for  several  months  after;  but  he  had  a 
sister  residing  in  London,  to  whom  he  had  given  an  authority  to  fill 
up  and  accept  bills  in  his  name,  and  to  transact  other  business  for 
him,  and  who  had  in  fact  accepted  this  very  bill.  Tlie  bill  became 
due_QlL_thel4th  of  July.  It  was  not  presented  for  payment  to  the 
sister.  On  Uie  16th  notice  was  given  to  Davenport  and  Finney^that 
it  remained  unpaid,  but  no  notice  was  given  to  the  def^dants^__In 
February,  ISOO,  Davenport  and  Finney  became  insolvent;  and  Hougli- 
ton  was  declared  a  bankrupt  in  July,  1800.  No  application  \vas~made 
♦o  Jhe  defendants  for  payment  till  after  the  ^ate^T'^Tti. JblQikriipt- 

r'\ts.     The  jury  found  a  verdict  for  the  plaintiff,  deducting  the  £5. 

(per  cent,  for  the  premium  of  the  guaranty,  which  had  never  been 
*^f^i^   %l)aid ;    and  ^he  ^h[e£  Justice  reserved  liberty  to  the  defendants   to 

[move  to  enter^  non^sujF  accordingly.^ * 

Mansi-ield,  C.  J.  This  was  an  action  against  two  persons  on  a 
guaranty,  the  terms  of  which  are:  "Memorandum. — We  jointly  and 
separately  promise  to  guarantee  a  payment  of  £500.  at  £5.  per  cent., 
say  a  bill  dated  10th  January,  1808."  Then  the  bill  is  given,  dated 
11th  January,  and  accepted,  and,  not  having  been  paid,  this  action  is 
brought.  .At  the  trial  there  appeared  reason  to  believe  that  Daven- 
\x)n  and  Finney,  the  drawers,  and  Houghton,  the  acceptor,  were  all 
at  this  time  insolvent,  but  there  was  no  proof  of  it.  Davenport  and 
Finney  first  became  plainly  insolvent  in  February,  1809,  a  year  after 
this  bill  was  drawn.  There  was  no  evidence  of  any  demand  being 
made  on  Davenport  and  Finney  for  the  money;  and  no  notice  was 
given  them  of  the  bill  not  being  paid  till  the  16th.  Something  was 
said  of  a  threat  to  arrest  them,  but  there  was  no  evidence  of  Regu- 
lar notice.  As  to  Houghton,  he  went  abroad;  but  he  left  a  sister 
here,  of  whom  a  demand  might  have  been  made.  No  demand,  how- 
ever, was  made  at  the  place  where  his  sister  was  to  be  found. 

•  The  arguments  of  counsel  and  a  portion  of  the  opinion  are  omitted. 


Ch.  10)  ABSENCE   OF  NOTICE   OF   DEFAULT   OF   PRINCIPAL.  563 

At  the  trial  it  was  objected  that  the  plaintiff  could  not  recover,»for 
several  different  reasons :  First,  that  the  defendants  stood  as  indorsers 
of  the  bill,  and  that  as  indorsers  they  had  a  right  to  insrst~o"n  proof 
of  the  notice  of  non-payment  both  by  the  drawer  and  acceptor.  On 
the  ojhcr  hand,  it  was  urged,  and  as  we  think,  justly,  that  this  was  a 
genexalj^uaranty  for  payment  of  a  bill,  not,  as  usual,  a  guaranty  that 
the  acceptor  should  pay,  but  a  contract  that  either  the  one  or  the 
other  should  pay ;  and  the  consequence  is  that,  if  the  guarantee  paid 
the  bill,  he  would  have  a  right  to  come  both  on  the  drawer  and  ac- 
ceptor for  repayment;  and  though  want  of  notice  would  not  dis- 
charge the  acceptor,  yet  the  guarantee,  as  the  holder,  had  a  right  to 
insist  on  due  notice  being  given  to  himself  of  non-payment  by  the 
acceptor,  and  that  as  to  tlie  drawers  he  had  a  right  to  insist  on  notice 
being  given  to  them  of  the  same  fact,  for  that  otherwise  he  might  pay 
it  in  his  ow^n  wrong  if  they  were  discharged.    *     *     * 

I  strongly  think  the  plaintiff  knew  the  state  of  all  these  persons, 
and  that  they  were  not  good ;  but  as  Davenport  and  Finney  did  not 
become  insolvent  till  long  after  the  bill  became  due,  nor  Houghton  till 
long  after  the  bill  became  due,  I  do  not  know  how  to  give  the  plain- 
tiff the  benefit  of  his  contract  in  this  case.  I  thought  it  possible  that 
cases  might  have  been  found  on  the  interpretation  of  such  a  guaranty, 
in  the  distribution  of  bankrupt's  eft'ects  in  the  Court  of  Chancery. 
None  such,  however,  have  been  rnentioned.  In  the  case  of  Warring- 
ton v.  Furbor,  8  East,  245,  the  expression  "say  at  a  credit  of  six 
months"  seems  to  be  used  in  a  positive  sense.  That  case  also  arose 
on  a  guaranty,  and  Lord  Ellenborough,  C.  J.,  expressed  the  opinion 
of  the  court  that  although  the  insolvency  of  the  parties  to  a  bill 
would  not  in  general  dispense  with  the  necessity  of  presenting  it  for 
payment,  yet  w^here  it  was  obvious  that  it  could  not  avail,  the  same 
strictness  of  proof  was  not  necessary  to  charge  a  guarantee,  and 
therefore  if  the  parties  became  bankrupts,  and  notoriously  insolvent, 
it  was  the  same  as  if  they  were  dead. 

Now  this  case  is  decided  on  the  ground  that  the  pursuing  the  course 
of  applying  to  the  acceptor  in  that  case,  as  here  to  the  acceptors  and 
drawer,  would  have  been  of  no  effect,  because  there  the  bankruptcy 
had  already  happened  before  the  bill  became  due.  Here  the  insolvency 
did  not  occur  till  long  aftpr  the  bill  became  due,  and  Houghton's 
bankruptcy  was  long  after  that.  For  anytljing.  .then  that  appears,  if 
this  gentleman  had  demanded  the  money  either  of  the  acceptor  or 
drawer,  the  bill  might  have  been  paid.  That,  too,  was  a  guaranty 
of  payment  of  the  price  of  goods ;  this  is  for  a  bill,  and  the  contract 
necessarily  implies  that  the  defendants  will  pay  it  if  the  plaintiffs  do 
not,  being  called  on  in  a  proper  manner :  and  therefore,  although  that 
case  has  relaxed  the  strictness  of  the  proof  of  presentment  apd  no- 
tice, and  seems  to  decide  that  it  is  not  necessary  to  pursue  the  same 
strictness  in  order  to  charge  a  guarantee  as  to  charge  the  drawer 
of  the  bill,  yet  it  may  still  be  inferred  from  it  that,  if  the  necessary 


504  DKFliXSES  OF  SUUKTY  AGAINST  CREDITOR.  (Part   3 

to;>i  are  not  taken  to  obtain  payment  from  the  parties  wlia^arfiJiable 
.  ;.  ihe  bill  and  solvent,  the  guarantee  must  be  discharged;  andjhere- 
fore  the  rule  for  a  non-suit  must  be  made  absolute." 

i«Tr>eEngllsh  nisos.  Incltidlnf:  the  principal  case,  holding  that  notice  of  ^ 
fault  !•»  iH'n«sjiarV  to  one  vrho  grnnrantees  the  pwynient  of  commereiot  paftSr, 
u.-r.-  thus  siimiimrizo<l  by  Cliltty  lu  IS.^0  (Chltty  on  Bills,  p.  474)r ^fir-geB- 
.  !•;!  if  iho  hill  or  note  he  Kiveu  as  a  collateral  socurity.  and  the  party  deliv- 
iMiir.;  It  were  no  party  to  It,  either  hy  indorsing  or  transferring  it  by  delivery 
when  paval>Ie  to  bearer,  but  merely  caused  It  to  be  drawn  or  indorsed,  or  de- 
ll vennl  over  to  a  third  person  as  a  security,  or  has  merely  guaranteed  the 
pavin.'tit.  It  has  l»cen  considered  that  he  is  not  within  the  custom  of  merchants 
an"  Indorsor  or  party  to  It.  so  as  to  be  absolutely  entitled  to  strict  regular  no- 
tice, nor  discharged' from  liability  by  the  neglect  of  the  holder  to  gire  him  such 
notice,  unless  he  can  show  by  express  evidence,  or  by  inference,  that  he  has 
actuallv  sustained  loss  or  damai-'e  by  the  omission;  for  if  a  person  deliver  over 
a  bill  to  anotiier  without  in<lorsing  it.  he  does  not  subject  himself  to  the  obli- 
gations of  the  law  merchant,  and  cannot  be  sued  upon  the  bill,  and  as  he  does 
not  suiijcct  lilmself  to  the  obligation,  he  is  not  entitled  to  the  advantages;  and 
If  he  can  prove  that  he  has  sustained  damage,  then  he  is  only  discharged  to 
the  extent  of  such  actual  damnge." 

FciJi'wl"?  and  '"  accord  with  the  English  case,  Philips  v.  Astling,  and  con- 
p«'<iuently  boIdingThat  a  guarantor  of  coTnmerclal  paper  (though  iTo^rftB- in- 
dorser)  is  yet  entitled  to  notice  of  dishonor,  are  numerous  American  cases: 
Douk'lass  V.  Ue.uiokls.  7  Pet.  115.  120.  8  L.  Ed.  02G  (1S33). 

Where  the  surety  binds  himself  as  co-obligor  with  his  principal,  no  notice 
was  noo?s<»nrv  to  be  given  of  the  default  to  the  surety.  Nares  v.  Tlowl6?;l4 
East,  510  (ISll)  ;  Shepherd  v.  Reecher.  2  P.  Wms.  288  (172.5)  ;  Peel  v.  Tat- 
lock.  1  B.  A  P.  419  (1799) ;  Goring  v.  Edmonds,  6  Bing.  94  (1829)  ;  Dawson  v. 
Lawes,  23  Eug.  L.  &  E.  3G5  (1S54) ;  Orme  v.  Young,  1  Holt,  N.  P.  84  (1815). 

Btitsome  Anifrit-an  Jurisdictions  have  required  notice  of  non-payment  _t2,  be 
given,  not  merely  In  cases  where  commercial  paper  was  guaranteed,  but  in^the 
case  of  any  tvntract  or  debt;  but  this  is  in  conflict  with  the  doctrine  of  ^im« 
pie  contracts  at  the  common  law.    See  Lawson  v.  Townes,  2  Ala.  373  (1S41). 

.\merlcan  Leading  Cases  (Hare  &  Wallace,  5th  Ed.)  note  to  Douglass  v. 
Reynolds. 


Ch.  11)      CHANGE  IN  PERSONALITY  OF  PARTNERSHIP  PRINCIPAL.  565 


CHAPTER  XI 

CHANGE  IN  PERSONALITY  OF  THE  PARTNERSHIP 
PRINCIPAL 


C .  .1 


LAMM  &  CO.  V.  COLCORD. 

(Supreme  Court  of  Oklahoma,  1908.     22  Okl.  493,  98  Pac.  355,  19  L.  R.  A. 

[N.  S.]  901.) 

Error  from  Probate  Court,  Oklahoma  County. 

Action  by  Lamm  &  Co.  against  F.  C.  Colcord.  Judgment  Jor  de- 
fendant,  and  plaintiff  brings  erxor.     Affirmed. 

The-plaiiitiff  in  error,  Lamm  &  Co.,  as  plaintiff,  brought  this  ac- 
tion, in  the  probate  court  of  Oklahoma  county,  Okl.  T.,  agiThsTthe 
defendant  in  error,  C.  F.  Colcord,  as  defendant,  to  recover  the  sum 
Q>\  $400  alleged  to  be  due  it  under  the  following  written  guaranty,  to 
wTt:  "Feb.  27,  1901.  Lamm  &  Co.,  Chicago,  111.  Dear  Sir:  You  can 
extend  credit  to  O.  C.  Scoresby  to  amount  of  ($400.00)  Four  Hundred 
and  1  will  stand~good  for  same.  Yours  resp.  C.  F.  Colcord."  The 
case  was  tried  by  the  lower  court  without  the  intervention  of  a  jury 
on  the  24th  day  of  January,  1906. 

Tixe-evidence  on  the  part  of  plaintiff  showed  that  between  the  years  ^  "^-'A^ 
1900  and  1905  it  shipped  merchandise  to  the  value  of  thousands  of 
dollars,  and  charged  the  same  to  the  Scoresby  Tailoring  Company,  the 
account  beginning  with  March  1,  1901,  and  there  were  various  pay- 
ments made  thereon  by  said  Scoresby  Tailoring  Company,  the  first  ac- 
count aggregating  the  sum  of  $400,  having  been  paid  before  the  begin- 
ning of  this  action.  This  action  is  for  shipments  made  during  De- 
cember, 1904,  and  May,  1905 ;  that  is,  for  a  balance  thereon,  which 
exceeds  the  sum  of  $400.  The  evidence  showed  that  prior  to  the 
time  of  receiving  said  guaranty  from  defendant  plaintiff  had  shipped 
to  said  Scoresby  only  on  a  C.  O.  D.  basis,  having  been  doing  a  business 
with  him  a  year  or  so  before  the  guaranty  was  received.  The  evidence 
showed  that  the  goods  shipped  were  all  charged  to  the  Scoresby 
Tailoring  Company,  and  there  is  no  proof  in  the  record  as  to  whether 
or  not  the  Scoresby  Tailoring  Company  and  O.  C.  Scoresby  are  iden- 
tical and  the  same.  The  account  that  was  made  out  against  the  Scores- 
by Tailoring  Company,  showing  the  balance  due  for  goods  shipped 
during  December,  1904,  and  A'lay,  1905,  was  offered  in  evidence  over 
the  objection  of  the  defendant,  on  the  ground  that  same  was  irrelevant, 
incompetent,  and  immaterial ;  it  not  being  shown  to  be  an  account  for 
which  the  guaranty  was  executed,  nor  an  account  relating  to  or  com- 
mencing in  the  year  1901,  when  the  guaranty  was  given,  and  it  ap- 


566  DEFKNSLS   OF   SUKETY   AGAINST   CUEDITOR.  (Part    3 

peared  iii>on  its  lace  that  it  was  an  account  with  the  Scoresby  Tailor- 
ing Company,  whereas  the  guaranty  sued  on  was  as  to  O.  C.  Scoresby, 
the  presumption  being  that  the  So  rcsby  Tailoring  Company  was  a  cor- 
lH.)ration  or  a  copartnership  comixjsed  of  more  than  one. 

TIn.icni)on  the  defendant  demurred  to  the  evidence  on  the  pajt  of 
piaintill  uiwn  tfie  ground  (1)  that  same  failed  to  establish  facts  suf- 
Ficlcnt  to  constitute  a  cause~of  action  in  its  favor  against  defendant, 
or  to  entitle  it  to  recover  from  defendant  anything  whatever;  and  (2) 
that  the  evidence  introduced  on  behalf  of  plaintiff  affirmatively  slTows, 
when  considered  in  connection  with  the  pleadings  of  the  parties,  that 
plaintiff  is  not  entitled  to  recover  in  this  action  anything  against  de- 
fendant. The  demurrer  on  the  part  of  defendant  was  sustained,  and 
judgment  rendered  by  the  court  for  defendant. 

riaintilT  in  due  time  presented  a  motion  for  a  new  trial,  and  the 
osamc  was  overruled.  Exceptions  being  saved,  it  was  allowed  60  days 
Avithin  which  to  make  and  serve  a  case-made,  and  the  defendant  was 
allowed  10  days  thereafter  within  which  to  suggest  amendments  there- 
to, the  same  to  be  settled  on  5  days'  notice,  and  an  appeal  bond  fixed 
in  the  sum  of  $100.  Execution  was  stayed  for  30  days  to  permit  plain- 
tiff to  file  said  bond.  The  case-made  was  duly  settled,  bond  executed, 
and  said  case  taken  on  petition  in  error  to  the  Supreme  Court  of  Okla- 
homa Territory,  and  in  accordance  with  the  provisions  of  the  enabling 
act  was  transferred  to  this  court  for  review. 

Williams,  C.  J.  (after  stating  the  facts  as  above).  In  construing 
thejangtiage  of  an  instrument  of  guaranty  for  the  purpose  of  inter- 
preting the  same  to  ascertain  the  intention  of  the  parties  it  shottld  be 
taken  most  strongly  against  the  guarantor,  and  iri  favor  of  the  party 
who  has  partefl  with  his  property  upon  the  faith  of  the  interpretation 
most  favorable  to  his  rights.  Scott  v.  Myatt,  24  Ala.  489,  60  Am. 
Dec.  485;  Lawrence  v.  McCalmont,  2  How.  426,  450,  11  L.  Ed.  336; 
20  Cyc.  1425,  and  authorities  cited  in  footnotes  59  and  60.  But  when 
the  meaning  of  the  language  in  a  contract  of  guaranty  is  ascertained 
and  the  actual  operation  under  such  construction  has  begun,  the  guar- 
antor is  entitled  to  the  application  of  the  strict  rule  of  construction,  and 
cannot  be  held  beyond  the  precise  terms  of  such  contract.  Brittain 
Dry  Goods  Co.  v.  Yearout,  59  Kan.  684,  54  Pac.  1062 ;  Mayfield  v. 
Wheeler,  37  Tex.  256 ;  Kepley  v.  Carter,  49  Kan.  72,  30  Pac.  182 ; 
First  National  Rank  of  Alton.  111.,  v.  Marbourg,  22  Kan.  535 ;  Wool- 
Icy  V.  Van  \'olkenburgh.  16  Kan.  20;  Barnett  v.  Wing,  62  Hun,  125, 
16  N.  Y.  Supp.  5G7;  Bussier  v.  Chew,  5  Phila.  (Pa.)  70;  Eager  et  ah 
V.  Seeds  et  al.,  21  Okl.  52  4,  96  Pac.  646;  Lemp  Brewing  Co.  v.  Secor 
ct  al.,  21  Okl.  537,  96  Pac.  636. 

It  is  alleged  in  the  petition  that  "this  plaintiff  thereupon  accepted 

the  above  letter  of  credit  or  guaranty,  and,  relying  upon  the  same. 

1  to  extend  and  did  extend  credit  to  said  O.  C.  Scoresby  to  the 

iMt  of  $400;    that  said  O.  C.  Scoresby  bought  of  this  plaintiff,  on 

credit,  goods,  wares,  and  merchandise  of  the  value  of  $400,  and  for 


Ch.  11)      CHANGE   IN   PERSONALITY   OF   PARTNERSHIP  PRINCIPAL.  567 

which  he  agreed  to  pay  this  plaintiff  the  sum  of  $400."  In  the  afiswer 
of  defendant  these  allegations  are  traversed  by  a  general  denial.  The 
only  proof  in  the  record  shows  that  the  goods  were  furnished  and 
shipped  to  the  Scoresby  Tailoring  Company,  and  there  is  no  evi- 
dence tending  to  show  whether  or  not  the  Scoresby  Tailoring  Com- 
pany is  a  partnership  or  a  corporation,  or  whether  or  not  the  said 
O.  C.  Scoresby  comprises  solely  the  Scoresby  Tailoring  Company. 
The  burden  was  on  the  plaintiff  to  make  out  its  case.  There  is 
no  allegation  that  O.  C.  Scoresby  and  the  Scoresby  Tailoring  Com- 
pany are  one  and  the  same,  or  that  the  said  O,  C.  Scoresby  solely 
comprises  the  Scoresby  Tailoring  Company,  and  consequently  there 
was  no  necessity  to  affirmatively  traverse  the  same.  But  there  was 
an  allegation  that  upon  said  guaranty,  and,  relying  upon  the  same, 
plaintiff  extended  credit  to  O.  C.  Scoresby.  The  only  account  offered 
in  evidence  against  any  one  was  that  verified  by  the  witness  Malone 
in  his  deposition,  which  was  against  the  Scoresby  Tailoring  Company, 
and  was  introduced  over  the  objection  and  exception  of  the  defendant 
on  the  ground  that  the  same  was  irrelevant,  incompetent,  and  imma- 
terial; it  not  being  shown  to  be  an  account  for  which  the  guaranty 
was  executed,  it  appearing  on  its  face  that  it  was  against  the  Scoresby 
Tailoring  Company.  v  ^-s^j*^'^  d^ tA^y. 

In  the  case  of  Cremer  v.  Higginson  et  al.,  1  Mason,  323,  Fed.  Cas.  -^  ^  t^'e.^v^AjJ. 
No.  3,383,  Mr.  Circuit  Justice  Story  said:    "Having  thus  fixed  the  in- <^t'-^^ pl+^^  t^l 
terpretation  of  the  letter  on  this  point,  that  it  is  a  mere  guaranty  of  ^'^'/i^-'j^ 
the  debt  of  third  persons,  the  next  question  upon  its  construction  is, 
To  whom  are  the  advances  to  be  made?     If  there  be  anything  clear 
in  this  case,  it  is  that  the  advances  are  to  be  made  to  Stephen  Higgin- 
son, Jr.,  and  Henry  Higginson,  then  co-partners  in  trade  under  the 
firm  name  of  S.  &  H.  Higginson.     It  follows,  therefore,  that  it  covers 
only  advances  made  to  them  jointly  on  their  joint  credit,  and  not  ad- 
vances made  to  them  severally  on  their  several  credit.     Unless  then  it 
should  be  completely  established  that  the  advances  were  made  on  the 
joint  account  of  the  firm,  there  is  an  end  of  the  plaintiffs'  case." 

In  the  case  of  Crane  Co.  v.  Specht,  39  Neb.  129,  57  N.  W.  1017,  42 
Am.  St.  Rep.  562,  Mr.  Justice  Harrison  in  delivering  the  opinion  of 
the  court  said:  "The  question  raised  by  the  bill  of  exceptions  and 
strenuously  argued  by  counsel  is :  Can  the  Crane  Company  recover 
upon  the  contract  of  guaranty  given  by  defendants  to  Crane  Bros. 
Manufacturing  Company?  The  attorneys  for  plaintiff  contending  that 
the  Crane  Company  was  organized  on  the  20th  day  of  January,  1890, 
being  the  Crane  Bros.  Manufacturing  Company  under  the  new  name, 
Crane  Company,  that  it  was  composed  of  the  same  persons,  managed 
by  the  same  officers,  engaged  in  the  same  business,  and  at  the  same 
location;  that  there  was  merely  a  change  in  the  name,  and  no  other 
or  further  change  in  the  composition  or  operations  of  the  company, 
and  hence  it  was  entitled  to  recover  on  this,  as  well  as  other  contracts 
to  which  the  Crane  Bros.  Manufacturing  Company  was  a  party.    The 


568  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

dcfciM.int  s  attorneys  claim  that  the  Crane  Company  cannot  recover 
by  virtue  of  the  guaranty  given  by  defendant  to  the  Crane  Bros. 
Manufacturing  Company  any  sum  due  it  for  goods  sold  or  furnished 
Liclitcnbcrgcr  after  the  change  of  its  name  to  Crane  Company.  The 
contention  in  the  case  resolves  itself  to  the  question,  Did  the  change  in 
the  name  of  the  corporation  deprive  it  of  the  right  to  recover,  upon  the 
contract  of  guaranty  given  to  it  by  the  defendant  in  its  former  name, 
the  price  of  goods  furnished  after  the  change  in  style  to  the  party 
whose  account  was  guarantied  to  it  under  the  old  name?  The  answer 
to  this  question  will  be  most  readily  obtained,  it  seems  to  me,  by  an  ex- 
amination of  the  nature  of  the  contract  of  guaranty,  and  the  construc- 
tion to  be  given  to  it.  In  1  Brandt  on  Suretyship  and  Guaranty  (2d 
ICd.)  pp.  131,  135,  §  93,  it  is  said,  in  discussing  such  contracts:  'A 
rule  never  to  be  lost  sight  of  in  determining  the  liability  of  a  surety 
or  guarantor  is  that  he  is  a  favorite  of  the  law,  and  has  a  right  to 
?tand  upon  the  strict  terms  of  his  obligation,  when  such  terms  are  as- 
certained. This  is  a  rule  universally  recognized  by  the  courts,  and  is 
applicable  to  every  variety  of  circumstances.'  Again  it  is  said :  'A 
>urety  or  guarantor  usually  derives  no  benefit  from  his  contract.  His 
object,  generally,  is  to  befriend  the  principal.  The  guarantor  is  only 
liable  because  he  has  agreed  to  become  so.  He  is  bound  by  his  agree- 
ment, and  nothing  else.  It  has  been  repeatedly  decided  that  he  is  under 
no  moral  obligation  to  pay  the  debt  of  his  principal.  Being,  then, 
bound  by  his  agreement  alone,  and  deriving  no  benefit  from  the  trans- 
action, it  is  eminently  just  and  proper  that  he  should  be  a  favorite  of 
the  law,  and  have  a  right  to  stand  upon  the  strict  terms  of  his  obli- 
gation. To  charge  him  beyond  its  terms  would  be  not  to  enforce  the 
contract  made  by  him,  but  to  make  another  for  him.'  " 

In  the  case  of  Allison  v.  Rutledge,  5  Yerg.  (Tenn.)  193,  the  de- 
fendant addressed  a  letter  to  "Mr.  Allison,"  by  which  he  became  surety 
for  the  payment  of  the  purchase  price  of  some  bacon  purchased  by  one 
Cooper,  under  which  guaranty  he  was  sued  as  guarantor  bv  John  and 
Joseph  Allison  for  the  price  of  the  bacon.  Mr.  Chief  Justice  Catron, 
m  speaking  for  the  Supreme  Court  of  Tennessee,  said :  "Can,  under 
any  circumstances,  a  recovery  be  had  in  this  action  by  force  of  the 
guaranty?  It  is  addressed  in  the  singular  to  Mr.^Allison.  Rutledge 
undertook  for  the  debt  of  Cooper,  and  is  bound  by  the  writing,  and 
this  only.  1  he  contract  cannot  be  varied,  or  its  meaning  explained 
without  violating  the  statute  of  frauds.  He  did  not  address  himself  to 
two  A  hsons.  but  to  one..  The  paper  from  its  face  could  not'lbTiTven 
in  evidence  to  sustain  the  joint  action,  and  it  could  not  be  proved  by 
parol  that  two  were  meant." 

In  the  case  of  Grant  v.  Naylor,  4  Cranch,  22-i,  2  L.  Ed.  603,  John 
anj.jeremiah  Baylor  brought  an  action  against  Daniel  Grant^"on-a 
letter  or  contract  of  guaranty  addressed  to  John  and  Joseph  Naylor. 

Ljh  "Th  ^fi'",  ^"■'^'"'  '"  ^^l'^'^'-'"?  the  opinion  of  the  c^uT^ 
said.      That  the  letter  was  really  designed  for  John  and  Jeremiah 


Ch.  11)       CHANGE   IN   PERSONALITY   OF   PARTNERSHIP   PRINCIPAL.  569 

Naylor  cannot  be  doubted,  but  the  principles  which  require  that  the 
promise  to  pay  the  debt  of  another  shall  be  in  writing,  and  which  will 
not  permit  a  written  contract  to  be  explained  by  parol  testimony,  orig- 
inate in  a  general  and  wise  policy,  which  this  court  cannot  relax, 
so  far  as  to  except  from  its  operation  cases  within  the  principles. 
Already  have  so  many  cases  been  taken  out  of  the  statute  of  frauds, 
which  seem  to  be  within  its  letter,  that  it  may  well  be  doubted  whether 
the  exceptions  do  not  let  in  many  of  the  mischiefs  against  which  the 
rule  was  intended  to  guard.  On  examining  the  cases  which  have  been 
cited  at  bar,  it  does  not  appear  to  the  court  that  they  authorize  the  ex- 
planation of  the  contract  which  is  attempted  in  this  case.  This  is  not 
a  case  of  ambiguity.  It  is  not  an  ambiguity  patent,  for  the  face  of 
the  letter  can  excite  no  doubt.  It  is  not  a  latent  ambiguity,  for  there 
are  not  two  firms  of  the  name  of  John  &  Joseph  Naylor  &  Co.  to  either 
of  which  this  letter  might  have  been  delivered.  In  such  a  case  the 
letter  is  not  a  written  contract  between  Daniel  Grant,  the  writer,  and 
John  and  Jeremiah  Naylor,  the  persons  to  whom  it  was  delivered.  To 
admit  parol  proof  to  make  such  a  contract  is  going  further  than  the 
courts  have  ever  gone,  where  the  writing  is  itself  a  contract,  and 
where  no  pre-existing  obligation  bound  the  party  to  enter  into  it." 

The  apparent  weight  of  authority  is  that  no  one,.kul_the  identical 
pexsQTLlo,  whom  the  letter  of  credit  was  addressed,  or  in  whose  favor 
the  instniment  of  guaranty  rims,  or  his  or  their  assigns,  Can  Tnaintain 
an  action  thereon.  Taylor  v.  McClung,  2  Houst.  (Del.)  25  ^'"SiHth 
v.  Montgomery,  3  Tex.  199;  'Walsh  et  al.  v.  Baihe,  10  Johns.  (N.  Y.) 
180;  Penoyer  v.  Watson,  16  Johns.  (N.  Y.)  100;  Evansville  National 
Bank  V.  Kaufmann  et  al,  93  N.  Y.  273,  45  Am.  Rep.  204;  Taylor 
et  al.  V.  Wetmore,  10  Ohio,  491.  The  following  authorities  appear  to 
support  the  contrary  doctrine:  Michigan  State  Bank  v.  Peck,  28 
Vt.  200,  65  Am.  Dec.  234;  Wadsworth  v.  Allen,  8  Grat.  (Va.)  174, 
56  Am.  Dec.  137.  It  is  not  necessary,  however,  to  determine  which 
announces  the  correct  rule,  these  authorities  being  merely  referred  to 
for  the  purpose  of  illuminating  the  doctrine  of  the  liability  of  a 
guarantor. 

In  the  case  at  bar  the  guarantor  agreed  to  answer  for  the  default   '^^j  /vi'-vV-' 
oiSL  C.  Scoresby.     The  record  shows  that  upon  this  instrument  of^  '      ■,' -,■^"^'^4^^' 
guaranty  the  goods  were  furnished  the  Scoresby  Tailoring  Company."^  •"  '  '     j^'^^^ 
There  is  no  presumption  that  they  were  one  and  the  same.     A  guar-  >p»>#/>vW 
antor  has  the  right  to  prescribe  the  exact  terms  upon  which  he  will 
enter  into  the  obligation,  and  to  insist  upon  a  discharge  in  case  those 
terms  are  not  observed.     If  the  Scoresby  Tailoring  Company  was  a 
corporation  or  a   partnership   composed  of  members  oth^r  than  the 
party  mentioned  in  this  guaranty,  the  defendant  could  not  be  held  as 
guarantor  in  this  action.     If  it  were  a  corporation,  its  business  and 
assets  would  be  controlled  by  a  board  of  directors,  and  the  guarantor 
might  have  refused  to  have  been  bound  for  its  defaults,  though  the 
said  O.  C.  Scoresby  was  one  of  the  stockholders  and  officers.     If  it 


><■ 


570  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

were  a  partnership  composed  of  otiier  members  than  the  said  Scoresby, 
the  partnership  pro[)crty  and  assets  would  have  been  subject  to  the 
partnership  control,  and  the  other  partners  would  have  had  the  same 
control  thereof  as  the  said  O.  C.  Scoresby,  and  under  such  circum- 
stances the  guarantor  might  have  declined  to  have  become  bound.__The 
plaintilT  having  failed  to  affirmatively  show  that  the  ^oods  _w£i£ 
furnished  to  the  party  named  in  the  guaranty,  tlie  guarantor  could  not 
be  held  on  such  liability. 

There  appears  to  have  been  no  error  committed  by  the  lower  court 
in  rendering  judgment  in  favor  of  the  defendant.  Its  judgment  is 
affirmed.    All  the  Justices  concur.* 

>  Similarly,  where  the  oblijreos  are  a  partnership  and  one  dies,  the  surety 
ottlli;or  la  not  bound  as  to  transactions  entered  into  by  the  survivors.  Weston 
V.  narton,  4  Taniit.  073  (1812). 

St-  ll>  &  2<)  Vletorla.  c.  07.  8  4: 

"IV.  No  rromlsp  to  answer  for  the  Dobt.  Default,  or  Miscarriage  of  another 
Tnadp  to  a  Firm  rnnsistinir  of  Two  or  More  Persons,  or  to  a  sinsrle  Person 
tradinR  under  the  Name  of  a  firm,  and  no  Promise  to  answer  for  the  Debt.  De- 
fault, or  Miscarriaee  of  a  Firm  consisting  of  Two  or  more  Persons,  or  of  a 
single  rers(m  tradint:  under  the  Name  of  a  Firm,  shall  be  binding  on  the  Per- 
son making  such  Prondse  in  respect  of  anything  done  or  omitted  to  be  done 
after  a  Change  shall  have  taken  place  in  any  One  or  more  of  the  Persons  con- 
stituting the  Firm,  or  in  the  Person  trading  under  the  Name  of  a  Firm,  unless 
the  Intention  of  the  Parties,  that  such  Promise  shall  continue  to  be  binding 
notwithstanding  such  Change,  shall  appear  either  by  express  Stipulation  or 
by  necessary  Impllcatlou  from  the  Nature  of  the  Firm  or  otherwise." 


Ch.  12)  THE  STATUTE  OF   LIMITATIONS.  571 

CHAPTER  XII 
THE  STATUTE  OF  LIMITATIONS 


McGOVERN  V.  RECTANUS  et  al. 

(Court  of  Appeals  of  Kentucky,  1907.     105  S.  W.  965,  32  Ky.  Law  Rep.  3&4, 
14  L.  R.  A.  [N.  S.]  380.) 

Appeal  from  Circuit  Court,  Jefferson  County,  Common  Pleas 
Branch,  Second  Division. 

Action  by  John  McGovern  against  Theodore  Rectanus  and  others. 
From  a  judgment  for  defendants,  plaintiff  appeals.    Affirmed. 

Clay,  C.^  This  is  an  appeal  from  a  judgment  of  the  Jefferson 
circuit  court,  common  pleas  branch,  second  division,  dismissing  ap- 
pellant's petition,  wherein  he  sought  to  recover  of  appellees,  sureties 
upon  a  policeman's  bond,  the  sum  of  $.500,  with  interest  and  costs,  for 
wITicli~amount  appellant  had  in  another  action  recovered  judgment 
against  the  policeman  himself.  The  petition  alleges  that  on  June  12, 
1899,  Edward  Powell,  a  police  officer  of  the  city  of  Louisville,  illegal- 
ly arrested  and  assaulted  appellant ;  that_ori_August  14,  1899,  he  sued 
Powell  for  damages,  and  recovered  judgment  on  June~^~ItTOl,  lor 
_^()0,  with  interest  from  the  date  of  the  judgment  and  costs;  and  that 
Powell  appealed  from  this  judgment,  and  it  was  afterwards  affirmed 
by  the  Court  of  Appeals.  Appellant  also  alleges  that  appellees  are  the 
sureties  on  Powell's  bond  as  such  police  officer. 

This  action  was  instituted  on  October  6,  1906,  mQre__tharL_-S.e.v£n 
years  after  the  alleged  assault.  The  petition  charges  that  this  judg- 
ment v/as  for  actual  damages  only ;  but  the  answer  pleads  that,  under 
the  instructions  given  by  the  court  on  the  trial  of  that  action,  the 
judgment  obtained  includes  punitive  damages,  and  that  appellees,  as 
sureties,  are  not  liable  for  punitive  damages.  T1t£_  answer— further 
pleads__tliat_appellajit's  cause  of  action.. is_.barred  by  the  seven-year 
statute  of  limitation  applicable  to  sureties.  Appellant,  by  way  of 
reply,  pleads  that  he  was  obstructed  in  prosecuting  his  action  against 
tlie  sureties  by  delays  in  his  litigation  with  the  principal  and  by  the 
appeal  prosecuted  by  the  principal  in  the'Orig^inal  action,  to  which  the-^ 
sureties~were  riot  parties.  The  court  below  sustained  a  demurrer  to  ,  J^p,*^ 
the  reply,  and  dismissed  the  petition.  3 

The  two  questions  presented  to  this  court  are :  First,  is  appellant's 
cause  of  action  barred  by  the  seven-year  statute  of  limitations?     Sec- 

1  The  opinion  has  been  abridged,  by  omitting  all  the  discussions  of  the  ques- 
tions whether  the  plaintiff  was  "obstructed  in  prosecuting"  the  action,  within 
the  meaning  of  the  Kentuclvy  statute,  and  whether  the  principal  and  surety 
can  in  that  jurisdiction  be  joined  in  the  same  action. 


572  DKFKNSES  OF   SURETY   AGAINST   CREDITOR.  (Part    3 

ond,  was  he  obbtructed  in  prosecuting  the  present  action  within  the 
meaning  of  the  statute  on  the  subject? 

Section  2551  of  the  Kentucky  Statutes  of  1903  provides-,_tbat  the 
surety  on  any  obhgation,  other  than  those  "provided  f<5r  under  sec- 
tions 2945  and  2950',  shall^  be  discharged  from  liabiHty  when  ^ven 
vears  shall  elapse  without  suit  thereon  after  the  cause  o?  acHbn  ac- 
crucdl^  The  bond  in  this  case  was  executed  on  the  13fh  ot"-Aifgust, 
18D8,  and  the  assault  complained  of  took  place  on  June  12,  1S99,  more 
than  seven  years  before  October  6,  1906,  the  date  of  the  institution  of 
this  action.  The  ^eal  question,  then,  is  whether  or  not  appellant's 
cause  of  action  accrued  against  appellees  on  June  12^1899,  when  the 
all<jged  assault  was  committed.  In  Schwearman  v.  Common  wealth, 
99  Ky.  296,  ^8  S.  W.lierand  Grant  County  v.  Lemmon,  78  S.  W. 
874,  25  Ky.  Law  Rep.  1725,  this  court  recognized  the  rule  that  the 
cause  of  action  against  the  surety  of  a  county  clerk  and  treasurer  of  a 
building  and  loan  association  for  a  defalcation  by  the  officer  accrued 
when  the  defalcation  was  committed,  expressly  holding  that,  as  the 
surety  may  be  sued  jointly  with  the  principal,  the  cause  of  action  ac- 
crues~a.gainst  him  at  the  same  time  that  it  accrues  against  tHe^rin- 
cipatTT*"  "'^  *  "^ 

iTis  true  that  in  Craddock  v.  Payton  [114  Ky.  298,  70  S.  W. 
G84],  this  court  held  that  the  surety  of  a  personal  representative  could 
not  be  sued  until  there  had  been  a  judgment  against  the  administrator 
fixing  his  liability.  This  rule,  however,  has  been  confined  to  sureties 
upon  the  bonds  of  personal  representatives,  as  will  be  seen  by  refer- 
ence to  authorities  referred  to  in  that  case.  Being  of  the  opinion, 
therefore,  that  Jhe  party  for  whose  benefit  the  bond  is  given  may, 
when  the  conditions  of  the  bond  are  violated,  sue  both  the  principal 
and  the  sureties,  it  will  necessarily  follow  that  the  cause  of  action 
against  the  sureties  accrues  at  the  same  time  as  it  does  against  the 
principal. 

As  appellant  did  not  sue  appellees  until  seven  years  had  elapsed  from 

the  time  that  his  cause  of  action  accrued,  his  cause  of  action  was 

barred  by  the  statute  of  limitations,  unless  appellant's  reply  exhibited 

such  a  state  of  facts  as  would,  under  section  2552,  suspend  the  run- 

,ning  of  the  statute.     *     *     ♦ 

'      Judgment  affirmed.' 

«  ThfiJIaldUtj  of  the  surety  by  simple  contract  at  common  law  was  limLted 
to  six  years  by  the  statute  of  limitations.     St.  21  Jac.  I,  c.  1G7 

TtUa^gtatute  applies  to  n  surety  who  by  simple  contract  s:uarantfifis_ajmQrt- 
^.    Ik-nton  V.  Paddlson,  9  Times  Law  Reports,  333  (1S93). 
^r^cc2fd:  Parr's  Hanlcing  Co.  v.  Yates,  67  L.  J.  Q.  B.  8.j1  (1S9S) 
^  ThP  Rtntute  of  limitations  having  run  in  favor  of  the  suretv.  he  is  in  some 
V  a  new  pron)l?.e  to  pay,  unless  there  is  a  new  cousideralibn. 
f  furtlier  forl)oarance  to  the  principal.     Steger  v.  Jackson, 
•    T  :iw  Rop.  4.'',4  (1007). 
„ '!  llowing  the  analog}-  of  the  liability  of  the  principal 

In,,.'.   ,r  „,       ...       ,,  ""•   '■•■•Hin,-  no  new  consideration   to  sustain"  a  "sabse- 
??\   \V  ^.^  ri  \  i-as  ru;i.     Perkins  v.  Cheney,  114  Mich.  1367, 

..  N.  W.  o9o.  08  Am.  S:  ,  (1S97) ;  Collins  v.  Bane,  34  Iowa,  385  (1872): 


Ch.  12)  THE  STATUTE  OF  LIMITATIONS.  573 

NELSON  V.  FIRST  NAT.  BANK  OF  KILLINGLEY. 

(Circuit  Court  of  Appeals  of  tlie  United  States,  Eighth  Circuit,  1895.    69  Fed. 

79S,  16  C.  C.  A.  425.) 

In  error  to  the  Circuit  Court  of  the  United  States  for  the  District  of 
Minnesota. 

Sanborn,  Circuit  Judge,  after  stating  the  facts  as  above,  deliver- 
ed the  opinion  of  the  court.*     *     *     * 

It,  is  contended  that  the  plaintiff  in  error  was  relieved  frorr.  all) 
liability  on  the  note  in  suit,  and  that  the  court  should  have  so  charged  \  0^'^ 
the  jury,  because  he  stood  in  the  relation  of  a  surety  for  the  mak- 
er_of  the  note,  and  the  defendant  in  error  had  permitted  its  claim 
against  the  principal  to  become  barred  by  the  statute  of  limitations 
betore  the  trial  of  this  action.  The  facts  on  which  this  claim  is 
based  are  that  the  bank  filed  a  claim  against  the  maker  of  the  note 
and  the  plaintiff  in  error  in  this  action  several  years  before  the  stat- 
ute  of  limitations  ran  against  either  of  them,  and  caused  the  sum- 
mons  in  the  action  to  be  served  upon  the  plaintiff  in  error,  but  did  not 
cause  it  to  be  served  upon  the  maker  of  the  note  at  all,  and  its  claim 
against  him  became  barred  by  the  statute  before  the  trial  of  the 
action7""  There  was,  however,  no  evidence  of  any  agreement  on  the* 
part  of  the  bank  to  extend  the  time  of  payment  to  the  maker,  or  to 
forbear  or  delay  the  prosecution  of  its  action  against  him.  The 
statutes  of  the  state  of  Minnesota  provided  that  an  action  might  be 
brought  against  two  or  more  persons  for  the  purpose  of  compelling 
one  of  them  to  satisfy  a  debt  due  to  the  other  for  which  the  plaintiff 
was  a  surety.  Gen.  St.  Minn.  1878,  c.  66,  §  130  (Gen.  St.  189-i,  §  5272). 
The  plaintiff  in  error  could  have  paid  the  note  at  any  time  before  the 
statute  ran  in  favor  of  the  maker,  and  could  then  have  enforced  re- 
payment by  the  maker,  or  he  could  have  maintained  an  action  against 
the  maker  under  the  statute  we  have  cited,  without  first  paying 
the  note.  Under  this  state  of  facts,  the  plaintiff  in  error  was  not  re- 
leased from  his  liability  on  the  note  by  the  mere  failure  of  the  bank  to 
press  its  action  against  the  maker. 

Conceding  that  the  plaintiff  in  error  was  an  accommodation  indorser 
of  the  note,  and  that  his  relation  to  the  maker  after  he  was  charged 
as  an  indorser  was  that  of  a  surety,  still  this  relation  imposed  no  ob- 
ligation of  active  diligence  upon  the  bank  in  the  prosecution  of  its 
suit  against  the  principal.  The  surety  assumes  for  himself  the  liability 
of  his  principal.  The  contract  of  suretyship  is  not  that  the  creditor 
will  see  that  the  principal  pays  the  debt  or  performs  the  obligation, 
but  that  the  surety  will  see  that  the  principal  pays  or  performs.  It 
is  true  that,  if  the  creditor  makes  a  binding  agreement  with  the 
principal  that  he  will  extend  the  time  of  payment  or  forbear  to  col- 

*  The  facts  sufficiently  appear  in  the  opinion,  of  which  only  so  much  is 
printed  as  relates  to  the  statute  of  limitations. 


674  DEFENSES  OF  SURETY  AGAINST   CREDITOR.  (Part    3 

lect  the  debt,  this  will  release  the  surety.  But  the  reason  of  this  rule 
is  that  such  an  agreement  ties  the  liands  of  both  creditor  and  surety, 
and  deprives  the  surety  of  his  right  to  pay  the  debt  at  any  time 
and  enforce  repayment  from  the  principal.  Mere  forbearance  or 
delay  in  enforcing  the  obligation  of  the  principal  has  no  such^  ef- 
fect and  hence  does  not  release  the  surety.  2  Brandt,  Sur.  §  342  • 
Kcid  V.  Flippen.  47  Ga.  273,  27C,  277;  Whiting  v.  Clark,  17  Cal.  407 
411 :  Hunt  V.  Bridgham,  2  Pick.  (Mass.)  581,  584,  13  Am.  Dec.  458 
Mueller  v.  Dobschuctz,  89  111.  176,  182;  Hubbell  v.  Carpenter,  5  N 
Y.  171,  177,  178;  Ruckcr  v.  Robinson,  38  Mo.  154,  90  Am.  Dec.  412 
Morse  v.  Huntington,  40  Vt.  488. 

There  are  43  alleged  errors  assigned  in  this  record.  We  have 
carefully  considered  each  one  of  them.  We  have  reviewed  the  most 
important  of  them — those  upon  which  counsel  for  plaintiff  in  error 
appeared  to  place  chief  reliance— and  we  have  stated  the  reasons 
why  they  cannot  be  sustained.  No  good  purpose  would  be  served 
by  an  e.xtended  discussion  of  the  alleged  errors  we  have  not  noticed. 
It  is  sufficient  to  say  that  no  exception  was  taken  to  the  charge  of 
the  court,  the  evidence  was  sufficient  to  warrant  the  verdict,  and  the 
court  below,  in  our  opinion,  committed  no  material  error  in  the  trial 
of  this  case. 

The  judgment  below  must  be  affirmed,  with  costs;  and  it  is  so 
ordered.' 


HOOKS  &  WRIGHT  v.  BRANCH  BANK  AT  MOBILE. 

(Supreme  Court  of  Alabama,  1845.     8  Ala.  580.) 

Error  to  the  Circuit  Court  of  Mobile. 
Motion  by  the  bank  against  the  plaintiffs  in  error. 
Plea,  that  the  defendants  were  the  sureties  of  one  C.  Hooks,  who 
has"~(Ie"parted  this  life ;    that  administration  has  been  grantFd^orr  his 
estate,  but  that  the  adminfstrator  was  not  notified  of  the  existence  of 
the  debt,  by  which  the  estate  has  been  discharged  from  its  payment. 
I      To  _this  plea  the  bank  demurred  and  the  court  sustained  the  de- 
•  murrer,  and  rendered  judgment  for  the  bank,  from  which  this  writ 
'  is  prosecuted. 

*  T  main  proposition  that  the  surety  is  not  <iiscliar^d4)e- 

ea"  ite  is  disfliarireil  hy  thp  statute  of  limitations:    Banks 

V.  >■-; .  - .....^M-ad.  62  M(1.  S-8  (IS&i) :   Moore  et  al.  v.  GravTIZC'Ohio  St 

r»2,'.  (IST.'i).  which  puts  the  rule  ui>on  the  principle  that  the  surety  is  bv  the 
i-omnion  law  a  joint  «U'btor;  wniis  &  Bro.  v.  ChowninR,  90  Tex.  G17.  40  S.  '^^ 
mi.  rvn  Am.  St.  Rep.  S^2  (18,07) ;  McBroom  v.  Governor,  etc..  6  Port.  (Ala.)  32 
,1837):  Bell  v.  WnHcor.  rA  Neb.  222.  74  N.  W.  617  (1808);  Daniel  v.  Vinson, 
10  Tex.  Civ.  A  .:i  S.  W.  421  (lS».j). 

Contra-;  Ar  !i  v.  Schmidt.  70  Iowa,  642,  27  N.  W.  805,  59  Am.  Rep. 

H.V'  "^--      '  ni...  Reed.  .7. 

"  'f'e  that  the  debt  against  the  principal  is  barred  by  limi- 

tal.  ,15  II.  L.  I'v.  4:17. 


Ch.  12)  THE   STATUTE  OF   LIMITATIONS.  575 

Ormond,  J.  The  exemption  from  suit,  if  due  presentment  of  the 
debt  is  not  made  to  the  representative  of  an  estate,  is  a  privilege  ap- 
pertaining to  the  estate  of  the  deceased  and  those  interested  in  it,  and 
cannot  be  claimed  by  any  other  person  liable  on  the  same  debt.  Nor 
is  the  right  of  one  so  circumstanced,  v^ho  may  be  compelled  to  pay  the 
debt,  to  proceed  against  the  estate,  at  all  affected  by  the  omission  of 
the_  creditor  to  present  the  claim  to  the  representative  of  the  estate. 
His,  right  to  recover  from  his  principal  arises  from  the  payment  of 
the  debt,,  and  is  not  impaired  by  the  omission  of  the  creditor  to  make 
due '  presentm£nt.  This  point  was  expressly  ruled  in  the  case  of 
Cawthorne  v.  Weisinger,  6  Ala.  716,  and  previously  in  McBroom 
V.  Governor,  6  Port.  32. 

Let  the  judgment  be  affirmed. 


WHITING  et  al.  v.  CLARK. 
(Supreme  Court  of  California,  1861.    17  Cal.  407.) 

Appeal  from  the  Fourth  District. 

Suit  commenced  by  Whiting,  Goodman  &  Co.,  August  26,  1859, 
on  the  following  written  guaranty : 

"San  Francisco,  Dec.  19,  1859. 

"For  a  valuable  consideration,  I  hereby  guaranty  the  payment 
for  any  goods  which  Whiting,  Goodman  &  Co.  shall  deliver  to  George 
S.  Porter,  or  his  order,  on  and  after  this  date. 

"[Signed]         G.  W.  Clark." 

The  complaint  avers  that  plaintiffs  gave  defendant  notice  that  they 
accepted  the  guaranty,'and  afterwards,  relying  on  it,  between  its  date 
and  June  1,  1858,  sold  and  delivered  to  Porter  goods  amounting  to 
$795.50,  and  notified  defendant  thereof  at  the  time  of  the  sales,  and 
that  on  the  17th  September,  1858,  there  was' a  balance  due  of  $395.50, 
for  payment  of  which  demand  was  then  made  of  Porter  and  refused ; 
that  defendant  was  on  the  same  day  notified  of  such  refusal,  and  de- 
mand made  on  him  for  payment ;  and  that  August  1,  1859,  plaintiffs 
presented  defendant  an  account  of  said  balance,  and  demanded  pay- 
ment, etc.    Prayer  for  $500  damages  and  costs. 

The  answer  admits  knowledge  of  the  sales  up  to  April  20,  1858, 
but  denies  that  defendant  was  ever  notified  of  any  sales  after  that 
date,  or  that  he  was  notified  of  any  demand  on  Porter  or  of  the 
time  when  his  account  was  due,  until  August,  1859.  It  also  sets 
up  that  the  goods  sold  to  Porter  were  charged  to  him  in  a  book 
account,  and  that  he  (Porter)  is  indebted  on  this  book  account  only, 
that  plaintiffs  have  failed  to  sue  him  for  the  amount,  and  that  the  cause 
of  action  against  Porter  has  accrued  more  than  one  year  before  the 
commencement  of  this  suit,  and  is  barred. 


57G  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

The  case  was  tried  before  the  court,  and  the  allegations  of  the 
complaint  were  substantially  found  true.  The  account  on  plaintiffs' 
books  was  against  Porter.  Judgment  for  plaiiitiffs  for  $395.50,  with 
10  per  cent,  interest  from  September  rTlSoS.'In  all  $452.29. 

I\-f«Mvi.nnt  moved  for  a  new  trial,  on  the  ground  that  the  finding 
is  •  l)v  the  evidence  and  is  against  law.    Overruled.     De- 

le:; ,...  , 

Baldwin,  J.,  delivered  the  opinion  of  the  court;  Field,  C.  J., 
concurring. 

This  suit  is  brought  on  a  guaranty  by  defendant  of  a  debt  of  or 
for  one  Porter.  The  only  thing  set  up  in  defense  which  it  is  necessary 
to  11. 'ii^-i>  is  the  plea  that  no  suit  has  been  brought  to  chargelhe  original 
d«.'  '.  thaTtHe  sTatiife  of  limitations  bars  the  claitn  as  lo  liim. 

Bm  uii>  IS  no  defense.^  After  legally  charging  the  defendant, "the 
plaintiff  was  not  bound  to  sue  the  principal,  at  least,  unless  requested 
by  the  guarantor ;  and  the  surety  had  in  his  own  hands  the  means  of 
protecting  himself  from  loss  by  delay,  by  paying  the  debt  and  then 
suing  the  principal,  or  by  filing  a  bill  to  compel  the  creditor  to  sue. 
B^  the  guaranty  tlie  defendant  became  the  debtor  of  the  creditor,  and 
no  otlier  limitation  could  defeat  the  claim  than  that  prescribed  by 
law  for  the  class  of  indebtedness  evidenced  by  the  paper. 

Probably  the  charge  of  $56  for  interest  is  erroneous;  but  this  mat- 
ter should  have  been  brought  distinctly  to  the  notice  of  the  referee, 
and  objection  taken  to  the  judgment  and  finding  on  this  account. 

Judgment  at!irmed.^ 


WmTCOMB  v.  WHITING. 
(Court  of  King's  Bench,  17S1.    2  Doug.  651a.) 

Declaration,  in  the  common  form,  on  a  promissory  note  executed 
by  the  defendant.  Pleas,  the  general  issue,  and.non  assumpsit  infra 
sex^annos.  Replicattort,  assumpsit  infra  sex  annos!  The  cause  was 
tried  before  Hotham,  Baron,  at  the  last  assizes  for  Hampshire.  The 
plaintiff  produced  a  joint  and  several  note,  executed  by  the  defendant 
and  three  others ;  and,  having  proved  payment  by  one  of  the  others 
■of  interest  on  the  note,~and  part  of  the  principal,  within  six^yeaxs,  and 
the  judge  thinking  that  was  sufficient  to  take"  the  case  out' of  the 
statute,  as  against  the  defendant,  a  verdict  was  found  for  the  plaintiff. 

'^"  Tr. ;,!-,,.  ,i,p  4ti^  Qf  ^^^^,^  ^  j.y|g  ^y^g  granted  to  show  cause  why 
*'^'  ■■  be  a  ne\YJdal,  on  the  motion  of  Lawrence,  who  cited 

Blaiul  V.  lla..:crig.  C.  B.  H.  1  &  2  W.  &  M.  2  Ventr.  151,  and  this  dav, 
in  support  of  the  application,  he  contended  that  the  plaintiff,  by  suing 

•  The  arguments  of  conusel  are  omitted. 
a»73r*"^'^'  ^^  '<'"°'^^g  <^ase  of  suretyship:     Vlllars  v.  Palmer,  G7  IlL  204 


Ch.  12)  THE   STATUTE   OF   LIMITATIONS.  577 

the  defendant  separately,  had  treated  this  note  exactly  as  if  it  had  been 
signed  only  by  the  defendant;  and  therefore,  whatever  might  have 
been  the  case  in  a  joint  action,  in  this  case  the  acts  of  the  other  par- 
ties were  clearly  not  evidence  against  him.  The  acknowledgment  of  a 
party  himself  does  not  amount  to  a  new  promise,  but  is  only  evidence 
of  a  promise.  This  was  determined  in  the  case  of  Heylin  v.  Hastings, 
B.  R.  H.  10  Will.  Ill,  reported  in  1  Salk.  29,  and  12  Modern,  223,  and 
Hemings  v.  Robinson,  C.  B.  M.  6  Geo.  II,  Barnes  Oto.  Ed.  436.  It 
was  decided  that  the  confession  of  nobody  but  a  defendant  himself  is 
evidence  against  him.  That  last  case  was  an  action  by  an  indorsee  of 
a  note  against  the  drawer,  and  the  plaintiflf  proved  the  acknowledg- 
ment of  a  mesne  indorser  that  the  indorsement  on  the  back  of  the  note 
was  in  his  handwriting;  but  the  court  was  of  opinion  that  this  was 
not  evidence  against  the  drawer,  but  that  the  indorsement  must  be 
proved.  It  would  certainly  open  a  door  to  fraud  and  collusion  if  this 
sort  of  evidence  were,  in  any  case,  to  be  admitted.  A  plaintiff  might 
get  a  joint  drawer  to  make  an  acknowledgment,  or  to  pay  part,  in 
order  to  recover  the  whole,  although  it  had  been  already  paid. 

Lord  Mansfield.  The  question,  here,  is  only  whether  the  action 
is  barred  by  the  statute  of  limitations.  When  cases  of  fraud  appear, 
they  will  be  determined  on  their  own  circumstances.  Payment  by  one 
is_  payment  for  all,  the  one  acting  virtually  as  agent  for  the  re.st; 
and  in  the  same  manner  an  admission  by  one  is  an  admission  by  all,  and 
the  law  raises  the  promise  to  pay,  when  the  debt  is  admitted  to  be 
due. 

WiLLES,  Justice.  The  defendant  has  had  the  advantage  of  the  par- 
tial payment,  and,  therefore,  must  be  bound  by  it. 

AsHHURST  and  BullER,  Justices,  of  the  same  opinion. 

The  rule  discharged." 

8  AXter  the  death  of  one  of  the  joint  promisoi*s,  the  contract  becomes  sev- 
eralat  common  law,  and  a  payment  by  the  survivor  vrould  not  postpone  the 
statufe  as  against  the  executor  of  the  decedent.  Atkins  v.  Tredgold,  2  Barn. 
fiTTSS  (1823). 

^Ylierethej[H;o^misejEas.  joint..  at_  common  law,  the  doctrine  of  the  principal 
caseaclmitte"dly  applied.     In  re  Wolmershausen,  62  Law  Times  (N.   S.)   541 

(IS90): 

But  where  the  promise  was  merely  several  the  doctrine  of  the  principal 
caseTs  inapplicable.  "In  no  case,  so  far  as  I  have  been  ahle  to  discover,  has 
it  be'eii  held  that,  where  the  liability  arises  from  several  promises,  a  payment 
by  one  of  the  parties  so  severally  liable  prevents  the  statute  from  running  in 
favor  of  the  others."  Sterling,  J.,  In  re  Wolmershausen,  62  Law  Times  (N. 
S.)  541  (1890). 

The  Mercantile  Law  Amendment  Act  of  1856  (19  &  20  Vict.  c.  97,  §  14) 
enacts  that: 

"In  reference  to  the  provisions  of  the  Acts  21  Jae.  I.  c.  16,  sect.  3.  the  3  &  4 
Will.  IV,  c.  42,  sect.  3,  and  the  16  &  17  Vict.  c.  113,  sect.  20,  when  there  shall 
be  two  or  more  co-contractors  or  co-debtors,  whether  bound  or  liable  jointly 
only  or  jointly  and  severally,  or  executors  or  administrators  of  any  contract- 
or, no  such  co-contractor  or  co-debtor,  executor,  or  administrator,  shall 
lose  the  benefit  of  the  said  enactments,  or  any  of  them  so  as  to  be  chargeable 
In  respect  or  by  reason  only  of  payment  of  any  principal,  interest,  or  other 

Hen.Sur.— 37 


U7S  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

CROSS  V.  ALLEN. 

(Supreme  Court  of  the  United  States.  1891.    141  U.  S.  528,  12  Sup    Ct.  67.  35 

L.  Ed.  843.) 

Appeal  from  the  Circuit  Court  of  the  United  States  for  the  District 
of  Oregon. 

The  case  is  stated  in  the  opinion.  ^ 

Mr  Justice  Lamar  deHvcrcd  the  opinion  of  the  court. 

This  was  a  suit  in  e^uitj  to  foreclose  two  mortgages  of  real 
estate  in  OregoHTTfTe  case  is  this:  On  the  1st  of  NovcnJ^er  1871, 
Thomai  CrossTbf  Salem,  Oregon,  gave  his  note  to  the  -firm  of  Allen 
&  Lewis,  of  Portland,  in  that  state,  for  $30,000,  payable  m  three  years, 
with  interest  at  10  per  cent,  per  annum  from  date ;  and  to  secure  its 
payment  he  and  his  wife.  Pluma  F.  Cross,  on  the  same  day  executed 
a  mortgage  in  favor  of  that  f^rm  upon  fifteen  parcels  of  agricultural 
land  in  that  state,  numbered  respectively  from  1  to  15,  and  contam- 
ing  over  3,000  acres.  Parcels  14  and  15,  containing  about  211  acres, 
were  the  separate  property  of  Pluma  F.  Cross,  while  the  remainder 
of  the  property  belonged  to  Thomas  Cross.  On  January  23,  1872, 
they  gave  another  mortgage  to  the  same  firm  upon  the  same  property 
embraced  in  the  preceding  mortgage  and  certain  town  lots  in  Salem, 
to  secure  the  payment  of  another  note,  of  even  date  therewith,  given 
by  said  Thomas  Cross  to  said  firm,  for  $10,000,  due  in  one  year,  and 
bearing  12  per  cent,  interest  from  date. 

On  the  IGth  of  September,  1872,  before  either  note  became  due, 
Pluma  F.  Cross  died ;  but  there  was  never  any  administration  of  her 
estate.  Nothing  was  paid  on  either  of  the  notes  when  they  became 
due.    *     *     * 

money  by  nny  other  or  others  of  such  co-contractors,  co-debtors,  executors. 
or  ailinlnlstrators." 

Lord  Chief  .Justice  Best,  in  Perham  v.  Raynall,  9  Moore.  C.  P.  5G6  (1S24), 
jiays:  "It  therefore  soems  that  the  principle  laid  down  in  Whitcomb  v.  Whit- 
ing applies  to  all  Instances  of  admissions  made  by  one  of  several  persons 
Jointly  <-oncerne<l  or  wbo  has  a  joint  interest;  and  we  should  create  an  anom- 
aly In  the  law  by  departing  from  it." 

Contra:     Kallenbach  v.  Dickinson.  100  111.  427,  .39  Am.  Rep.  47  (1881),  pay- 

meift     •.lt..r    i,,.,f  iirity. 

s  iicipal  case  would  apply  to  a  payment  by  one  partner  after 

dl."-  to  postpone  the  statute  of  limitations  as  to  his  co-partner. 

tfie  <'a».f  i.s  hot  accoptoil  ponerally  in  the  United  States.  Bell  v.  Morrison,  1 
Pet.  .m.  7  I*  Ed.  174  (1S2.'^) :  I>evy  v.  Cadet.  17  Sers.  &  R.  (Pa.)  126.  17  Am. 
I»e<\  iV<0  (1S2^)  :  Kallenbach  v.  Dickiuson,  100  111.  427,  39  Am.  Rep.  47  (1881). 
ScH'.  iilso,  .Story  on  Partnership.  4<;2.  note. 

But  In  sonie  J»irls<lirtionR  it  is  recotrnized  and  applied.  Dav  v.  :Merritt,  38 
N.  J.  Ijiw.  .^2.  20  Am.  Rep.  302  (1R7.^:  Caspl>olt  v.  Ackerman,  4G  X.  J.  Law, 
172  (\SS4):    Popp   V.   Ri.sley,  2:^   Mo.   185  (IS-jG). 

Whltf^mb  V.  Wbltinc  has  been  thoroughly  annotated  bv  Hare  &  Wallace 
Id  1  Smith's  T/ea<llnp  Cases,  pt.  2,  p.  983. 

•  Only  so  much  of  the  opinion  Is  given  as  relates  to  the  question  of  the 
statute  of  limitations. 


Ch.  12)  THE   STATUTE   OF   LIMITATIONS.  579 

This  leads  up  to  the  next  question  of  the  case,  viz.,  laches,  staleness 
of  claim,  and  the  statute  of  limitations  of  the  state  of  Oregon. 

Pluma^  F.  Cross,  having  executed  a  mortgage  upon  her  separate 
property  to  secure  the  debt  of  her  husband,  became  as  to  that  debt 
a  surety^  She  did  not  become  personally  bound  for  the  payment  of  the 
debt,  but  her  property  mortgaged  was  bound.  As  such  surety,  she 
was  entitled  to  all  the  rights  and  privileges  of  a  personal  surety, 
and  would  be  discharged  from  anything  that  would  discharge  a 
surety  who  was  personally  bound.  Spear  v.  Ward,  20  Cal.  659,  674; 
Gahn  v.  Niemcewicz,  11  Wend.  (N.  Y.)  312,  326;  Vartie  v.  Under- 
wood, 18  Barb.  (N.  Y.)  561,  563;  Bank  of  Albion  v.  Burns,  46  N. 
Y.  170,  175;  Bishop,  Law  of  Married  Women,  §  604;  Brandt  on 
Suretyship  and  Guaranty,  §  22;  Jones  on  Mortgages,  §  114.  And 
the  appellants,  having  succeeded  by  inheritance  to  the  estate  and  in- 
terest of  their  mother,  occupy  the  same  position  as  she  would  have 
done  had  she  lived.  Bank  of  Albion  v.  Burns,  supra.  Her  death  did 
not  discharge  her  estate  from  the  lien  which  she  created  upon  it,  nor 
did  it  vest  in  her  heirs  an  estate  which  she  had  conveyed  away  as  a 
security  for  her  husband's  debts.  Miner  v.  Graham,  24  Pa.  491, 
495. 

It  is  bv  the  application  of  these  rules  to  the  facts  of  this  case  that 
the  liability  of  the  surety  is  to  be  determined.  Under  the  Civil  Code 
of  Oregon,  the  period  of  limitation  for  promissory  notes  is  six  years ; 
and  it  is  argued  that,  as  the  notes  in  this  controversy  were  not  sued 
on  until  more  than  six  years  from  the  dates  when  they  respectively 
became  due,  an  action  on  them  would  not  lie,  notwithstanding  the 
fact  that  the  maker  made  payments  of  interest  upon  them  from  time 
to  time.  The  facts  in  this  matter  are  these :  The  first  note  was  dated 
November  1,  1871,  payable  in  three  years.  Consequently  it  matured 
November  4,  1874,  and,  if  no  payment  of  interest  had  been  made,  the 
bar  of  the  statute  would  have  been  complete  November  4,  1880 ;  but 
in  1877,  1878,  1880,  and  on  the  22d  of  December,  1881,  partial  pay- 
ments of  interest  were  made  on  the  note  by  Thomas  Cross,  or  in  his 
interest.  The  second  note  was  dated  January  23,  1872,  payable  in 
one  year,  and  consequently  matured  January  26,  1873.  The  bar  of  the 
statute  on  this  note  would  have  been  complete  January  26,  1879,  had 
no  interest  been  paid  upon  it  in  the  meantime.  It  is  averred  in  the 
bill  and  admitted  in  the  answer  that  the  interest  on  this  note  was  paid 
in  full  up  to  January  25,  1879,  one  day  before  the  completion  of  the 
bar;  and  another  payment  of  interest  was  made  February  1,  1883. 
This  suit  was  commenced  August  6,  1884.  Consequently  it  is  to  be 
observed  that  there  never  was  a  period  of  six  years  between  the  making 
of'eTther'note  and  the  bringing  of  this  suit  that  no  payments  were 
made  upon  them. 

"  Section  25  of  the  Code  of  Civil  Procedure  of  Oregon  provides 
as  follows:  "Whenever  any  payment  of  principal  or  interest  is 
made  on  an  existing  contract,  whether  it  be  bill  of  exchange,  promis- 


5S0  DEFENSES  OK  SUBETY  AGAINST  CREDITOR.  (Part    3 

sorxnott.  bond  or  otUer  ev4d€rKe  of  indebtedness,  after  the  same  be- 
comes  due,  the  limitation  shall  commence  from  the  tim^  thelasiLiiay- 
mcnt  was  made." 

It  is  conceded  tliat  Lhe_pa>ments  of  interest  above  referred  to  serve 
to  k'  'cbt  alive,  so  far  as  the  principal  was  concerne(r;~Tut  it  is 

argi  ;licy  did  not  do  so  with  reference  to  the  surety,  Pluma  F. 

Cross,  or  her  estate,  especially  in  view  of  the  fact  that  she  died  be- 
fore the  maturity  of  either  note,  and  also  in  view  of  the  fact  that  she 
never  sliced  the  notes  at  all,  but  became  a  legal  surety  by  reason  of 
having  signed  the  mortgages. 

This  presents  a  question  worthy  of  much  consideration.  Ai..com- 
mqn_law,  a  payment  made  upon  a  note  by  the  principal  debtor  before 
the^ompletion  of  the  bar  of  the  statute  served  to  keep  the  dBt>t -ative, 
both  as  to  himself  and  the  surety.  Whitcomb  v.  Whiting,  2  Doug: 
G.'2  ;  Burleigh  v.  Stott,  8  B.  &  C.  3G  ;  Wyatt  v.  Hodson,  8  Bing.  309  ; 
Mainzinger  v.  Mohr,  41  Mich.  685,  3  N.  W.  183. 

That  is  the  rule  in  many  of  the  states  of  this  Union — in  all,  in  fact, 
where  it  has  not  been  changed  by  statute.  National  Bank  of  Delavan 
v.  Cotton,  53  Wis.  31,  9  N.  W.  926;  Quimby  v.  Putnam,  28  Me.  419. 
At  common  law,  and  in  those  of  the  states  where  the  common-law  rule 
prevails,  a  distinction  is  made  between  those  cases  in  which  a  part  pay- 
ment is  made  by  one  of  several  promisors  of  a  note  before  the 
statute  of  limitations  has  attached  and  those  in  which  the  payment 
is  made  after  the  completion  of  the  bar  of  the  statute;  it  being  held 
in  the  former  that  the  debt  or  demand  is  kept  alive  as  to  all,  and  in 
the  latter  that  it  is  revived  only  as  to  the  party  making  the  payment. 
Atkins  v.  Tredgold,  2  B.  &  C.  23;  Sigourney  v.  Drury,  14  Pick. 
(Mass.)  387,  391;  Ellicott  v.  Nichols,  7  Gill  (Md.)  85,  48  Am.  Dec. 
540,  and  cases  cited.  The  reason  of  this  distinction  lies  in  the  prin- 
ciple that,  by  withdrawing  from  a  joint  debtor  the  protection  of  the 
statute,  he  is  subjected  to  a  new  liability  not  created  by  the  original 
contract  of  indebtedness. 

There  is  no  statute  of  Oregon,  so  far  as  we  have  been  able  to  dis- 
cover, changing  the  common-law  rule  of  liability  with  reference  to 
sureties.  Consequently,  under  the  admitted  facts  of  this  case,  it 
must  be  held  that  the  statute  of  limitations  of  the  state  never  operated 
as  a  bar  to  the  enforcement  of  the  original  demands  against  bothlhe 
principal  and  the  surety. 

"Nor  do  we  thint  the  death  of  the  surety  before  either  of  the  de- 
man3s  matured  makes  any  difference,  in  principle,  where,  as  in  thi?' 
case,  the  liability  is  not  of  a  personal  nature,  but  is  an  incumbrance 
upon  the  surety's  property.  We  are  aware  that  there  is  authority 
holding  that  payment  of  interest  by  the  principal  debtor,  after  the 
death  of  the  surety,  but  before  the  statute  of  limitations  has  run 
against  the  note,  will  not  prevent  the  suretv's  executors  from  pleading 
the  Statute.    Lane  v.  Doty,  4  Barb.  (N.  Y.)  530;   Smith  v.  Townsend, 


Ch.  12)  THE   STATUTE   OF   LIMITATIONS.  581 

9  Rich.  Law  (S.  C.)  44;  Byles  on  Bills,  §  353;  2  Parsons  on  Notes 
and  Bills,  659,  and  note  "t."  But  we  know  of  no  authority  extending 
this  rule  to  the  representatives  of  a  deceased  surety,  whose  liability 
was  not  personal,  but  upon  property  mortgaged.  On  the  contrary, 
the  cases  of  Miner  v.  Graham  and  Bank  of  Albion  v.  Burns,  supra, 
seem  to  recognize  the  doctrine  which  we  are  inclined  to  accept.  We 
conclude,  therefore,  that  the  contract  of  suretyship  in  this  case  was 
not  terminated  by  th.e  death  of  the  surety  before  the  maturity  of  the 
indebtedness.     *     *     * 

Upon  the  whole  case  we  are  of  the  opinion  that  the  decree  of  the 
court  below  was  correct,  and  it  is  affirmed. 

The  Chief  Justice  and  Mr.  Justice  Gray  did  not  hear  the  argu- 
ment or  take  part  in  the  decision  of  this  case. 


LOUISA  DEATON  et  al.  v.  JOSEPH  DEATON  et  al. 
(Appellate  Court  of  Illinois,  1902.     109  111.  App.  7.) 

Appeal  from  the  Circuit  Court  of  Morgan  County. 

On  March  1,  1887,  Thomas  Deaton  borrowed  from  N.  Adelia  Blake- 
man  $350,  and  delivered  to  her  his  promissory  note  for  that  sum 
and  interest,  payable  two  years  after  date,  with  Robert  Deaton  as 
surety.  He  and  his  wife,  Matilda  Deaton,  on  the  same  day,  to  further 
secure  the  payment  of  the  note,  executed  and  delivered  to  Blakeman 
a  mortgage  on  the  northwest  quarter  of  the  southeast  quarter  of 
section  11,  township  15  north,  range  11  west,  in  Morgan  county, 
Illinois.  The  west  half  of  the  tract  was  then  owned  by  Matilda  Deaton 
and  the  east  half  by  Thomas  Deaton. 

On  February  21,  1888,  Matilda  Deaton  died  intestate,  leaving  her 
husband,  Thomas  Deaton,  and  as  her  only  heirs  at  law  seven  children, 
to  wit,  Louisa,  Permelia,  Joseph,  Nathan,  Augustus  and  John  Deaton, 
and  Sardelia  Waunamaker.  On  February  6,  1890,  Thomas  Deaton 
conveyed  to  Louisa  Deaton  and  Permelia  Deaton  the  east  half  of 
the  above-described  land,  and  on  June  19,  1890,  Sardelia  Waunamaker 
conveyed  to  her  father,  Thomas  Deaton,  and  her  brothers  and  sisters 
above  named,  all  her  title  and  interest  in  the  west  half  of  the  tract. 

On  February  7,  1891,  Thomas  Deaton  paid  $100  on  the  principal  of 
the  above-mentioned  note  and  the  interest  to  that  date,  and  on  Feb- 
ruary 14,  1891,  N.  Adelia  Blakeman,  the  payee,  assigned  the  note  to 
Louisa  Deaton  and  Permelia  Deaton,  and  also  delivered  to  them  a 
formal  assignment  of  the  mortgage  given  to  secure  it. 

On  February  28,  1900,  Thomas  Deaton  died  intestate,  leaving  as 
his  only  heirs  at  law  the  seven  children  above  named.  Sardelia  Waun- 
amaker, on  January  19,  1901,  conveyed  her  interest,  inherited  from  her 
father,  to  Louisa  and  Permelia  Deaton. 


5S2  DEFKNSK?   OF  SUKETY  AGAINST   CREDITOR.  (Part    3 

On  February  5,  1901,  Louisa  and  Permelia  Deaton  filed  in  the  cir- 
cuit court  of  Morgan  county  their  bill  in  equity  agamst  their  brothers, 
[oseph,  John.  Augustus  and  Robert  Deaton,  praying  for  an  account- 
inc  of  the  amount  due  on  the  said  note  and  mortgage,  and  that  they 
be  required  to  pav  tlicir  equitable  and  pro  rata  share  of  the  amount 
so  found  to  be  due,  and  in  default  thereof  their  interests  m  the  west 
half  of  the  said  tract  of  land  be  sold.  Only  John  Deaton  and  Joseph 
Deaton  answered.  The  other  defendants  were  defaulted.  The  answer 
set  up  that  the  note  and  mortgage  were  barred  by  the  statute  of  limita- 
tions and  upon  that  issue  the  cause  was  referred  to  the  master  in 
chancery  for  proofs  and  findings.  Reforr  *'-  hearing  John  Deaton 
died,  and  his  widow,  Georgia  Deaton,  and  four  children,  were  sub- 
stituted as  defendants.  The  master  heard  the  proofs  and  reported 
that  there  was  due  on  the  nolTand  mortgage  the  sum  of  $479.55,  and 
that  the  complainants  had  no  right  to  foreclose  die  mortgage  except  as 
[to  the  undivided  one  forty-ninth  part,  which  was  owned  by  Thomas 
J  Deaton  at  the  time  of  his  death.  The  court  sustained  the  master's 
report  and  rendered  a  decree  accordingly,  to  which  the  complainants 
excepted,  and  now,  by  appeal,  bring  the  record  to  this  court  for  re- 
view. 

Mr.  Justice  H.\rker  delivered  the  opinion  of  the  court. 
The  sole  question  for  our  decision  is  whether  the  circuit  court 
erred  in  holding  that  the  note  and  mortgage  in  question  were  barred 
by  the  statute  of  limitations  as  against  the  remaining  interests  of -ap- 
pellees in  the  land  which  Matilda  Deaton  owned  at  the  time  of  her 
death. 

Tlie  note  became  due  on  the  1st  of  March,  1SS9,  and  under  section 
16  ofliie  limitations  act  was  barred  ten  years  thereafter,  unless  the 
bar  was  removed  by  payment,  or  new  promise  to  pay,  in  writing.  Ap- 
pcllants'  bill  was  not  filed  until  February  5,  1901,  nearly  two  years' 
after  the  expiration  of  the  ten  years.  It  is  contended  that  because  of 
the  payment  made  by  Thomas  Deaton  on  the  7th  of  February,  1891, 
the  statute  did  not  begin  to  run  until  that  date.  That  is  true  as^o 
Thomas  Deaton,  the  principal  maker,  and  as  to  the  land  owned  by  _him 
that  was  included  in  the  mortgage,  but  not  as  to  the  land  owned  by 
his  wife,  Matilda  Deaton.  When  she  pledged  her  land  to  the  pay- 
ment of  the  debt,  the  pledge  was  that  of  a  surety.  The  law  is  well 
settled  in  this  state  that  a  payment  or  new  promise  of  the  principal 
maker  of  a  promissory  note,  which  has  the  eflfect  to  take  the  case  out 
of  the  statute  of  limitations  so  far  as  he  is  concerned,  does  not  re- 
move the  bar  so  far  as  it  relates  to  his  unadvised  and  non-consenting 
surety.  Kallcnback  v.  Dickinson.  100  111.  427,  39  Am.  Rep.  47; 
.€tna  Life  Ins.  Co.  v.  McXecly.  65  111.  App.  222 ;  iEtna  Life  Ins.  Co. 
V.  McXeely,  166  111.  540,  46  N.  E.  1130. 

A  surety  who  executes  a  mortgage  to  secure  a  note  and  does  not 
sign  the  ncte  is  entitled  to  all  the  rights  and  privileges  of  a  personal 


Ch.  13)  THE   STATUTE   OF   LIMITATIONS.  583 

surety  under  the  statute,  and  whatever  would  be   necessary  to  re- 
move the  bar  in  the  one  case  would  be  required  in  the  other. 
"The  decree  of  the  circuit  court  will  be  affirmed/** 


MASON  V.  KILCOURSE. 

(Supreme  Court  of  New  Jersey,  1904.     71  N.  J.  Law,  472,  59  Atl.  21.) 

On  appeal  from  District  Court. 

The  opinion  of  the  court  was  delivered  by 

Fort,  J.  This  was  an  action  against  an  indorser  of  a  promissory 
note.  The  note  was  dated  October  1,  1896,  payable  four  months  after 
its  date,  and  was  for  $150.  When  the  note  came  due  it  was  protested 
for  non-payment.  On, the  10th  of  August,  1901,  the  maker  paid  $75 
upon  the  note.  This  case  is  brought  to  recover  the  balance.  There 
was  no  controversy  about  the  signatures. 

The  judgment  in  the  district  court  was  for  the  defendant,  and  it  is 
contended  in  this  court  that  the  judgment  should  be  sustained,  for 
several  reasons.  There  was  no  proper  proof  of  protest  and  notice ''  '^r4^  r^ij'^ 
thereof  to  the  defendant.  The  certificate  of  the  notary  was  offered  in 
evidence  in  the  cause  and  admitted.  This  is  permissible  only  when  a 
copy  of  the  notarial  certificate  is  annexed  to  the  state  of  the  demand 
filed  in  the  cause.  P.  L.  1900,  p.  367,  §  21.  No  copy  of  such  certifi- 
cate was  annexed  to  the  demand  in  this  case.  "r- 

The  defendant  in  this  cause  filed  a  plea  in  the  district  court,  and 
stated  that  his  defense  would  be  the  statute  of  limitations,  and  that 
the  note  set  forth  in  the  plaintiff's  declaration  had  not  been  legally 
protested.  The  notarial  certificate,  which  was  admitted  in  evidence 
in  this  cause,  and  which  is  returned  in  the  record,  even  if  it  had  been 
evidential,  does  not  establish  the  requisites  of  a  good  protest.  It  does 
not  show  in  what  post  office  the  notice  to  the  defendant  was  deposited, 
nor  does  it  show  to  what  post  office  address  the  letter  said  to  contain 
the  notice  was  directed  to  the  defendant.  The  defendant,  therefore, 
was  entitled  to  have  the  ofTer  in  evidence  of  the  notarial  certificate 
overruled,  and,  for  failure  of  proof  to  protest  which  would  have  re- 
sulted from  the  overruling  of  this  offer,  he  would  have  been  entitled  to 
a  non-suit.  But  upon  the  certificate  itself,  it  not  showing  proper  no- 
tice, even  if  it  had  been  properly  admitted  in  evidence,  he  was  likewise 
entitled  to  his  motion  for  a  non-suit.  )< 

But  as  the  case  has  been  tried,  and  is  here  upon  its  merits,  we  think 
the  judgment  upon  the  merits  was  also  right.  The  contract  of  in- 
dorsement is  an  independent  contract,  contingent  in  character,  to  be- 

10  In  t&e  principal  case  pavmeut  was  made  before  statute  had  run. 
Accord :  Monroe  v.  Herrington,  110  Mo.  App.  509,  85  S.  W.  1002  (1905). 
CoBtm:  By  statute,  Garrett  v.  Reeves,  125  N.  C.  529,  34  S.  K  636  (1899). 


584  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

come  absolute  upon  the  failure  of  the  maker  to  pay  tlie  note  at 
maturity,  and  upon  proper  protest  and  notice  thereof  to  the  mdorser. 
Th<t  contract  of  the  maker  and  the  indorser,  after  such  non-payment 
and  protest,  is  several,  not  iomt.  A  payni^iiL.aii-accauiiLJiy-tlj£_^iiiaker 
wiirnot  take  the  case  out  of  "the  statute  of  limitations  agamst  the 
indorser.  -  »       t,       ~I„    .^ 

In  Parker  v.  Buttervvorth,  46  N.  J.  Law,  244,  50  Am.  Rep.  407,  it 
was  held  that  a  payment  by  one  joint  promisor  will  not  remove  the 
bar  of  the  statute  of  limitations  as  against  a  co-promisor,  in  whose 
favor  the  statute  has  attached  at  the  time  of  the  payment. 

Whitcomb  v.  Whiting,  2  Doug.  652,  was  followed  in  this  court  in 
Parker  v.  Butterworth,  and  the  extent  of  the  holding  in  that  case 
was  that  a  payment  by  a  joint  and  several  promisor,  made  before  the 
note  is  outlawed,  is  a  good  payment  as  against  all  and  revives  the 
note  for  six  years  from  such  payment;  but  a  payment  by  such  a 
joint  promisor  after  the  statute  has  attached  will  not  revive  the  note 
as  against  other  joint  and  several  promisors. 

In  Casebolt  v.  Ackerman,  46  N.  J.  Law,  169,  it  was  held  that  one 
partner,  paying  upon  a  partnership  debt  which  had  become  outlawed, 
could  revive  the  obligation  against  the  partnership.  This  case  fol- 
lowed the  decision  of  this  court  in  Day  v.  Merritt,  38  N.  J.  Law,  32, 
20  Am.  Rep.  362. 

The  principle  of  this  case  is,  however,  not  within  any  of  these  cases. 
.\  payment  by  one  of  several  promisors  will  not  revive  an  obliga- 
tion as  against  the  bar  of  the  statute  of  limitations  as  to  any  other 
party  to  the  instrument  except  the  promisor  so  paying.  But  an  in- 
dorser is  neither  a  joint  nor  a  several  promisor.  His  obligation  arises 
r.ut  of  the  contract  of  indorsement,  after  default  and  notice,  and  is  in- 
dependent of  the  maker's  liability,  or  the  liability  of  any  other  indorser 
upon  the  note,  and  but  for  our  statute,  which  authorizes  an  .action 
against  the  maker  and  an  indorser,  or  indorsers,  in  one  suit,  a  suit 
against  an  indorser  would  have  to  be  brought  separate  and  'apart 
from  the  maker. 

The  statute  of  limitations  was  a  complete  bar  to  the  suit  against 
this  defendant  in  this  case,  and  the  judgment  of  the  district  court  is 
affirmed,  with  costs. 


Ch.  13)  DISCHARGE  IN   BANKRUPTCY.  585 

CHAPTER  XIII 
DISCHARGE  IN  BANKRUPTCY 


CILLEY  V.  COLBY. 

(Supreme  Ckjurt  of  New  Hampshire,  18S1.    61  N.  H.  63.) 

Assumpsit,  on  a  note  dated  July  14,  1876,  signed  by  the  defendant 
as3urety7  The  principal  filed  his  petition  in  bankruptcy  February 
6,  1877.  The  plaintiff  proved  his  claim,  and  voted  for  assignee.  Sub- 
sequently the  bankrupt  submitted  to  his  creditors  a  proposition~for 
a  composition  of  10  per  cent,  in  satisfaction  of  their  claims,  under 
section  17  of  the  amendment  to  the  bankrupt  act  approved  June  22, 
1874  (Act  June  22,  1874,  c.  390,  18  Stat.  182).  The  creditors  passed 
a  resolution  accepting  the  proposition,  the  plaintiff  voting  to  ratify 
and  confirm  it.  His  signature  was  necessary  to  make  the  required 
amount  and  confirm  the  resolution.  The  composition  was  accepted, 
and  ordered  to  be  recorded.  The  10  per  cent,  was  paid,  and  the  cred- 
itors, including  the  plaintiff,  signed  a  receipt  in  full  payment  and 
liquidation  of  their  respective  claims  in  composition  in  bankruptcy, 
November,  1877. 

Stanley,  J.  The  defendant  is  liable,  unless  the  plaintiff's  vote  in 
favor  of  a  resolution  accepting  the  proposition  of  10  per  cent.,  to  be 
paid  to  the  creditors  in  discharge  of  their  claims  against  the  prin- 
cipal, has  the  effect  to  release  him.  In  a  composition,  no  actual  dis- 
charge of  the  principal  is  given ;  but  the  payment  of  the  .amount  of- 
fered, and  its  acceptance  by  the  creditor,  is  in  effect  a  discharge,  for 
by  it  all  right  of  action  against  the  bankrupt  is  barred.  "No  discharge 
shall  release,  discharge,  or  affect  any  person  liable  for  the  same  debt 
for  or  with  the  bankrupt,  either  as  partner,  joint  contractor,  indorser, 
surety,  or  otherwise."    Rev.  St.  U.  S.  §  5118. 

The_voluntary  discharge  of  the  principal  by  the  creditor  discharges 
the  surety;  but  proceedings  in  bankruptcy,  even  though  the  creditor 
participates  therein,  do  not  have  the  effect  of  a  voluntary  discharge. 
It  is  not  the  act  of  the  creditor  alone  that  makes  the  composition  valid. 
A  majority  in  number  and  amount  must  concur  in  consenting,  and  the 
court  must  also  give  its  consent.  If  the  plaintiff's  consent  was  neces- 
sary, and  if  his  withholding  it  would  have  prevented  the  bankrupt 
from  obtaining  his  discharge,  it  does  not  follow  that  his  signature 
alone  was  effectual.  It  was  the  concurrent  act  of  a  majority  in 
number  of  the  creditors  and  in  amount  of  their  debts,  with  the  assent  of 
the  court,  that  made  the  composition  effectual.     Unless  these  three 


586  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

conditions  had  co-cxistcd,  there  would  liave  been  no  valid  composition. 
Guild  V.  Butler,  V22  Mass.  498,  23  Am.  Rep.  378;  Farwell  v.  Raddin, 
129  Mass.  7 ;  Hill  v.  Trainer,  49  Wis.  537,  5  N.  W.  926. 

The  same  construction  is  given  by  the  English  courts  to  their  stat- 
ute of  comp«isitions,  from  which  our  own  was,  no  doubt,  copied. 
Browne  v.  Carr,  7  Bing.  508;  Ellis  v.  Wilmot,  L.  R.  10  Ex.  10; 
Simpson  v.  Henning.  L.  R.  10  Q.  B.  40G ;  Ex  parte  Jacobs,  L.  R.  10 
Ch.  211. 

Judgment  for  the  plaintiff. 

Allen,  J.,  did  not  sit.    The  others  concurred.* 

•  Accord:  Ray  v.  Brenner.  12  Kan.  105  (1S7.'>);  Ames  v.  Wilkinson,  47 
Mlnnr~T*8.  40  X.  W.  OTM*.  HSOl):  Boyd  v.  Asrieultural  Ins.  Co..  20  Colo. 
App.  28.  70  Pac.  ns«5  (1«XH);  Pinkard  v.  Willis.  24  Tex.  Civ.  App.  69,  57 
S.  W.  801    (15K)()):    Cochrane  v.  Cushin?.  Ex'x.  124  Mass.  219   (1S78). 

Where  the  creditor's  claim  depends  upon  a  contingency  which  has  not  yet 
happentHpnf  Tlie  thne  of  the  principal's  discharge,  and  hence  is  not  prov- 
nirie  under  the  commission,  a  fortiori  the  discharge  of  the  principal  in  bank- 
ruptcy will  not  bar  a  subsequent  action  by  the  creditor  against  the  surety 
uiKin  hapi)enlng  of  the  coutingencv.  Leader  v.  Mattincly,  140  Ala.  444,  37 
South.  270   (in<M)  :    L.Trfoon  v.  Kenier.  l.-^S  X.  C.  2S1.  .^0  S.  E.  654   (1905). 

See  note  on  "Proof  of  Contingent  Claims  In  Bankruptcy"  in  14  H.  L.  R. 
372. 


Ch.  14)  EFFECT   OF  JUDGMENTS   PLEADED   IN   BAR.  5b7 

CHAPTER  XIV 
EFFECT  OF  JUDGMENTS  PLEADED  IN  BAR 


CRUM  V.  WILSON,  Adm'r,  et  al. 
(Supreme  Court  of  Mississippi,  18S3.    61  Miss.  233.) 

Appeal  from  the  Circuit  Court  of  Pontotoc  County;  Hon.  W.  S. 
Featherston,  Judge. 

On  February  15,  1859,  Benjamin  C.  Earle,  of  whose  estate  the  ap- 
pellee, Jefferson  Wilson,  is  administrator,  was  by  the  probate  court 
of  Pontotoc  county  appointed  guardian  of  the  appellant,  whose  father 
was  then  living.  Earle  gave  bond,  with  the  testator  of  the  other  ap- 
pellee as  surety,  returned  an  inventory,  and  filed  two  annual  accounts. 
On  presentation  of  the  second  account,  in  March,  1861,  the  court 
refused  to  receive  it,  and  revoked  his  letters  of  guardianship,  upon  the 
ground  that  his  appointment  was  void.  In  April,  1866,  a  citation 
was  issued  to  Benjamin  C.  Earle  to  make  a  final  settlement.  He 
answered  that  his  appointment  was  a  nullity  and  his  letters  had  been 
revoked.  The  court  held  him  liable.  An  account  which  he  was  com- 
pelled to  make  was  restated  by  direction  of  the  court,  and  from  a  de- 
cree ordering  him  to  pay  the  infant  a  balance  he  appealed.  In  the  case, 
Earle  v.  Crum,  42  Miss.  165,  the  appellate  court  decided  that  the  order 
appointing  Benjamin  C.  Earle  guardian  was  void,  and  that  the  proceed- 
ing on  the  final  settlement  was  coram  npn  judice.  and  dismissed- the 
cause  for  want  of  jurisdiction  in  the  probate  court  of  Pontotoc  county. 

At  the  February  term,  1883,  of  the  circuit  court  of  Pontotoc  county, 
the__appellant  brought  suit  on  the  guardian  bond  of  Benjamin  C. 
Earle  against  Jeff'  Wilson,  administrator  of  said  Earle,  and  S.  D. 
Pinson,  executrix  and  sole  devisee  and  legatee  of  R.  A.  Pinson,  de- 
ceased, surety  on  said  guardian  bond.  The  defendants  pleaded  the 
general  issue,  and  S.  D.  Pinson  also  pleaded  that  at  the  death  of  her 
testator  she  was,  and  had  been  ever  since,  a  resident  of  the  state  of 
Tennessee;  that  she  took  out  her  letters  testamentary  and  qualified 
as  executrix  in  Tennessee,  and  had  never  qualified  in  this  state. 

The  verdict  was  for  the  defendants. 

On  the  trial,  the  court  below  excluded  from  the  jury  the  bond  of 
Earle  and  Pinson  when  offered  in  evidence  by  the  plaintiff.  This  is 
assigned  for  error. ^ 

Campbell,  C.  J.,  delivered  the  opinion  of  the  court. 

Where  no  action  is  maintainable  against  the  principal  because  of  the 
inherent  nullity  of  the  alleged  obligation  sued  on,  no  action  can  be 

1  The  arguments  of  counsel  tiave  been  omitted. 


G88  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

maintained  against  sureties  on  such  obligation;  for  a  surety  is  only 
bound  for  the  acts  of  his  principal,  and,  if  there'were  no  principal, 
there  could  not  be  a  surety.  Even  after  judgment  against  sureties, 
they  are  entitled  to  be  relieved  if  their  principal  is  discharged  for  some 
cause  going  to  the  original  transaction,  and  not  merely  personal  to  him. 
Brandt  on  Suretyship,  etc.,  §  121;  Brown  v.  Bradford,  30  Ga.  927; 
Hempstead  v.  Coste,  36  Mo.  437,  88  Am.  Dec.  148 ;  Ames  v.  Maclay, 
14  Iowa,  2S1 ;  Dickason  v.  Bell,  13  La.  Ann.  249 ;  Miller  v.  Gaskins, 
Sm.  &  M.  Ch.  (Miss.)  524;  Beall  v.  Cochran,  18  Ga.  38. 

This  results  from  the  accessory  character  of  a  surety,  whose  ex- 
istence presupposes  the  existence  of  a  principal  for  whose  acts  he  is 
bound. 

In  Earle  v.  Crum,  42  Miss.  165,  it  was  adjudicated  that  Earle  was 
not  the  legal  guardian  of  the  appellant,  for  want  of  authority  in  the 
prc>bate  court  to  appoint  him,  and  a  corollary  from  this  is  that  the  bond 
he  gave,  and  now  sued"  on,  imposed  no  obligation.  Boyd  v.  Swing,  33" 
Miss.  182. 

The  judgment  referred  to  is  evidence  of  its  rendition,  and  of  those 
legal  consequences  which  result  from  the  fact  of  its  rendition,  and  it 
shows  the  discharge  of  the  principal  obligor,  and  is  available  to  the 
surety  as  well  as  to  the  principal. 

The  judgment  is  not  an  estoppel  as  between  the  appellant  and 
the  surety,  who  was  not  a  party  to  the  litigation ;  but  it  is  conclusive 
evidence  of  the  fact  that  the  principal  was  not  bound  by  the  bond, 
and  that  fact  discharges  the  surety. 

Judgment  affirmed.* 


DOUGLASS  V.  ROWLAND. 

;  Supreme  Court  of  New  York,  1840.    24  Wend.  35.) 

^This  was  an  action  of  covenant,  tried  at  the  Herkimer  Circuit,  in 
November,  1838,  before  Hon.  John  Willard,  one  of  the  circuit  judges. 
On  the  2d  September,  1833,  articles  of  agreement  were  entered  into 
between  the  plaintiff  and  one  George  W.  Bingham,  whereby  it  was 
mutually  agreed  that  an  account  should  be  stated  between  the  members 
of  two  mercantile  firms  which  had  theretofore  existed,  and  in  which 
Bmgham  had  been  a  partner;  the  plaintiff  engaging  to  pay  to  Bingham 
such  sum  as  upon  such  accounting  should  be  found  due  to  him,  and 
Bmgham  engaging  to  pay  to  the  plaintiff  such  sum  as  should  be 
found  due  from  him.     On  the  same  day  an  instrument  in  writing. 


•  Mo"4T-''"J^?.''"n  ^T.*!,^^,^  ^^-  ^^-   (^^^^s>  524  (1843):    State 
Mo.  4.{..  S8  Am.  Deo.  148  (1SG5):    Dickason  v.  Bell,  13  La    \nn. 

nfr^To-'A     "«'''''v30   Ga.   927    (18G0)  ;    Gill    v.    Morris,    11 


•Accord 
T.  (^ 
24' 


Ch.  14)  EFFECT   OF  JUDGMENTS   PLEADED   IN  BAR,  589 

written  underneath  the  articles  of  agreement,  was  executed  under 
the  hand  and  seal  of  the  defendant,  in  these  words:  "For  value  re- 
ceived, I  doJiereby.covettant-an4  agree  with  the  abeve-nanied_B^n- 
jaminJDouglass  that  the  said  Ge_Qrge  W.  Bingham  will  well _aad. faith- 
fully perform  on  his  part  the  above  agreement."  On  these  instruments 
the  action  was  brought.  _ 

The-pJaintiff,  in  declaring,  set  them  forth,  and,  after  averring  per-  f^L  (^ 
formance  on  his  part  of  all  the  stipulations  contained  in  the  agreement 
on  his  part  to  be  performed,  alleged  that  Bingham  was  indebted  to  the 
said  mercantile  firms  in  the  sum  of  $1,500 ;  that  he  would  not  account, 
or  suffer  an  account  to  be  taken,  according  to  the  tenor  and  effect  of 
the  articles  of  agreement,  and  wholly  refused  so  to  do;  that  he,  the 
plaintiff,  was  obliged  to  and  did  file  a  bill  in  chancery  to  compel  an  ac- 
count; that  such  proceedings  were  thereupon  had  that  subsequently 
a  decree  was  made  in  the  court  of  chancery,  adjudging  Bingham  to  pay 
to  the  plaintiff'  the  sum  of  $836.56,  with  the  interest  thereof  from  6th 
August,  1835,  together  with  the  costs  of  the  plaintiff  to  be  taxed,  and 
which  were  subsequently  taxed  at  $200,  of  all  which  it  was  alleged  the 
defendant  had  notice.  He  then  alleged  for  breach  that  the  defendant 
had  not  caused  Bingham  to  perform,  fulfil  and  keep  all  things  in  the 
articles  of  agreement  contained  on  the  part  of  Bingham  to  be  per- 
formed, fulfilled  and  kept,  although  often  requested,  etc.  And  so, 
etc.  Tlie  defendant  pleaded:  (1)  Non  est  factum;  (2)  that  Bingham 
was  not  indebted  to  the  two  mercantile  firms  in  the  agreement  men- 
tioned. 

:  On  the  trial  of  the  cause,  the  plaintiff  read  in  evidence  the  articles  of 
agreement  set  forth  in  the  declaration,  and  offered  to  read  the  covenant 
of  the  defendant  indorsed  thereon,  which  was  objected  to  by  the  de- 
fendant's counsel  as  being  within  the  statute  of  frauds,  and  therefore 
void.  The  objection  was  overruled  and  the  covenant  read. /The  plain- 
tiff  then  offered  in  evidence  the  enrolment  of  the  decree  against  Bing- 
ham, as  set  forth  in  the  declaration,  which  was  objected  to  as  in- 
admissible ;  the  defendant  in  this  cause  not  being  a  party  thereto.  _Tlie 
objection  was  overruled  and  the  decree  read,  from  which  it  appeared 
tliat  ^Bingham  put  in  an  answer,  that  he  was  decreed  to  pay  the  sum 
mentioned  in  the  declaration,  and  that  the  costs  were  taxed  at  $181:.12. 
The  plaintiff  also  read  in  evidence  an  exemplification  of  an  execu- 
tion issued  upon  the  decree  and  a  return  of  nulla  bona,  etc.  Upon^this 
evidence  the  plaintiff  rested. 
f-tfThe  defendant's  counsel  moved  for  a  non-suit,  upon  the  grounds: 
())(1)  That  the  covenant,  not  expressing  any  consideration,  was  within* 
the  statute  of  frauds  and  void,  although  under  seal;  (2)  that  the  decree 
was  not  proper  evidence  to  charge  the  defendant,  he  not  being  a 
party  to  the  suit  in  chancery,  and  it  not  having  been  shown  that  he  had 
notice  of  that  suit;  and  (3)  that  no  action  would  lie  until  after  demand 
and  refusal  to  pay.  The  motion  was  denied.  'The  defendant  then  of- 
fered  to  prove  that  Bingham  was  not  indebted  to  either  of  the  firms 


590  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

mentioned  in  the  articles  of  agreement  specified  iQ  the  declaration. 
The  plaintiff  objected  and  the  proof  was  excluded. /i(The  counsel  next 
insisted  that  the  defendant  was  not  liable  for  the  payment  of  the  costs 
of  the  suit  in  chancery;  but  the  judge  ruled  otherwise,  and  the  jury 
under  his  charge  found  a  verdict  for  the  plaintiff  for  $1,235.07  damages 
rand  6  cents  costs.  The  defendant,  having  excepted  to  the  various  de- 
i-ions  made  against  him,  moved  for  a  new  trial  on  a  bill  of  excep- 

CowEN,  J.  *  *  *  Thirdly,  it  is  strenuously  insisted,  and,  as  I 
think  it  will  appear,  with  great  propriety,  that  the  decree  was  not  evi- 
dence against  the  dofcndant.  Standing  as  it  did  against  Bingham 
alone,  it  was  certainly  not  evidence,  proprio  vigore;  and,  if  receivable 
at  all,  it  must  be  on  the  ground  that  the  defendant  has  made  himself 
privy  to  the  suit  in  equity,  by  his  covenant.  All  those  cases,  therefore, 
cited  on  the  argument  to  show  that  one  man  cannot  be  affected  by  a 
judgment  or  decree  against  another,  who  is  not  privy  to  it,  may  be 
dismissed  at  once,  for  all  purposes,  except  as  showing  the  reason  why 
that  is  so.  The  objection  is  that  the  party  sought  to  be  affected  had 
no  opportunity  to  examine  witnesses,  or  in  any  way  litigate  the  matter 
in  controversy,  either  originally  or  by  appeal,  and  may,  therefore,  be 
wronged  beyond  measure,  by  others  proceeding  coUusively  behind  his 
back.  1  Phil.  Ev.  (Cowen  &  Hill's  Ed.)  321 ;  Case  v.  Reeve,  14  Johns. 
79,  81;  Maybee  v.  Avery,  18  Johns.  352;  1  Stark.  Ev.  (Am.  Ed.  1837) 
217. 

It  is  admitted  in  the  books  cited,  that  the  verdict  is  not  only  evi- 
ilence  against  the  immediate  parties,  but  against  all  claiming  under 
them,  which  very  nearly  expresses  the  meaning  of  the  word  "privy," 
when  used  to  signify  those  persons,  off  the  record,  who  may  be  affected 
to  the  same  extent  as  if  they  were  parties.  It  means  any  one  who  takes 
the  subject-matter  of  litigation,  after  the  suit  is  determined,  or,  in 
some  cases,  while  it  is  pending.  He  is  either  a  privy  in  blood,  as  an 
heir  on  whom  the  estate  in  litigation  descends ;  a  privy  in  estate,  as 
one  who  takes  by  conveyance ;  or  a  privy  in  law,  as  one  who  takes  a 
right  of  dower.  1  Phil,  (same  edition)  321.  In  all  these  cases  the 
reason  is  obvious.  The  heir,  purchaser,  etc.,  always  come  in  subject 
to  any  act  or  default  of  the  predecessor,  by  which  the  title  may  have 
been  effected.  But,  subject  to  this  exception,  the  law  is  extremely 
jealous  of  the  rights  of  all  who  are  not  actual  parties,  even  though  they 
may  appear  and  be  made  so.  Thus,  in  a  suit  against  one  of  two  joint 
debtors,  were  it  not  for  the  statute  making  the  judgment  evidence  to  a 
certain  extent  agamst  the  other,  it  cannot  be  doubted  that  the  proceed- 
ing would  l)e  altogether  nugatory,  for  the  purpose  of  establishing  the 
truth  of  the  clami  against  him.  although  it'  might,  in  a  suit  for  con- 
tribution, be  received,  as  every  record  may,  against  whatever  person 


Ch.  14)  EFFECT   OF  JUDGMENTS   PLEADED   IX   BAR.  591 

to  prove  rem  ipsam.    1  Stark.  Ev.  (Am.  Ed.  1837)  p.  215.    Vid.  Deer- 
ing  V.  The  Earl  of  Winchelsea,  3  Bos.  &  Pull.  270. 

Come,  then,  to  the  surety  of  a  debtor.  Suppose  the  now  defend- 
ant's name  to  have  been  signed  to  the  original  covenant  of  Bing- 
ham. If  he  would  not,  standing  there,  have  been  bound  by  a  suit  and 
judgment  against  Bingham  alone,  with  what  propriety  can  he  be  held 
bound  in  a  like  proceeding  here?  In  either  case,  what  is  the  covenant? 
That  Bingham  should  account  and  pay  over_the  balance  found  due ; 
not  rhar  he  should,  oiraefault,  abide  any  decree  in  chancery  or  judg- 
nlehf^atTaw  for  not  accounting.  With  what  propriety  can  it  be  said 
the  defendant  has  incurred  a  greater  liability  by  a  separate  guaranty 
than  he  would  by  joining  in  the  covenant  ?  May  he  not  say,  when  the 
plaintiff  comes  with  his  decree,  Non  hasc  in  foedera  veni?  Is  there 
anything  in  the  nature  of  suretyship  which,  at  the  common  law,  gives 
to  this  decree  the  force  contended  for?  By  the  civil  law,  he  would  be 
_bound.  1  Evans'  Poth.  (Lond.  Ed.  1806)  562;  Laralde  v.  Derbi"gny, 
1  La. ^5,  91.  The  reason  given  by  Pothier  is  thus:  "In  consequence  of 
the  obligation  of  the  surety  being  dependent  upon  that  of  the  principal 
debtor,  the  surety  is  regarded  as  the  same  party  with  the  principal, 
with  respect  to  whatever  is  decided  for  or  against  him."  Again : 
"But  the  surety  is  allowed  to  appeal  against  this  judgment,  or  to  form 
an  opposition  to  it,  if  it  be  in  the  last  resort."  Here  is  a  reason  found- 
ed both  in  the  nature  of  the  obligation  and  the  right  to  litigate  the 
demand.  So  that,  even  at  the  civil  law,  a  decree  would  be  no  more 
than  prima  facie  evidence.  At  common  law,  where  the  guaranty  is 
entirely  collateral,  as  in  the  principal  case,  there  is  neither  a  right  to 
litigate  originally  nor  to  appeal.  Had  the  defendant  gone  into  the 
court  of  chancery,  he  would  have  been  dismissed  as  an  intruder,  on  an 
Dbjection  by  the  complainant. 

It  is  true  he  might  so  have  framed  his  contract  as  to  have  underr 
taken  for  the  decree,  like  special  bail  engaging  for  their  principal  j._or_ 
there  may  be  an  express  stipulation  in  pais  that  the  principal  shall 
abide  the  event  of  the  suit,  as  in  Patton  v.  Caldwell,  1  Dall.  419,  1 
L.  Ed.  204.  Something  of  the  same  nature  are  bonds  of  indemnity 
against  actions  and  cases,  as  in  Duffield  v.  Scott,  3  T,  R.  374.  There 
an  action  and  recovery  against  the  obligee  were  held  conclusive,  even 
without  notice,  that  not  being  expressly  provided  for  in  the  bond.  A 
fortiori,  where  notice  has  in  fact  been  given.  The  case  most  familiar 
to  us  is  a  limit  bond,  whereof  it  has  been  held  that  notice  to  indem- 
nitors and  a  chance  to  defend  shall  render  the  judgment  against  the 
obligee  conclusive  in  an  action  to  recover  over.  Kip  v.  Brigham,  6 
Johns.  158,  159;  Id.,  7  Johns.  168.  Codified,  2  R.  S.  2-54  (2d  Ed.) 
§  52,  The  same  may  be  said  of  a  warrantor  of  title.  6  Johns.  159, 
and  cases  cited  there.  The  obligation  of  the  sureties  in  a  probate  bond, 
that  the  administrator  shall  account,  has  been  construed  to  mean  an 
accounting  in  the  proper  court,  and  thus  the  decree  has  been  let  in  as 
at  least  prima  facie  evidence  against  them.    This  is  given  as  the  result 


592  DEFKNSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

of  various  South  Carolina  cases,  cited  in  Cowen  &  Ilill's  notes  to  1 
Phil.  Ev.  p.  yS4.  Such  would  it  of  course  be,  with  all  that  class  of 
bonds,  so  numerous  in  our  present  system,  by  which  sureties  expressly 
bind  themselves  that  the  principal  shall  abide  the  event  of  a  suit ;  as 
to  pay  costs,  or  principal  moneys  to  be  recovered,  or  return  goods 
in  replevin,  etc.  Indeed,  it  is  here  plain,  from  the  nature  of  the  agree- 
ment, that  the  surety  means  to  be  concluded,  always  saving  the  right, 
as  the  law  must  in  every  case  where  a  suit  is  between  third  persons, 
to  contest  the  proceeding  on  the  ground  of  fraudulent  collusion,  for 
the  purpose  of  charging  the  surety. 

In  Hobbs  v.  Middletown,  1  J.  J.  Marsh.  176,  179,  the  Court  of  Ap- 
peals in  Kentucky  gave  this  effect  to  a  judgment  against  a  principal 
in  an  administration  bond.  Whether  there  be  a  clause  in  such  a  bond, 
which  may,  as  in  South  Carolina,  be  construed  specially  to  bind  the 
surety,  does  not  appear  from  the  case.  The  court  remarked  that, 
"the  responsibility  of  securities  being  incidental  and  collateral  to  that 
of  the  principal,  a  judgment  in  favor  of  a  creditor,  against  the  ad- 
ministrator, concludes  the  securities  as  to  the  existence  and  character 
of  the  debt  thus  ascertained,  and  cannot  be  questioned  or  reviewed  on 
the  official  bond."  Of  course  the  court  except  cases  of  fraud.  Vide, 
also,  Fauntlcroy  v.  Lyle,  5  T.  B.  Mon.  266.  If  the  remark  cited  be 
intended  of  sureties  in  general,  who  engage  merely  for  their  principal 
doing  some  act  in  pais,  it  would  go  beyond  any  other  case  I  have  seen 
under  the  system  of  the  common  law. 

The  doctrine  has  been  denied  in  an  action  against  the  sureties  of  a 
sheriff,  both  in  Pennsylvania  and  Virginia.  Carmack  v.  Common- 
wealth, 5  Bin.  181 ;  Munford  v.  Overseers  of  the  Poor  of  Nottoway,  2 
Rand.  313.  In  State  of  Ohio  v.  Colerick,  3  Ham.  487,  the  judgment 
wa^  in  such  case,  holden  to  be  prima  facie  evidence,  impeachable  for 
collusion  or  mistake.  Nearly  the  same  effect  seems  to  be  collectible 
from  the  cases  already  cited  from  the  Pennsylvania  and  Virginia  Re- 
ports, and  other  cases  in  the  latter.  Jacobs  v.  Hill,  2  Leigh,  393.  In 
the  latter  case,  even  a  judgment  by  voluntary  confession  was  holden  to 
have  this  effect.  The  earlier  cases  in  Virginia  will  be  found  cited  and 
commented  upon  in  Munford  v.  Overseers,  etc.,  of  Nottoway.  These 
cases,  from  Ohio,  Pennsylvania,  and  Virginia,  hold  the  distinction,  es- 
pecially those  of  the  two  former  states,  that  the  judgment  is  either 
prima  facie  or  conclusive  evidence,  according  as  the  surety  may  or 
may  not  have  had  notice,  and  an  opportunity  given  him  to  defend, 
which,  of  course,  he  may  do  in  the  name  of  the  principal,  with  the  con- 
sent of  the  plaintiff.  In  the  latter  case,  nothing  is  more  reasonable. 
It  brings  the  case  to  the  ground  of  the  civil  law,  and  is,  we  have  seen, 
countenanced  by  our  own  adjudications. 
■  I.,  >  ..^ndcnt  of  that,  however, 'independent  of  any  clause  specially 
•  e  surety  to  pay  judgments  or  decrees  against  his  principal, 
Kidcpciivicnt  of  the  identity  and  right  of  defense  and  appeal,  which  the 
civil  law  imputes  to  and  confers  upon  the  surety,  it  may   with  great 


Ch.  14)  EFFECT   OF  JUDGMENTS  PLEADED   IX   BAR.  593 

confidence,  I  should  think,  be  asked,  ought  the  surety  to  be  farther 
affected  than  the  merest  stranger?  This  question,  I  perceive,  has  been 
answered  in  the  negative  even  by  a  court  sitting  under  the  civil  law 
system,  where  the  surety  did  not  happen  to  be  in  such  a  posture  as 
subjected  him  to  the  general  effect  of  res  judicata  against  the  prin- 
cipal, under  that  system.  One  had  become  bound  for  the  plaintiff  to 
indemnify  the  defendant  against  loss  by  an  attachment  against  him, 
if  it  should  not  be  prosecuted  to  effect.  It  was  not,  and  damages  were 
in  a  distinct  suit  recovered  against  the  principal  without  notice  to 
the  surety.  In  an  action  against  the  latter,  the  court  below  received 
the  record  of  recovery  as  evidence,  per  se,  against  him.  *  But  on  appeal 
the  judgment  was  reversed;  Derbigny,  J.,  remarking:  "There  is  no 
rule  in  our  laws  better  understood  than  that  which  allows  the  surety 
the  right  of  availing  himself  of  the  same  means  of  defense  (save  those 
that  are  merely  personal)  which  the  principal  debtor  could  resort  to. 
That  principle  is  founded  on  the  sacred  maxim  that  no  one  ought  to 
be  condemned  without  being  heard,  and  that  consequently  no  person 
shall  be  bound  by  a  judgment  to  which  he  is  not  a  party."  Lartegue 
V.  Baldwin,  5  Mart.  (La.)  193.  In  this  case,  too,  the  record  had  been 
received  by  consent.  But  to  that  the  learned  judge  gave  the  answer 
that  it  was  admissible  for  the  purpose  of  showing  the  principal  had 
been  sued,  and  an  execution  against  him  had  proved  unavailable,  but 
that  the  judge  a  quo  had  improperly  allowed  to  it  any  farther  effect. 
For  the  purpose  of  proving  the  damages  sustained,  it  was  held  entirely 
incompetent — no  notice  having  been  given,  or  opportunity  for  defense 
extended,  to  the  then  defendant. 

This  seems  to  us  the  reasonable  distinction.  In  general  itjm^oses 
no  hardship  on  the  plaintiff.  He  has  but  to  serve  a  notice,  with  a 
consent  that  the  surety  may  take  up  the  defense,  and  hold  all  the  rights 
of  the  principal  in  that  respect,  so  far  as  the  defense  by  a  surety  is 
admissible.  In  some  cases,  as  is  well  known,  it  may  be  wider  than  that 
of  the  principal,  as'lvhere  time  may  have  been  improperly  given  by  the 
creditor,  or  the  claim  is,  in  character,  without  the  terms  of  the  bond. 
The  case  which  occurs  to  me  is  a  debt  charged  against  one  as  ad- 
ministrator, which  is  in  fact  due  from  him  as  an  individual.  It  will, 
of  course,  be  narrowed,  where  the  defense  of  the  principal  is  personal, 
as"b€ing  founded  on  infancy  or  an  insolvent  discharge.  In  the  very 
case  before  us,  I  perceive  that  the  account  of  Bingham  was  agreed  by 
the  articles  between  him  and  the  plaintiff  to  be  adjusted  on  certain 
specified  principles.  Whether  more  confined  than  those  upon  which  the 
court  of  chancery  proceeds  it  is  not  necessary  to  inquire,  though  I 
imagine  it  would  not  be  difficult  to  show  that,  in  some  aspects  of  the 
matter,  the  agreed  principles  were  more  confined.  How  are  we  to 
know,  from  the  sweeping  evidence  of  the  decree,  that  the  stipulated 
measure  of  the  account  may  not  have  been  entirely  overgone? 

Hen.  Sub.— 38 


594  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

But  I  forbear  to  pursue  the  farther  examination  of  the  question 
upon  principle;  and  I  do  it  the  rather  because  I  perceive  the  very 
point  has  been  decided,  after  an  examination  which  seems  to  me  en- 
tirely satisfactory,  by  two  learned  courts,  one  in  Maryland  and  the 
other  in  North  Carolina.  Beal  v.  Beck,  3  Har.  &  McH.  242  ;  McKellar 
V.  BowcU,  11  N.  C.  34.  The  first  was  an  action  on  a  bond  for  the  faith- 
ful performance  of  a  deputy  sheriff,  who  had  been  sued  and  a  recovery 
had  against  him  alone  in  a  defended  suit.  On  this  being  followed  by 
an  action  against  the  surety,  the  recovery  was  held  by  the  Court  of 
,\l»|)cals  not  admissible  in  evidence  against  him.  The  argument  of  the 
court  is  not  given. 

The  latter  case  was  an  action  against  a  surety  on  his  bond  condi- 
tioned for  the  faithful  performance  of  his  principal  as  guardian.  A 
decree  had  passed  against  his  principal's  administrator,  in  the  probate 
court,  on  a  petition  for  an  account,  answer,  and  proofs  taken.  The 
decree  was  de  bonis  intcstati,  and  had  been  followed  by  a  fi.  fa.  and  re- 
turn of  nulla  bona.  These  proceedings  were  offered  in  evidence  at 
nisi  prius,  as  prima  facie  evidence  in  the  suit  against  the  surety,  but 
rejected,  and  the  plaintiff  non-suited.  A  motion  at  the  bar  of  the 
Supreme  Court,  to  set  aside  the  non-suit,  was  denied.  The  cause  ap- 
pears by  Mr.  Hawks'  report  to  have  been  well  argued.;  and  Chief 
Justice  Taylor,  who  delivered  the  leading  opinion,  based  the  decision 
on  a  full  consideration  of  the  English  cases  as  they  then  stood,  and  their 
grounds  as  compared  with  the  reason  of  civil  law  for  coming  to  a  dif- 
ferent decision.  The  authority  of  the  case  in  this  court  decided  on  a 
limit  bond  is  reviewed,  and  not  disapproved,  merely  because  notice  was 
there  given.  The  opinion  of  Hall,  J.,  in  the  same  case  is  a  very 
handsome  summary  of  the  arguments  bearing  upon  the  question. 

Both  the  learned  judges  advert  to  the  analogy  which  repudiates  the 
admissions  of  the  principal  as  evidence  when  offered  to  aft'ect  his 
surety.  How  perfectly  well  settled  that  notion  is,  both  at  Westminster 
liall  and  by  a  majority  of  the  American  courts,  where  the  admission  is 
not  a  part  of  the  res  gestae,  I  have  endeavored  to  show  in  Cowen  & 
^Hill's  note,  1  Phil.  485,  p.  G69. 

f  I  do  not  deny  what  was  said  at  the  bar,  that,  had  Bingham  volun- 
Ui:\]y  ;uc'  tinted  on  the  principle  prescribed  by  his  covenaHtr  the 
>ure-\  wuiiM  have  been  liable  for  the  balance  struck.  The  striking  of 
such  a  balance  would  be  an  admission  making-  part  of  the  res  gestae. 
Indeed,  that,  and  every  act  leading  to  or  connected  with  it,  would  be 
the  res  gcstse  themselves,  for  which  the  defendant  undertook  in  his 
covenant.  The  distinction  will  be  found  fully  presented  and  illustrated 
by  the  cases  cited  in  the  note  to  which  I  have  just  referred. 

It  follows,  a  fortiori,  from  what  has  been  already  said,  that  the  re- 
matnmg  grounds  taken  at  the  circuit,  and  repeated  at  the  bar  are  more 
than  sustamcd.  These  are  that,  at  most,  the  decree  was  prima  facie 
o-idence;  that  the  defendant  should  have  been  allowed  to  show  under 


Ch.  14)  EFFECT  OF  JUDGMENTS   PLEADED   IN  BAR.  595 

the  second  plea,  that  his  principal  was  in  fact  never  liable;  and  that 
the  defendant  was  at  all  events  not  liable  for  the  costs  of  a  chan- 
cery suit,  litigated  without  his  being  in  any  way  privy  to  it,  or  having 
had  a  chance  to  defend. 

That  a  surety,  upon  a  general  undertaking  for  his  principal's  pay- 
ing a  debt,  can  be  made  liable  in  any  way  for  the  costs  of  a  suit  against 
the  latter  solely,  seems  to  be  a  somewhat  extraordinary  position.  A 
man  indorses  a  note,  or  signs  a  guaranty  for  payment,  not  of  costs, 
but  the  debt ;  what  authority  has  any  court  for  adding  costs  to  the 
words  of  such  a  contract?  The  case  at  bar  is  nothing  more  in 
principle.  Bingham  covenanted  to  account  and  pay  the  balance.  '  He 
owed  two  things;  the  accounting  and  paying.  These  made  the  debt. 
The  defendant  covenants  that  Bingham  shall  perform  both ;  in  other 
words,  discharge  his  debt,  not  that  he  should  pay  costs.  The  latter 
obligation  is  without  the  bond.  Knight  v.  Hughes,  Mood.  &  Malk. 
244,  has  some  bearing  in  its  principle;  Lord  Tenterden,  C.  J.  The 
distinction  is  well  illustrated  by  a  common  bond  of  indemnity,  which 
you  take  against  actions.  There  the  obligor  would  doubtless  be  liable 
for  costs,  because  they  are  directly  incident  to  the  action.  They  are 
virtually  expressed  by  the  bond.  And  yet  for  more  abundant  cau- 
tion, costs  are  usually  added ;  such  was  the  case  of  Duffield  v.  Scott, 
3  T.  R.  374. 

A  new  trial  is  granted,  the  costs  to  abide  the  event.* 

4  In  accord  with  and  citing  the  principal  case.  Clark  v.  Montgomery,  23 
Barb.  464  (1856),  applied  its  doctrine  by  rejecting  the  judgment  against 
a  guardian  for  breach  of  his  duty.  The  principal  case  was  distinguished 
in  Jackson  v.  Griswold,  4  Hill,  522  (1S42),  by  Cowen,  J.,  from  cases  where 
tEe  surety  actively  participates  in  defending  the  suit  for  his  principal.  In 
Moss  V.  McCullough,  5  Hill,  131  (1843),  it  was  held  the  judgment  against 
the  principal  ought  to  have  been  allowed  to  be  impeached;  Cowen,  J.,  say- 
ing that  no  effect  should  have  been  given  to  the  judgment  "beyond  its  mere 
existence  to  fulfill  the  condition  on  which  the  defendant  consented  to  be 
chargeable."  Bronson,  J.,  thought  the  judgment  neither  conclusive  nor  prima 
facie   evidence. 

In  accord  with  the  principal  case  is  also  Pico  v.  Webster,  14  Cal.  202, 
73  Am.  Dec.  64T  (1859). 

Piei-point  v.  McGuire,  13  Misc.  Kep.  70,  34  N.  Y.  Supp.  150  (Com.  PI.  1895), 
held  a  verdict  against  the  surety  maintainable  on  the  unrebutted  evidence 
of  the  prior  judgment. 

In  Maryland,  the  court,  though  professing  to  follow  the  doctrine  that  the 
judgment  is  only  prima  facie  evidence  against  the  surety,  holds  him  bound 
bv  the  result.    Parr  v.  State.  71  Md.  220,  17  Atl.  1020  (1889). 
'in  accord:    Ex  parte  Young,  17  L.  R.  Ch.  D.  668  (1881). 


506  DEFENSES  OF  SUBETI  AGAINST  CREDITOR.  (Part    3 

GILTINAN  V.  STRONG. 
(Supreme  Court  of  Pennsylvania,  1S70.     64  Pa.  242.) 

February  14,  1870,  before  Read,  Agnew,  Sharswood,  and  Wil- 
liams, ]]. 

Error  to  the  District  Court  of  Philadelphia;  No.  203,  to  July  Term» 
18G9.    Before  Thompson,  C.  J.,  at  nisi  prius. 

Catharine  Strong  brought  an  action  of  assumpsit  in  the  district 
court  of  Philadelphia,  to  December  term,  1866,  against  David  Gilt- 
inan.  The  first  count  of  the  declaration  was,  in  consideration  that  the 
plaintiff,  at  the  defendant's  request,  would  let  to  George  R.  Maguire 
a  house  for  one  year,  at  $1,200  per  annum,  the  defendant  in  writing 
promised  that  he  would  pay  the  rent  if  IMaguire  did  not;  that  the 
plaintiff  rented  to  Maguire,  who  did  not  pay.  Second  count  was 
that,  if  the  plaintiff  would  let  the  house  to  Maguire,  the  defendant 
promised  to  pay  the  rent ;   also  the  common  counts.'     *    *     * 

The  opinion  of  the  court  was  delivered,  March  3,  1870,  by 

Agnew,  J.  *  *  *  But  we  think  the  court  erred  in  holdirig;^at 
the  record  of  the  judgment  against  INIaguire  was  competent  evidence 
against  Giltinan.  If  the  liability  is  direct  and  primary  it  is  clear  this  is 
so,  and  if  the  writing  is  viewed  as  a  mere  undertaking  of  suretyship 
still  it  was  error.  Giltinan  was  no  party  to  that  action,  had  no  notice 
to  defend  it,  and  could  not  be  brought  into  defense  of  it  by  the  plain- 
tiff. The  plaintiff's  remedy  against  him  could  be  only  on  his  own 
promise.  A  surety  may  give  notice  to  his  principal,  who  owes  him 
this  duty  to  defend  him;  but  it  would  be  a  novelty  if  the  principal 
could  call  in  his  surety,  who  owes  no  such  duty,  to  defend  him.  Gilti- 
nan was  therefore  in  no  sense  either  a  party  or  privy  to  that  action. 
Under  the  term  "parties,"  says  Mr.  Greenleaf,  in  his  Law  of  Evi- 
dence (section  524)  "the  law  includes  all  who  were  directly  interested 
in  the  subject-matter,  and  had  a  right  to  make  defense  or  to  control  the 
proceeding,  and  to  appeal  from  the  judgment.  The  right  involves  also 
the  right  to  adduce  testimony,  and  to  cross-examine  the  witnesses  ad- 
duced on  the  other  side.  Persons  not  having  these  rights  are  regard- 
ed as  strangers  to  the  cause."  A^surety  in  a  separate  and  independent, 
instrument  is  no  party  who  could  appear  and  control  the  separate  ac- 
tion against  his  principal  or  appeal  from  the  judgment. 

Noijs  there  a  legal  privity.  Privity,  says  i\Ir.  Greenleaf  (section 
189),  denotes  mutual  or  successive  relationship  to  the  same  right  of 
property.  In  none  of  the  classes  enumerated,  as  in  estate,  in  blood, 
and  in  law,  does  the  case  of  a  surety  fall  in  reference  to  a  creditor's 
action.    It  IS  the  right  to  represent,  which  creates  privity  in  law  as  be- 

•  Th.  r.m.lnlng  Jj^^^f  'niportance  appearing  sufficiently  in  the  opin- 
are  .  fi  ^fw,^°  ^f  ^^"  abridged.     The  arguments  of  counsel 

dS^  J  on  ^     ''''  °'  ^^'  °^'''^*'"  ^'  ^°  ^^  sufficiency  of  the 


Ch.  14)  EFFECT   OF  JUDGMENTS   PLEADED   IX   BAR.  597 

tween  ancestor  and  heir,  decedent  and  administrator,  etc. ;  but  clearly 
the  principal,  in  an  action  against  himself  alone,  cannot  represent  his 
surety.  If  he  could,  then  he  could  bind  his  surety  for  an  extinguished 
or  paid  debt  by  a  confession  or  a  default.  The  privity  of  the  surety 
with  his  principal  is  in  the  contract  alone,  and  not  in  the  action.  For 
the  acts  or  omissions  of  the  principal  to  which  the  surety  pledges  him- 
selfin  his  contract  he  is  bound,  and  it  is  only  in  this  respect  the  prin- 
cipal represents  his  surety.  This  is  the  criterion  of  the  competency  of 
the  principal's  declarations  or  admissions.  Where  these  form  a  part 
of  the  acts  or  omissions  of  the  principal  for  which  the  surety  is  bound, 
they  constitute  portions  of  the  res  gestae,  and  may  be  evidence  against 
the  surety.  But  beyond  this  line  clearly  the  surety  cannot  be  affected 
by  the  acts  or  admissions  of  his  principal,  for  he  is  not  represented  by 
him.  1  Greenleaf's  Ev.  §  187.  The  acts  or  omissions,  or  admissions 
of  the  principal  in  an  action  at  law  against  himself,  clearly  do  not 
represent  the  surety  in  any  wise. 

Thejiability  of  the  surety  is  only  for  the  unpaid  rent  in  this  case. 
Nqw,  clearly,  the  principal  cannot,  by  any  act,  admission  or  omission 
in  such  action,  increase  the  surety's  liability  beyond  that  extent.  Nor 
are  the  interests  of  the  principal  and  surety  always  identical.  If  the 
interest  of  the  principal  induce  him  to  withdraw  a  payment  made  to 
the  rent  and  apply  it  to  another  debt,  the  judgment  against  the  princi- 
pal would  not  represent  the  true  balance  against  the  surety.  In  the 
very  case  before  us  the  payments  proved  would  reduce  the  judgment 
against  the  principal  more  than  $100.  If  we  analyze  the  judgment, 
we  discover  that  it  cannot  affect  the  surety.  It  speaks  simply  the 
voice  of  the  evidence,  and  is  but  the  determination  of  the  tribunal 
of  the  result  of  the  evidence.  But  clearly  the  principal  does  not 
represent  his  surety  in  marshaling  and  controlling  the  evidence.  His 
interest,  we  have  seen,  may  be  different  from  that  of  his  surety,  and 
induce  him  to  withhold  evidence  to  which  the  surety  would  be  en- 
titled, y  7«rww,  rjffp 

No  argument  can  be  drawn  from  the  cases  founded  on  oiEcial  ^^■i.j,  ^  JLjj^ 
bcmds,  bonds  of  indemnity,  etc.  They  arise  from  the  terms  of  the 
bond,  or  terms  of  the  indemnity,  whereby  the  surety  submits  himself 
to  the  acts  of  the  principal  and  to  the  judgment,  as  itself  a  legal 
consequence,  falling  within  the  scope  of  the  suretyship.  Such  are 
the  cases  of  Masser  v.  Strickland,  17  Serg.  &  R.  354,  17  Am.  Dec. 
668 ;  Musselman  v.  Commonwealth,  7  Pa.  240 ;  Commonwealth  v. 
Evans,  1  Watts,  437;    and  others  of  similar  charactefvi-    The  dis- 

6  Methodist  CTiurches  of  Nex\-  York  v.  Barker.  IS  N.  Y.  463  (1858),  JJie 
surety  on  an  ir.i^nction  bond  after  a  .iufl.^nient  against  the  principal  held  to- 
be  ""concluded  by  the  force  and  effect  of  the  contract";  Towle  v.  Towle^ 
46  N.  H.  431  (ISGG),  surety  on  injunction  bond;  Parkhurst  v.  Sumner,  23- 
Vt.  5.38,  5G  Am.  Dec.  94  (IS-^l).  bail;  State  ex  rel.  Brown  v.  Pike.  74  N. 
C.  531  (1876),  surety  on  administrator's  bond;  Stovall  v.  Banks,  10  Wall. 
583,  19  L.  Ed.  1036  (1870)  ;  Mitchell  v.  Toole,  63  Ga.  93  (1879).  surety  of 
claimant  on  damage  bond;    Ruggles  v.  Bernstein,  188  Mass.  232,  74  N.  E. 


598  DEFENSES  OF  SURETY   AGAINST  CREDITOR.  (Part   3 

senting  opinion  of  Gibson,  ].,  in  Masser  v.  Strickland,  while  inef- 
fectual against  the  peculiar  terms  of  a  constable's  bond,  is  conclusive 
as  an  argument  against  the  competency  of  the  judgment  as  evidence 
in  an  ordinary  case  of  suretyship.  If  we  look  for  decisions  more 
germane  to  the  present  case,  we  shall  find  them  in  Carmack  v.  Com- 
monwealth, 5  Bin.  184,  and  Moore's  Appeal,  34  Pa.  -ill.  See,  also, 
1  Grccnlcaf,  §§  522,  523,  524. 

We  think  the  court  erred,  therefore,  in  admitting  the  judgment 
against  Maguire  as  competent  evidence  against  Giltinan  of  the  sum 
due  upon  the  rent. 

Judgment  reversed,  and  a  venire  de  novo  awarded.'' 

.TOi  (IfKV.).  post  p.  nOO.  Rut  not  where  the  judgment  is  obtained  on  a  plea 
of  Imnkruptcy.     Elder  v.   Trussing,  101  111.  App.  655   (1902). 

7  The  strong  dissenting  opinion  of  Gibson.  C.  J.,  in  Masser  v.  Strickland, 
17  Sen;.  &  It-  354,  17  Am.  Dec.  GG8  (1S28),  should  be  read  in  connection 
with  the  decision  In  the  principal   case. 

Tlu'  rule  In  the  above  jurisdiction  is,  however,  subject  to  special  contract. 
M.MIoken  v.  Conunonwealth,  58  Pa.  213  (18G8);  Carmack  v.  Ck)mmouwealth, 
.-.  HIM.   184    (1812). 

.Vo-tiTdL  witk  the  principal  case :  De  Greiff  v.  Wilson,  30  N.  J.  Eq.  435 
(IsTitt:  Lticas  v.  Governor,  6  Ala.  82G  (1844);  Hobson  v.  Tancej',  2  Grat. 
iVa.)  73  (1845);  McConnell  v.  Poor,  113  Iowa,  133,  84  N.  W.  968,  52  L.  R. 
A.  ;n2  (1001). 

Ttiere  are  numerous  Jurisdictions  which  occupy  a  middle  ground,  ^neither 
wholly  excluding  the  prior  judgment  (as  in  the  principal  case),  nor'hold- 
iiif  that  the  prior  judiinient  is  conclusive  evidence  as  in  the  cases  of  court 
bonds  mentioned  In  note  r>,  supra. 

"Tliiis  ill  many  jurisdictions  the  prior  judgment  is  allowed  to  be  introduced 
.1^  evidence,  and  if  no  opposing  evidence  is  adduced,  a  verdict  may  stsyid 
aealnst  the  surety  If  based  on  no  other  evidence  of  the  principal's  default 
than  the  jud;;ment.     Fnrguson  v.  Glaze,  12  La.  Ann.  667   (1S.56). 

Exactly  what  is  meant  by  those  decisions  which,  admitting  in  evidence 
the  prior  judgment,  say  that  it  is  "prima  facie  evidence."  is  not  clearly 
detlnod  l)y  any  harmonious  line  of  authorities.  In  Drummond  v.  Prestman, 
12  Wheat.  .MR.  G  L.  Ed.  712  (1S27).  nothing  was  determined  except  that 
the  exclusion  of  the  judumont  was  error.  As  to  what  extent  the  judgment, 
if  admitted,  was  conclusive,  if  at  all,  was  not  decided  in  that  case,  nor 
in  c;raves  v.  Hulkley.  25  Kan.  240.  37  Am.  Rep.  249  (1881).  nor  in  Macready 
V.  Schenck.  41  La.  Ann.  4.")G.  G  South.  517  (18.S0),  nor  in  Leppert  v.  Flaggs. 
101  .Md.  71,  GO  Atl.  4.50  (19(k5),  nor  in  Bradwell  v.  Spencer,  16  Ga.  578 
(l.*vVi».  nor  in  Whitehead  v.  Woolfolk,  3  La.  Ann.  42    (1848). 

Ai»art  from  these  cjises  of  doubtful  meaning,  there  are.  however,  others 
where  the  surety  has  been  permitted  to  offer  evidence  in  rebuttal  of  the  judg- 
ment and  to  show  the  following  facts:  E.  g..  non-liability  of  the  principal. 
Fay  V.  F^lnilston.  25  Kan.  4.39  (ISSl) ;  a  defense  of  couutercLaim  for  damages 
un.suc<-etwfully  made  by  principal  in  prior  suit,  Park  v.  Ensign,  66  Kan.  50, 
71  Pac.  230.  07  Am.  St  Rep.   352    (1903). 

In  Weover  v.  Thornton,  .<}3  Ga.  G55  (1879).  a  judgment  by  an  ordinarv 
against  the  principal  was  held  not  to  be  conclusive,  but  was  allowed  to  be 
n'tnitt*-*!  as  to  amount  of  principal's  liability  in  an  action  against  his  surety, 
."o  eviden.-e  of  the  s.itisfiiction  of  a  judgment  against  the  principal  may  be 
n-lMittt'd  Ijy  the  cn-ditor  in  the  subsetiuent  suit  again.st  the  suretv  State 
V.   Martin.  2*)  Ark.   G20    (1S.50). 

In  Cniwford  v.  Word.  7  Ga.  445  (1849),  it  was  decided  that  a  sheriff's 
Buretli>s  "will  be  entiUed  to  make  any  defense  which  the  sheriff  himself 
ivuld  have  made."  And  so  of  the  sureties  of  an  administrator.  Bennett 
V.  Graham,  71  Ga.  211  (is,s:i).  in  Atkins  v.  Bailv,  9  Yerg  (Tenn )  111 
(is;:r.).  ^uretu-s  of  a  constable  were  permitted  to  show  notwithstanding  a 
judfcniienr  against  him.  that  the  money  was  received  by  him  after  his  res- 


Ch.  14)  EFFECT   OF  JUDGMENTS   PLEADED   IN   BAR.  599 

RUGGLES  V.  BERNSTEIN  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1905.    188  Mass.  232,  74  N.  E.  3G6.) 

Contract,  on  a  bond  to  dissolve  a  mechanic's  lien.  Writ  in  the 
Police  Court  of  Chelsea,  dated  July  15.  1903.  " 

On  appeal  to  the  superior  court,  the  case  was  heard  by  Aiken,  J., 
without  a  jury.  It  appeared  that,  the  plaintifif  having  filed  a  petition 
in  the  police  court  of  Chelsea  to  enforce  a  mechanic's  lien,  the  de- 
fendant Rosa  Bernstein,  as  principal,  and  the  defendants  Bessie  Aron- 
berg  and  Horatio  F.  Twombly,  as  sureties,  on  March  5,  1903,  ex- 
ecuted the  bond  to  the  plaintiff  to  dissolve  the  lien.  Upon  the  original 
petition  counsel  appeared  for  the  respondent  Bernstein,  who  subse- 
quently was  defaulted,  and  on  a  hearing,  on  June  12,  1903,  the_lien 
was  estabhshed  in  the  sum  of  $450.50  damages,  and  $13.83  cqsjs.  At 
that  hearing  Bernstein  was  not  present  in  person  nor  by  counsel. 
Bernstein  not  having  paid  the  plaintiff  the  amount  named  within  30 
days  after  final  judgment  thereon,  the  plaintiff  began  the  present  ac- 
tion upon  the  bond  in  the  police  court,  and  on  September  11,  1903, 
obtained  judgment  by  default  in  the  sum  of  $464.32  as  damages  and 
$16.32  costs,  from  which  judgment  the  defendant  Twombly  appealed, 
bringing  the  case  to  the  superior  court.  In  that  court  the  defend- 
ants were  defaulted,  and  the  judge  after  default  assessed  damages  in 
the  penal  sum  of  the  bond,  $1,000,  and  heard  the  parties  upon  the 
question  of  the  amount  for  which  execution  should  be  awarded. 

The  defendant  Twombly,  under  Rev.  Laws,  c.  177,  §10,  offered 
evidence  to  prove  that  the  original  petition  brought  to  enforce  the 
mechanic's  lien  could  not  be  maintained  by  reason  of  the  fact  that 
the  debt  due  the  petitioner  was  a  contract  price  under  an  entire  con- 
tract, that  the  contract  never  had  been  performed  by  the  petitioner, 
that  no  statement  ever  had  been  filed  properly  covering  this  debt,  and 
that  the  statement  filed  was  prematurely  filed,  -and  was  not  in  ac- 
cordance with  the  statute,  and  also  offered  evidence  to  prove  that,  if 
the  petitioner  could  establish  a  lien  for  any  amount,  the  principal 
defendant,  Bernstein,  had  made  substantial  payments  to  the  plaintiff 
on  account  of  the  work  performed   under  the  contract   before  the 

ignation;  but  this  was,  of  course,  a  defense  peculiar  to  the  surety.  The 
rejection  of  rebutting  evidence  as  to  the  non-liability  of  a  sheriff  against 
whom  judgment  had  been  recovered  was  held  error  In  Pico  v.  Webster,  14 
Cal.  202,  73  Am.  Dec.  647  (1859).  So  the  surety  of  an  administrator  may  re- 
but the  judgment  as  to  his  liability.  Commonwealth  v.  Bracken  (Ky.)  32 
S.  W.  609  (1895).  See,  also,  Jenkins  v.  State,  76  Md.  235,  23  Atl.  608,  790 
(1892). 

Some  courts,  however,  lean  toward  a  restriction  of  the  evidence  in  rebut- 
tal to  "collusion,  fraud,  that  demand  has  been  paid,  that  there  has  been  a 
clerical  mistake  in  entering  up  judgment."  Dictum  in  Berger  v.  Williams, 
Fed.  Cas.  No.  1341  (1849),  and  another  dictum  in  Charles  v.  Hoskins,  14 
Iowa,  471,  83  Am.  Dec.  378    (1863). 

On  judgments  against  principal,  how  far  evidfincfiLagainst  surety,  see  note, 
14  H.  L.  R.  304. 


CUO  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3 

Statement  was  filed,  for  which  no  credit  was  given  the  principal  de- 
fendant in  the  statement,  and  also  offered  evidence  to  prove  that  at 
:he  hearing  in  the  police  court,  when  the  lien  was  established,  the 
principal  defendant  was  not  personally  present  or  represented  by 
counsel. 

The  judge  excluded  the  evidence,  and  awarded  execution  to  issue 
for  tfie  sum  of  $500.13.    The  defendant  Twombly  alleged  exceptions. 

HAM.M0ND,  J.  The  evidence  excluded  related  to  defenses  which 
could  have  been  set~up  in  the  original  action.  No  fraud  or  collu- 
sion being  shown,  the  judgment  rendered  against  the  principal  was 
conclusive  evidence  of  the  debt  thereby  ascertained,  both  against  her 
and  against  the  surety.  Cutter  v.  Evans,  115  Mass.  27 ;  Way  v.  Lew- 
is, 115  Mass.  2G,  and  cases  there  cited. 

Exceptions  overruled. 


HENRY  et  al.  v.  HELDMAIER. 
(Supreme  Court  of  Illinois,  1907.     226  111.  152,  80  N.  E.  705.) 

Appeal  from  Appellate  Court,  Second  District ;  heard  in  that  court 
on  appeal  from  the  Circuit  Court  of  Will  County,  where  Hon.  Dor- 
rance  Dibell,  Judge,  presided. 

On  February  8,  1899,  J.  C.  Regan  and  John  F.  Quinn  entered  into 
a  written  contract  with  Ernst  Heldmaier  for  the  performance  of 
certam"w6rlc  on  the  sanitary  canal  therein  described.  The  work  was 
tcTBe  done  under  the  direction  and  to  the  satisfaction  of  the  engineer 
of  the  sanitary  district.  Time  was  of  the  essence  of  the  contract, 
and  Regan  and  Quinn  were  to  maintain  on  the  work  sufficient  work- 
men and  machinery  to  perform  in  each  and  every  month  the  full  pro 
rata  of  the  work  agreed  upon,  which  was  to  be  entirely  completed 
by  September  1,  1899.  Upon  notice  that  a  sufficient  number  of  men 
were  not  upon  the  work,  they  were  to  immediately  increase  the 
number,  and  upon  the  failure  to  keep  any  of  the  t*rms  of  the  con- 
tract Heldmaier  was,  by  the  giving  of  prior  notice,  to  have  the  right 
to  take  possession  of  the  work  already  done,  and  hire  other  parties 
to  complete  the  contract  and  charge  any  excess  of  cost  over  the  stip- 
ulated price  to  Regan  and  Quinn,  who  agreed  to  furnish  a  bond, 
with  surety,  in  the  sum  of  $7,500  which  amount  it  was  agreed  should , 
upon  violation  of  the  terms  of  the  contract,  be  liquidated  damages,  and 
not  in  the  nature  of  a  penalty.  The  bond  as  specified  was  executed 
on  the  same  day  of  the  contract  and  signed  by  Jacob  A.  Henry  and 
Wcrden  Buck,  appellants  herein,  as  sureties.  The  condition  of  the 
bond  was,  if  Regan  and  Quinn  should  well  and  truly  keep  and  per- 
form the  contract  in  the  time  and  manner  therein  described,  then  the 
obligation  should  be  void,  otherwise  to  remain  in  full  force  and  vir- 
tue. 


CIl.  14)  EFFECT  OF  JUDGMENTS  PLEADED  IN  BAR.  601 

Regan  and  Quinn  did  not  keep  and  perform  the  contract  in  the 
manner  specified,  and,  on  August  17th,  Heldmaier  took  possession  of 
the  work  and  completed  the  contract  at  a  cost  of  $30,000  in  excess 
of  the  contract  price.  Afterwards  Regan  and  Quinn  filed  their  bill 
in  equity  in  the  circuit  court  of  Will  county  against  Heldmaier  and 
one  George  M.  Campbell,  setting  up  the  agreement  of  February  8, 
1899,  between  Heldmaier  and  themselves,  and  alleging  that  they 
entered  upon  the  performance  of  the  contract,  and  that  on  August 
17,  1899,  while  they  were  engaged  in  the  work  therein  described, 
Heldmaier,  without  notice  to  them,  took  possession  of  their  machin- 
ery and  tools  and  retained  possession  of  the  same.  The  prayer  was 
for  an  accounting  and  judgment  for  the  value  of  the  things  so  taken 
possession  of.  Heldmaier,  answered  the  bill,  and  also  filed  a  cross- 
bill, setting  up  the  contract  and  bond,  alleging  that  Regan  and  Quinn 
entered  upon  the  work  and  made  default  therein,  and  that  the  chief 
engineer  several  times  decided  that  the  work  done  by  them  did  not 
comply  with  the  contract,  and  on  several  occasions  demands  in  writ- 
ing were  made  upon  them  to  comply  with  the  contract;  that  they 
failed  and  refused  to  do  so,  and  on  August  16th  a  written  notice 
was  served  upon  Henry  and  Buck,  the  sureties  on  the  bond,  that 
Regan  and  Quinn  had  made  default,  and  upon  their  failure  to  comply 
with  the  contract  and  notices  Heldmaier  had  taken  possession  and 
completed  the  contract,  and  that  by  reason  thereof  Heldmaier  had 
suffered  damages  to  the  extent  of  $28,249.33.  Xbe  cross-bill  made 
Henry,  Buck,  Regan  and  Quinn  parties  defendant,  and  prayed  for 
an  accounting  of  the  whole  transaction.  Regan  and  Quinn  filed  their 
answer  and  Henry  and  Buck  demurred  to  the  cross-bill  and  the  same 
was  dismissed  as  to  them.  Upon  a  hearing  on  bill  and  cross-bill  a 
decree  was  entered  in  accordance  with  the  prayer  of  the  cross-bill,  to^ 
the  efifect  that  Regan  and  Quinn  had  failed  to  comply  with  the  terms 
of  the  contract,  and  pursuant  to  an  accounting  before  a  master  Regan 
and  Quinn  were  decreed  to  pay  Heldmaier  $25,526.25. 

At  the  September  term,  1903,  of  the  circuit  court  of  Will  county, 
Heldmaier  began  this  action  of  debt  against  Regan,  Quinn,  Henry, 
an3  Buck'  upon  the  bond  of  February  8,  1899.  The  declaration  con- 
sisted of  one  amended  count  setting  up  the  facts  as  above  stated,  and 
alleging  that  the  decree  for  $25,526.25  rendered  by  the  circuit  court 
of  Will  county  was  still  in  full  force,  not  reversed,  appealed  from,  or 
set  aside.  Appellants  demurred  both  ^nerally  and  specialljLto  the 
declaration  as  amended,  which  demurrer  was  overruled.  They  elected 
to  abide  by  the  demurrer,  and  a  default  nil  dicit  was  entered,  damages 
assessed  by  the  court,  and  judgment  rendered  for  the  penalty  of  the 
bond  in  debt  and  damages  in  the  sum  of  $7,500  which  judgment  has 
been  affirmed  by  the  Appellate  Court,  and  a  further  appeal  prose- 
cuted to  this  court. 


602  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part   3 

Mr.  Justice  Wilkin  delivered  the  opinion  of  the  court. 

The  first  question  is  as  to  the  sufficiency  of  the  amended  declara- 
tion. It  is  insisted  that  the  declaration  is  double,  and  that  the  cause 
of  action  therein  stated  is  based  not  only  upon  the  bond,  but  also  upon 
the  judj;:incnt  rendered  in  the  chancery  case.  Duplicity  in  a  declara- 
tion consists  in  joining  in  one  and  the  same  count  different  grounds 
of  action  of  different  natures,  or  of  the  same  nature,  to  enforce  only 
a  single  right  of  recovery.  Chicago  West  Division  Railway  Co.  v. 
Ingraham,  131  111.  659,  23  N.  E.  350.  We  do  not  think  the  claim 
of  duplicity  can  be  maintained  against  the  declaration  in  this  case. 
It  sets  out  the  bond  and  also  the  contract  which  the  bond  was  given 
to  secure,  and  avers  a  breach  of  that  contract.  While  it  goes  far- 
ther, and  sets  out  the  pleading  and  decree  in  the  chancery  case,  that 
is  not  done  for  the  purpose  of  setting  up  other  and  dift'erent  causes 
of  action  from  that  on  the  bond  and  contract,  but  for  the  purpose  of 
showing  that  the  principals  on  the  bond  have  had  their  day  in  court 
and  the  damages  upon  the  breach  have  been  established  at  least 
against  them.  It  would  clearly  not  be  sufficient  to  set  up  the  bond 
and  allege  nothing  as  to  the  contract  or  the  breach  of  it.  If  the  bond 
had  been  e.xecuted,  and  no  contract  entered  into  for  the  performance 
of  labor,  and  no  breach  of  that  contract,  there  could  have  been  no 
breach  of  the  bond,  and  so  the  declaration  properly  alleged,  not  only 
the  execution  of  the  bond  and  contract  and  the  subsequent  breach 
thereof,  but  also  that  the  damages  under  the  breach  had  been  estab- 
lished and  adjudicated  as  against  the  principals  in  the  bond.  The 
proceedings  in  the  chancery  case  are  set  out  possibly  with  greater 
fullness  than  was  actually  necessary,  but  the  declaration,  taken  as  a 
whole,  is  directly  upon  the  bond  and  for  the  breach  of  the  contract 
and  was  therefore  not  double,  and  the  court  committed  no  error  in 
so  holding. 

The  contract  provided  that  Regan  and  Quinn  should  maintain  on 
the  work  sufficient  material  and  workmen  to  perform  in  each  and 
every  month  the  full  pro  rata  part  of  the  work,  and  that  upon  notice 
from  Heldmaier  that  there  was  not  a  sufficient  number  of  men  or  ma- 
chinery upon  the  work,  Regan  and  Quinn  would  forthwith  increase 
the  force  or  machinery.  It  is  insisted  that  this  notice  was  a  condi- 
tion precedent  to  declaring  the  contract  forfeited,  and  the  declara- 
tion should  allege  the  giving  of  such  notice,  and  in  the  absence  of 
such  averment  the  declaration  is  subject  to  general  demurrer.  As 
we  before  said,  the  declaration  sets  up  the  bond,  contract  and  chan- 
cery proceedmg.  In  the  latter  the  cross-bill  alleged  that  Regan  and 
Quinn  were  repeatedly  notified  in  writing  that  the  work  was  not  beino- 
done  according  to  the  contract,  and  they  were  requested  to  provid? 
more  men  and  equipment,  which  they  failed  to  do,  and,  as  a  result, 
Heldmaier  took  possession  of  the  work.  The  decree  found  the  spe- 
cific allegations  of  the  bill  to  be  true  as  therein  specified,  and  made 


Ch.  14)  EFFECT   OF  JUDGMENTS   PLEADED   IN   BAR.  603 

specific  findings  thereon.  These  allegations  and  findings  were  set 
up  in  full  in  the  declaration  in  this  case,  and  constituted  a  sufficient 
allegation  as  to  notice  to  Regan  and  Quinn  to  comply  with  the  terms 
of  the  contract.  The  suretjes  on  the  bond  were  not  entitled  to  any 
notice.  The  contract  merely  provided  for  notice  to  the  principals. 
The  bond  said  nothing  about  notice,  but  the  sureties  therein  bound 
themselves  to  respond  to  any  damages  for  the  breach  of  the  con- 
tract. A         . 

It  is  again  insisted  that  if  it  was  intended  to  state  a  cause  of  ac-  ^^^^^^*^  »**^ 
tion  in  the  declaration  by  setting  out  the  proceedings  and  decree  in  "''^' '  r^^thr^J" 
the  chancery  suit  such  statement  is  defective,  for  the  reason  that  it 
does  not  allege  that  the  decree,  at  the  time  this  suit  was  commenced, 
had  not  been  performed  and  was  unpaid.  As  before  said,  the  cause 
of  action  was  not  upon  the  decree  but  upon  the  bond,  and  the  chan- 
cery proceeding  was  set  up  only  for  the  purpose  of  showing  that  the 
principals  on  the  bond  had  been  heard  or  had  an  opportunity  of  be- 
ing heard  in  court,  and  judgment  had  been  rendered  against  them. 
But  even  if  this  was  not  true,  the  declaration  alleged  that  the  de- 
cree was  in  full  force  and  effect,  not  reversed,  appealed  from,  or  set 
aside.  This  statement  was  equivalent  to  an  allegation  that  the  de- 
cree  had  not  been  performed  or  paid.     11  Ency.  of  PI.  &  Pr.  1145.        "^  c  ^Li'wf  A*o 

To  the  amended  declaration  appellants  demurred,  which  demurrer 
was  overruled.  They  elected  to  stand  by  the  demurrer,  and  judgment 
was  entered  against  them.  For  the  purpose  of  provingjLhe  amount 
due_upon  the  bond,  and  for  which  judgment  should  be  rendered,  ap- 
pellee offered  in  evidence  the  decree  in  the  chancery  case  which  forrned 
the  basis  of  the  judgment.  It  is  earnestly  insisted  by  appellants  that 
while  the  decree  might  have  been  a  sufficient  basis  for  a  judgment 
against  the  principals  on  the  bond  it  was  not  sufficient  as  against  the 
sureties,  for  the  reason  that  they  were  not  parties  to  the  decree,,  were 
not  bound  thereby  and  never  had  their  day  in  court  on  that  issue. 
This  raises  the  question  to  what  extent  a  judgment  against  the  prin- 
cipal may  be  introduced  in  evidence  against  sureties  and  how  far  J_t. 
is  binding  against  them.  This  has  been  a  matter  of  discussion  before 
the  various  courts  of  this  and  other  countries,  and  there  seems  to  be 
more  or  less  conflict  of  opinion  on  the  subject. 

Some  courts  hold  that  a  judgment,  against  the  principal  is  prima 
facie'evTd'ence  againsflhe  surety,  but  they  differ  as  to  the  charaeLer 
of  the  proof  required  to  overcome  the  prima  facie  case,  some  an- 
nouncing the  rule  to  be  that  to  avoid  the  effect  of  the  judgment  the 
surety  must  show  fraud,  collusion,  mistake,  or  payment ;  others,  .that 
the  surety  has  the  right  to  go  behind  the  judgment  against  the  prin- 
cipal and  make  any  defense  to  it  which  he  might  have  made  if  he 
had  been  a  party  to  the  suit;  still  others  hold  that  the  judgment , is 
conclusive  evidence  against  the  surety.  But  the  cases  are  distinguish- 
able from  ordinary  cases  in  that  the  contract  of  the  surety  obligates 


604  DEFENSES  OF  SURETY  AGAINST  CREDITOR.  (Part    3- 

him  to  be  responsible  for  the  result  of  a  suit  against  his  principal,  or 
where  he  has  been  privy  to  the  suit  against  the  principal  by  notice 
and  has  been  given  an  opportunity  to  defend  himself.  For  a  citation 
of  authorities  as  to  these  different  rules,  see  Grommes  v.  St.  Paul 
Trust  Co.,  147  111.  G34,  35  N.  E.  820,  37  Am.  St.  Rep.  248.  In  the 
American  and  English  Encyclopedia  of  Law  (volume  27,  p.  455)  the 
rule  is  announced  as  follows:  "It  is  generally  held  that  a  judgment 
against  a  principal  is  not  conclusive,  but  only  prima  facie  evidence 
against  his  surety  to  show  a  breach  of  contract  and  liability  unless 
the  condition  of  the  bond  makes  it  conclusive." 

This  court  on  several  occasions  since  the  decision  in  the  Grommes 
Case  has  been  called  upon  to  announce  the  rule.  In  Wanack  v.  Peo- 
ple, 187  111.  116,  58  N.  E.  242,  a  judgment  had  been  rendered  against 
a  saloon  keeper  and  the  owner  of  the  building,  under  the  dramshop 
act,  for  causing  the  death  of  one  John  Alexander.  Suit  was  subse- 
quently brought  upon  the  bond  of  the  saloon  keeper,  and  the  ques- 
tion was  as  to  the  extent  to  which  the  judgment  against  the  saloon 
keeper  and  owner  of  the  building  was  evidence  against  bondsmen. 
On  page  122  of  187  111.  and  page  244  of  58  N.  E.,  we  said':  "The 
rule  seems  to  be  well  settled  that  a  judgment  against  the  principal 
upon  official  bonds  and  bonds  by  parties  to  suits,  and  proceedings  in 
court  or  relating  to  the  result  of  a  suit  or  proceeding,  is  conclusive 
upon  the  surety.  Whether  or  not  the  same  rule  applies  in  suits  upon 
bonds  like  the  one  here  involved  the  authorities  are  not  altogether  har- 
monious ;  but  we  think  the  weight  of  authority  and  sound  reasoning 
is  in  favor  of  the  proposition  that  a  judgment  against  the  principal, 
especially  where  the  surety  has  been  notified  and  had  an  opportunity 
to  defend,  is  prima  facie  evidence  as  to  the  amount  of  damages  in  a 
suit  against  the  surety."  In  Meyer  v.  Purcell,  214  111.  62,  64,  73 
N.  E.  392,  we  said :  "Where  a  person  is  responsible  over  to  another^ 
and  he  is  notified  of  the  pendency  of  a  suit  involving  the  subject- 
matter  of  the  indemnity,  his  liability  will  be  fixed  and  determined 
by  the  judgment  rendered  therein,  and  notice  to  him  will  be  implied 
where  he  has  knowledge  of  the  pendency  of  the  suit  and  participates 
in  the  defense  thereof."  To  the  same  eft'ect,  see  Drennan  v.  Bunn, 
124  111.  175,  16  N.  E.  100,  7  Am.  St.  Rep.  354.  From  these  authori- 
ties we  think  the  rule  in  this  state  is  that  where  the  suretjesJiai^ 
had  notice  of  the  pendency  of  the  suit,  the  judgment  rendered  against 
the  principal  is  prima  facie  evidence  against  the  sureties. 

It  is  insisted,  however,  by  appellants,  that  the  cases  thus  cited  are 
each  upon  a  different  state  of  facts  from  this  case,  and  that  those 
cases  do  not  announce  the  rule  which  should  be  applied  here.  It  is 
true,  the  cases  cited  are  not  exactly  similar  in  their  facts  to  the  one 
at  bar,  but  we  think  they  announce  correct  principles  which  should 
govern  this  case.  The  record  in  the  chancery  case  shows  that  the 
sureties  on  the  bond  were  made  parties  defendant  to  the  cross-bill 


Ch.  li)  EFFECT  OF  JUDGMENTS   PLEADED   IN   BAR.  605 

of  Heldmaier.  Summons  was  issued  against  them  and  they  appeared 
in  court  and  filed  a  demurrer  to  the  cross-bill,  and  the  suit  was  sub- 
sequently dismissed  as  to  them.  This  was  sufficient  notice-ta  give 
them  an  opportunity  to  defend  in  that  suit  if  they  saw  fit.  The  cross- 
bill set  up  the  bond  and  contract  and  alleged  a  breach.  The  sureties 
knew,  or  were  chargeable  with  knowledge,  that  if  judgment  was 
rendered  against  the  principals  they  would  be  liable  on  their  bond 
for  the  payment  of  the  same  to  the  extent  of  the  amount  therein 
named.  If  they  had  any  defense  it  was  their  duty  to  appear  and 
protect  their  rights.  When  they  demurred  to  the  amended  declara- 
tion in  this  case  and  the  same  was  overruled  they  saw  fit  to  stand  by 
their  demurrer,  and  the  decree  in  the  chancery  case  was  prima  facie 
evidence  of  the  amount  due  upon  the  bond  as  against  the  sureties, 
and  the  circuit  court  committed  no  error  in  so  holding. 

We  find  no  reversible  error,  and  the  judgment  will  be  affirmed. 

Judgment  affirmed. 


INDEX 


ACCEPTANCE,  Page 

Of  offer  to  become  sarety  or  guarantor,  see  Formation,  4. 
ACTION, 

Form  of,  upon  a  surety  or  guarantor's  undertaking,  see 121,  n.  8 

By  surety  against  principal,   see  Reimbursement. 

By  surety  against  co-surety,  see  Contribution, 

ALTERATION, 

See  Defences,   VIII. 

ASSENT, 

See  Formation,  4. 

ASSIGNEE, 

Of  surety,  subrogation  In  favor  of,  see  Subrogation. 
ASSIGNMENT, 

Of  debt  by  creditor,  see  Statute  of  Frauds,  6. 

BANKRUPT^CX, 

Discharge  in  bankmptcy  of  principal,  whether  a  defence  for  sure- 
ty,  see  Defences,   XIII. 

Discharge  of  co-surety  in,  as  defence  to  suit  for  contribution,  see 
Contribution,   8. 

Discharge  of  principal   in  bankruptcy  as  defence  to   surety's  ac- 
tion  for  reimbursement,   see   Reimbursement. 
BILATERAL    CONTRACTS, 

Of  suretyship,  see  Formation,  4. 

BILLS   AND  NOTES, 

Application  of  suretyship  to,  see  Formation,  6. 
BOOK    ENTRIES, 

Of  creditor  as  evidence  to  prove  party  to  whom  credit  was  given, 
see  Statute  of  Frauds. 

CAPACITY, 

Of  principal,  see  Formation,  7. 
COLLATERAL, 

Held  by  creditor,  whether  must  be  exhausted  before  suing  surety, 

see  Defences,  VII  (2). 
Held  by  surety,  whether  must  be  exhausted  before  action  for  re- 
imbursement lies,  see  Reimbursement. 
Distinguished  from  original  undertakings,  see  Statute  of  Frauds. 
As  to  which  subrogation  exists,  see  Subrogation. 
COMPOSITION  AGREEMENTS, 

See  Defences  of  Surety   against  Creditor,   IV. 
CONCEALMENT, 
See  Formation,  8. 

CONDITIONS    PRECEDENT, 
See  Formation,   11. 

CONSENT, 

See  Formation,  4. 

CONSIDERATION, 

In  simple  contracts  of  suretyship,  see  Formation,  2,  3. 

Hen. Sub.  (607) 


608  INDEX. 

CO-SURETY,  ^^se 

See  Contribution. 

CONTINUING    GUARANTIES, 
See  ForiuatioD,  4. 

CONTRIBUTION, 

1.  Wlion  right  arises, 

Cooke    V.    326 

2.  rrosumptlon  as  to  extent  of  liability  of  co-sureties  Inter  se, 

Harrison    v.    Lane 343 

3.  In  case  of  Insolvency  of  one  or  more  sureties, 

Hole    V.    Harrison 325 

Gross  V.  Davis 348 

4.  Whether  rlcht  depends  upon  Insolvency  of  principal  being  first 

established. 

Ralnoy   v.   Yarborough 326 

Lawson   v.    Wright 341 

Sloo  V.   Tool 330 

Acers    v.    Curtis 332 

How  far  enforceable  at  law, 

Kemp    V.    Fiudcn 328 

Robinson   v.   Kenon's  Ex'r 339 

Mackreth    v.    Waluiesley 351 

Michael  v.  Allbright 356 

5.  Speculation  between  qo-sureties, 

Acers   v.    Curtis 332 

Labbe  v.   Bernard 339 

6.  Defences  of  the  co-surety, 

Statute  of  limitations, 

Chlpman    v.    Morrill 334 

Durbin   v.    Kuney 338 

7.  Duty  of  disclosure. 

Mackreth  v.  Walmesley 351 

8.  Bankruptcy, 

Liddell    V.    Wiswell 357 

Whether  demand  must  precede  suit, 

Chaffee   v.    Jones 360 

COUNTER-SECURITY, 
See  Contribution,  5. 

COVERTURE, 

Of  principal,  see  Formation,  7. 
CREDITOR, 

Subrogation  In  favor  of,  see  Subrogation. 

Right  of  surety  to  collateral  held  by  creditor,  see  Subrogation, 

Right  of  creditor  to  collateral  held  by  surety,  see  Subrogation. 

DEATH, 

Of  surety,  see  Defences,  II. 

Of  principal,  see  Defences,  III. 
DEFENCES   OF   SURETY   AGAINST  CREDITOR, 

L  Defences  arising  out  of  the  joint  nature  of  the  contract, 

Rawstone    v.    Parr gg3 

Collins    V.    Griflith •..*.'.*.*.'..'.*.*.*.*.'.'.'.*.!!!!!!!!'."!!       362 

Harrison    v.    Field '....'..'..'... 36.5 

Winslow   V.    Parkhurst's   Heirs '.'•'.*.'.*.'.'.'.'.'.*.**.*. 368 

Local  statutes  affecting  joint  liability.V.'.V.'.V.'.V. '.'.**.'.'.'/ 307    n    5 


INDEX.  609 

DEFENCES  OF  SURETY  AGAINST  CREDITOR^Continued,  Page 

II.  Death  of  the  surety, 

Saymond    v.    Gent 309 

In    re    Grace 372 

Royal  Ins.   Co.  v.  Davies 378 

Knotts   V.    Butler 376 

Dodd  V.  Whelan '    309 

Gay    V.    Ward 383 

Calvert   v.    Gordon 381 

III.  Death  of  principal, 

Davidson  v.  Taylor 392 

Legate    v.    Marr 393 

Nelson    v.    Anderson 391 

Gargan    v.    School    Dist 394 

Bank   v.    Barrington 398 

IV.  Satisfaction  or  payment  by  principal, 

Bancrofte    v.    Willet 402 

Merrimack   Bank    v.    Parker 402 

Tender, 

Johnson    v.    Mills 404 

Ruble  V.   Norman 405 

Release  of  principal, 

Ex    parte    Glendinning 408 ;  409,  n.  2  ;  4GS 

V.  Set-off  or  counterclaim, 

Waterman    v.    Clark 412 

Banks    v.    Pike 418 

Hollister  v.   Davis 417,  n.   5 

Bechervaise  v.   Lewis 424,  n.    10 

Lasher   v.    Williamson 417 

Graff    v.    Kahn 414 

Armstrong    v.    Warner 419 

VI.  Duty   of  creditor   to  pursue  principal, 

Moussa    V.    Loteri jman 42.j 

Suretyship  contrasted  with  guaranty  of  collection 425,  n.    2 

VII.  Defences   based  on  transactions   between   creditor  and  prin- 

cipal  42G-.542 

(1)  Extension    of    time   to    principal 426^71 

Basis  for  rule  discharging  surety, 

Rees    V.    Berrington 42G;    431,  n.    4 

Extent  of  Injury   by   delay, 

Rees    V.    Berrington 426 

Boultbee  V.   Stubbs. 429 

Originally  equitable  relief  given, 

Rees    V.    Berrington 426 

Devers  v.  Ross 447 

In  modern   times  a  defence  at  law 449,  n.   14 

Consent  of  surety  to  extension, 

Hutchinson    v.    Wright 470 

Knowledge  of  surety  as  to  extension, 

Stewart's   Adm'r  v.   Parker 461 

Specialty   extended   by   promissory  note, 

Rees  V.  Berrington 426 

Or  by  another  specialty, 

Boultbee   v.    Stubbs 429 

Hen.Sxjb.-^9 


GIO  INDEX. 

DEFENCES  OF  SURETY  AGAINST  GREDITOR-Continued.  Page 
Extension  must  be  binding,  and  not  merely  inactivity  or 
indulgence, 

Mclxjmore  v.  Powell 432;  431,  n.  4 

Payment  of  interest  and  promises  to  pay  interest 

Dodpson    V.    Henderson 4G4 ;   405,  n.    20 

Kellogg  V.  Olmsted 435 

Bank    v.    Truesdell 437 

Bank   v.    Tarsons 463 

Billlngton    v.    Wagoner 439 

.Wbcther  apparent  principal   in  written  contract  may   be 
shown    to   be   a    surety, 

Laxton  v.   Peat 444;   444.  n.    10 

Hall  V.  Bank 459;  444,  n.  10;  459,  n.  16 

Overend  v.   Oriental  Co 449 

Smith    V.    Sbelden 445  ;  447,  n.  13 

Extension   with   reservation    of   rights. 

Bank    v.    Johnson 467 

(2)  Surrender  or  loss  of  collateral, 
A  pro  tanto  discharge, 

Holland    v.    Johnson 471 

Bank    v.    Hayes 479 

Everly    v.    Rice 4S3 

Monroe    v.    De    Forest 476 

Presumption  as  to  extent  of  loss, 

Monroe   v.    De   Forest 476 

Bank    v.    Hayes 479 

Collateral   subsequently  acquired, 

Holland    v.    Johnson 471 

Campbell   v.   Kothwell 504 

Mt.    Sterling    Co.    v.    Cockrell ' 513 

Young   v.    Cleveland 515 

Parol  evidence  that  apparent  principal  is  surety, 

Holland  v.  Johnson 471;  473,  n.  24 

Whether  duty  of  creditor  is  to  resort  first  to  collateral, 

Bingham    v.    Mears 474 

National,  etc.,  Co.  v.  Montpelier,  etc.,  Co 4S2:  541,  n.  57 

Bank    v.    Wood 550 

Affirmative  duty  of   creditor  to  perfect  or  preserve  col- 
lateral, 

WulCf   V.   Jay 487 

Merritt    v.    Haas 508 

Board  of  Com'rs  v.  Branham 491 

Mayhew    v.    Crickett 496 

Alcock    V,    Hill 500 

Surrender  of   property   taken    on   execution, 

Young   V.    Cleveland 515 

(3)  Variation  by  principal  and  creditor  of  original  agreement, 
Alteration, 

Mersraan    v.    Werges 516 

Hilliboe   T.    Warner 533 

Jackson    v.    Cooper 535 

Assent    to,   by   surety 526,  n.    42 

Addition  of  new  name,  whether  alteration, 

Mersman   v.    Werges 516 


INDBZ. 


611 


DEFENCES  OF  SURETY  AGAINST  CREDITOR— Continued,  Page 

Variation  by  principal  and  creditor  of  terms  of  original 
agreement, 

Zeigler   v.    Hallahan 51^ 

Bethune  v.   Dozier •'•'-•* 

Zimmerman    v.    Judah ^^^ 

Taylor    v.    Scott ^^^ 

Variation  of  term  as  to  which  surety  has  not  contracted, 

Harper  v.  Ins.   Co 526 

Waiver  by  surety  of  variation, 

Woodcock   V.   Ry.   Co 531 

(4)  Connivances  at  breaches  of  principal's  duty  not  amounting 
to  dishonesty, 

Sanderson    v.    Aston 536;   538,    n.    56 

Neglect  of  creditor  to  utilize  means  of  payment, 

Fegley    v.    McDonald 538 

Voss  v.  Bank 541;  542,  n.  58 

IX.  Transactions  of  creditor  (or  promisee)  with  surety, 

(1)  Request  of  surety  to  creditor  to  sue  principal, 

Croughton    v.    Duval 543 

Thompson  v.   Bowne 549:  549,  n.   2 

(2)  Failure   or   neglect   to  sue  principal, 

Townsend    v.    Riddle 54.j 

(3)  Failure  to  resort  to  collateral, 

Bank  v.  Wood 550;  474;  482;  541,  n.   57 

(4)  Notice  that  creditor  will  look  only  to  principal, 

Harris   v.    Brooks 554 

(5)  Misinformation   given   surety   as   to   state   of   transactions 

between   principal    and   creditor. 
Brewing   Co.    v.    Mullican 556 

X.  Effect  of   absence  of  notice   to   surety   or   guarantor   of  prin- 

cipal's default, 

Orme    v.    Young 560 

Guarantor  of  commercial  paper, 

Philips  v.  Astling 561 ;  564.  n.   10 

XI.  Change  in  personality  of  partnership  principal, 

Lamm    v.    Colcord 565;    570,    n.    1 

XII.  Statute  of  limitations, 

When  begins  to   run  in  surety's  favor, 

McGovern    v.    Rectauus 571 

Effect  of  statute  barring  claim  against  principal. 

Nelson    v.    Bank 573 

Hooks    V.    Bank 574 

Whiting   V.    Clark 575 

Effect  of  part  payment  by  principal, 

Whitcomb  v.  Whiting 57G  ;   577,  n.  ^8 

Cross    V.    Allen 578 

Deaton    v.    Deaton 581 

Mason    v.    Kilcourse 583 

XIII.  Discharge   of   principal    in    bankruptcy, 

Cilley    V.    Colby 585 

XIV.  Judgments  pleaded   in   bar. 
Judgments  in  favor  of  principal, 


Crum    V.    Wilson, 


587 


C12  INDEX. 

DEFENCES  OF  SURETY  AGAINST  CREDITOR— Continued,  Page. 
Judjrnients  In   favor  of  croilitnr, 

(Jlltiimn  V.  Strong 596;  597,  n.  6;  598,  n.   7 

Uuf.'«Ies   V.   Rernstoin 599 

Doti;rl:i!=s    V.    Ilowland 5SS ;    594,  n.    4 

Where  surety  Is  notifled  of  actii)!i. 

Ilenrj*  v.  Heldmaler 600 

DBT.    CRKPKKE    FACTORSHIP 131 

DISCLOSURE. 

Duty  of  between   creditor   and   surety,    see   Formation,   8. 
Surety    and   co-surety,   see   Contribution,    7. 

DURESS. 

See  Formation,  10. 

EXCUSSION, 

As  duty  of  surety  or  guarantor,  see  Defences.  VI;  Suretyship. 

EXONERATION. 

Equity  of  exoneration  arises  before  payment, 

Holcombe   v.    Fetter 212 

Saunders    v.    Churchill 200 

Beardniore    v.    Cruttenden 201 

Ascherson    v.    Tredegar 205 

Exists  apiilnst  estate  of  deceased  principal, 

Saunders    v.    Churchill 200 

Taylor    v.    Ileriot 209 

Right  to  conii)el  creditor  to  sue  principal  on  securing  former, 

Beardmore    v.    Cruttenden 201 

In    re    Babcock 202 

Whether  bill  may  be  filed  after  creditor's  action, 

Hushes,  etc.,  v.   Indian,  etc.,  Co 214 

Scanland    v.    Settle 209 

Who  should  be  parties  to  bill, 

Stephenson  v.  Ta verners 213 

Whether  equity  arises  before  maturity  of  debt, 

Hughes,  etc.,  v.  Indian,  etc.,  Co 214 

EXTENSION  OF  TIME, 

To  principal  as  defence  for  surety,  see  Defences,  VII. 

FAILURE. 

Or  neKlect  of  creditor  to  sue  principal  as  defence  for  suretv,  see 

Defences.  IX  (2). 
Of  creditor  to  utilize  collateral,  whether  defence  for  surety,  see 

Defences.  IX  (3). 

FALSE   REPRESENTATIONS, 
See  Fraud. 
As  to  credit  of  another,  see  Statute  of  Frauds,  8. 
FORBEARANCE. 

To  sue  principal  as  a  consideration  for  surety's  contract,  see  For- 
mation, 3. 

FORM.VTION. 

L  By  specialty. 

Y.   B.  .33  Kd.   I "  ^ 

No    consideration [   ^ o     j^    ^ 


INDEX.  613 

FORMATION— Continned,  Page 

Past    consideration 2,  n.    4 

Estoppel   from  delivery,  see   Conditions   Precedent. 

2.  By  simple  contract, 

Consideration    for    suretyships,    etc.,    contemporaneous    with 
principal's   contract, 

T.   B.   12  Hen.   VIII 11.3 

Kirby  &  Eccles  Case 2 

Saline    v.    Sappington 3 

Brown    v.    Garbrey 4 

3.  Consideration  for  suretyships,  etc.,  as  to  past  debts, 

Jordan's    Case 12 

Forbearance  a  common  example  of  consideration 12,  n.  S 

Doctrines  of  consideration  applied  to  simple  contracts  of  sure- 
tyship and  guaranty 12  to  17 

Consideration  implies  a  detriment  incurred   on  request, 

Symmons    v.    Want 14 

Savage    v.    Bank 21 

(Obiter)   Polk   v.   Smedley 23 

French    v.    French 15 

Savage    v.    Bank ?i 

Consideration  consisting  of  promise  of  future  credit lo,  n.  10 

Consideration  consisting  of  actual  forbearance  for  a  reason- 
able time  on  request, 

Map  V.    Sidney IG ;    17,  n.   14 

Crears    v.    Himter 36 

Wynne    v.    Hughes 34 

Consideration  consisting  of  money  paid  surety, 

Dutchman  v.  Tooth 5G;  oG,  n.  41 

4.  Doctrines, of  offer  and  acceptance  applied  to  simple  contracts  of 

suretyship  and  guaranty 18  to  59 

Consent  necessary, 

Bourke  v.   Buxton 25 

Downing    v.    Robinson 25 

Volunteers  not  sureties. 

Downing    v.     Bobijison ' 25 

(Obiter)    Polk   &  Co.   v.    Smedley 23 

Overtures  distinguished  from   offers. 

Gaunt    V.    Hill IS 

Bilateral    contracts   of  suretyship, 

Westhead  v.   Sproson 18 

(Obiter)   Lennox  v.  Murphy 47;  40.  n.  31 

Unilateral  contracts  of  suretyship,   where. acceptance  consists 
of  detriment  incurred  on  request  (e.  g.,  in  giving  credit), 

Jarvis    v.    Wilkins 22 

Oldershaw    v.    King 29 

(Obiter)    Jordan's    Case 12 

Wynne  v.    Hughes 34 

Crears    v.    Hunter 36 

Lent  V.   Padelford 42 

Kotice  of ■  acceptance  of  offer  to  become  surety  in  unilateral 
contracts  of  suretyship, 

Somersall    v.    Barneby 55,  n.    39' 

Jarvis    v.    Wilkins 22 

Oldershaw   v.    King 29^ 

Wynne  v.   Hughes 34 


GU  INDEX. 

FORMATION— Continued.  ^^f* 


Croars    v.    Iliintpr. 


36 


Kddowes    v.    Nii'll 39  ;  39,  n.  2 

Lent   V.    Padolford '*- 

Lennox    v.    Murpliy -i':  ^6,  n.  40 

Dn vis    V.    Richards ^'■- 

Pajne    v.    1  ves 50 

Withdrawal  of  offer  to  become  surety. 

OfTord    V.    I  >avies 58 

B.  Suretyship  in  form  of  joint  contract 5  to  8 

Riley    V.    Jarvis 5 

City  of  rhila.   v.  Reeves 6;  7,  n.  8 

6.  Suretyship  in  the  form   of  Indorsement  or  other  contracts  of 

the  law  merchant. 

Tanner  v.  Gude 9 

Cheney   v.   Thompson,    etc.,    Co 11 ;  10,  n.  10 

7.  Capacity,  personal  Incapacity  of  principal, 

Goodell    V.    Bates 60;  60,  n.  1 ;  63,  ^.  2 

Winn    V.    Sanford 61 

Robbins    v.    Robinson 63 

Dutt  V.  Adm'r  Gen.  of  Bentral 66;  66,  n.  6 

8.  Fraud  affeotln;:  formation  of  suretyship, 

Fraud  by  creditor  upon  surety, 

Marchman    v.    Roliertson 67 

Stone  V.   Compton 68 

Remington  Co.    v.    Kezertee 71 

In  false  representation  of  collateral   fact, 

Marchman    v.    Robertson 67 

RemlngtoL   Co.  v.   Kezertee 71 

Stone    V.    Compton 68 

Whether  duty  of  creditor  to  disclose  material  facts 72,  n.  10 

Wilmlngion   Co.   v.   Ling 73 

Remington   Co.   v.   Kezertee 71 

Fraud  of  creditor  on  principal, 

Henry    v.    Daley 70;  SO,  n.  13 

Macey    v.    Ileger 78 ;  80,  d.  13 

Fraud  of  principal  on  surety, 

Ladd  V.  Board  of  Trustees 81 

Pnpe  V.   Krekey 82 

0.  Effect  of  illegality, 

Deni.son    v.    Gibson 86 

Warren    v.    Crabtree '  94. 

Coles  V.  Strick qq 

Swift   V.   Beers 98 

Hook    V.    White 97 

Mound    V.    Barker ^  99 

10.  Durt.ss. 

Of  cralitor  on  principal, 

Iluscombe    v.    Standing 200 

Bonds  to  obtain  discharge  from  imprisonment, 

Toles  V.   Adee '  -j^OO 

Invalid    statutory    oblij,'ation    and    valid' "common-law" obli- 
gntioDS, 

Toles  V.  Adee JOO 


INDEX.  615 

FORMATION — Continued,  Page 

11.  Conditions  precedent, 

Specialties  and  parol  conditions  precedent, 

Gwy'n    V.    Patterson 109 

Bonser   v.    Cox 105 

Butler  V.  U.  S lOT 

Morten    v.    Marshall 110 

FRAUD, 

See  Formation,  8. 

GUARANTY, 

Distinguished  from  suretyship,  see  Defences,  VI. 
Of  collection,  see  Defences,  VI. 

ILLEGALITY, 

See  Formation,  9. 

INDEBITATUS  ASSUMPSIT, 

Remedy  for  surety  to  obtain  reimbursement,  see  Reimbursement. 

INDEMNIFY, 

Promises  to,  whether  within  the  statute  of  frauds,  see  Statute  of 
Frauds,  4. 

INDORSEMENT, 

Suretyship  applied  to  indorsement,  see  Formation,  6. 

INFANCY, 

Of  principal,  see  Formation,  7. 

INTEREST, 

Payment  of,  whether  consideration  for  extension  of  time,  see  De- 
fences, VII  (1). 

JOINT  CONTRACTS, 

See  Formation,  5;  Defences,  I. 
And  statute  of  frauds,  see  Statute  of  Frauds. 
Subrogation  as  to,  see  Subrogation. 

JUDGMENTS, 

In  favor  of  creditor  against  principal,  how  far  admissible  against 
surety,  see  Defences,  XIV. 

Pleaded  in  bar  of  actions  by  creditor  against  surety,  see  De- 
fences, XIV. 

Subrogation  as  to,  see  Subrogation. 

LIENS, 

Subrogation  as  to,  see  Subrogation 

MISCARRIAGES  OF  ANOTHER, 

See  Statute  of  Frauds,  9. 

MISINFORMATION, 

Given  surety  by  creditor  concerning  transactions  with  principal, 
when  defence  for  surety,  see  Defences,  IX  (5). 

NOTICE, 

That  creditor  will  look  only  to  principal,  whether  a  defence  for 

surety,  see  Defences,  IX  (4). 
By  creditor  to  surety  or  guarantor  of  principal's  default,  when  absence 

thereof  is  defence  for  surety,  see  Defences,  X. 


GIG  INDEX. 

NOTICE— Continued.  Pago 

Of  actejitance  of  offer  to  become  surety  or  guarantor,  see  Forina- 
tlou.  4. 

NOVATIONS, 

See  Statute  of  Frauds,  5. 

OFFER  AND  ACXJEPTANCE, 

Doctrine  of,  applied  to  simple  contracts  of  suretyship,  see  Forma- 
tion, 4. 

ORIGINAL  UNDERTAKINGS, 

Distinguished  from  collateral  undertakings,  see  Statute  of  Frauds. 

OVERTURES, 

Distinguished  from  offers,  see  Formation,  4. 

PAROL  EVIDENCE, 

When  admissible  to  show  suretyship,  see  Defences,  VIII  (1)  (2). 

I'ARTNERSIIIP, 

Change  in  meml)ers  of  partnership  (principal  debtors)  as  defence 
for  surety,  see  Defences,  XI. 

PAYMENT, 

When  a  defence  for  surety,  see  Defences,  III. 
'By  surety  entitling  him  to  reimbursement  by  principal,  see  Reim- 
bursement 

PURCHASERS  OF  SECURITIES, 
Subrogation  as  to,  see  Subrogation. 

gUASI  CONTRACT, 

Basis  of  reimbursement  at  law,  see  Reimbursement. 

REIMBURSEMENT, 

Enforced   first  In   equity, 

O'Carroll's    Case 21S 

Glossup  V.  Harrison \\       219 

Tinsley  v.  Oliver's  Admr ..........'.      219 

At  law  in  the  action  of  indebitatus  assumpsit, 

Decker    v.    Pope 220 

Pownal   V.    Ferraiid ]      004 

De  I>ecton  v.  De  Suttoua 218 

When  right  arises, 

Ingalls  V.  Dennett 2'>i 

What  Is  payment, 

Cornwall    v.    Gould 9.-,^^ 

Action  ui>on  part  payment, 

Pownal  V.   Ferraud 004 

Craighead   v.    Swartz 2'^j 

Whether  collateral  must  first  be  utilized  Ijy  surety 

Riddle   V.    Bowman '  oog 

Quasi  contractual  basis  of  right  shown  in 

Joint  contracts, 

Apgar's  Adra'rs  v.   Hiler 90-^ 

Payment  of  specialty  debts,  

Buckner   v.    .Morris ,,„^ 

Speculations  at  expense  of  principal, 

Gieseke  t.  Johnson '  _ 


INDEX.  617 

REIMBURSEMENT— Continued,  Page 

Defences  of  principal, 
Incapacity, 

Davis    V.    Com'rs 242 

Illegality, 

Harley  v.  Stapleton's  Adm'r 250 

Statute  of  limitations, 

Angrove  v.   Tippett 232 

Effect  of  running  of  statute  between  principal  and  cred- 
itor, 

Godfrey    v.    Rice 245 

Odlin    V.    Greenleaf 251 

Marshall    v.    Hudson 255 

Voluntary  payment  by  surety, 

Hatchett  v.   Pegram 257 

Cabin    V.    Bigelow 253 

Brown    v.    Kidd 230 

Smith   V.    Wheeler 265 

Thayer  v.  Daniels '. 2G6 

Norton  v.  Hall 261 

Principal's,  discharge  in  bankruptcy, 

Smith   V.    Wheeler 265 

Effect  of  judgments  recovered  by  creditor  against  surety, 

Tarleton    v.    Tarleton 252 

RELEASE  OF  PRINCIPAL, 

As  defence  for  surety,  see  Defences,  IV. 

REQUEST  OF  SURETY, 

To  creditor  to  sue  principal  as  defence  for  surety,  see  Defences, 
IX  (1). 

RESERVATION  OF  REMEDY, 

By  creditor  against  surety  where 

Time  is  given  principal,  see  Defences,  VII  (1). 
Discharge  is  given  principal,  see  Defences,  IV. 

RETENTION  OF   DISHONEST   SERVANT, 

By  guarantee  after  notice,  see  Defences,  VIII  (2). 


SECURITIES, 

Subrogation  as  to,  see  Subrogation. 

SET-OFF, 

Of  principal's  claim  as  defence  for  surety,  see  Defences,  V. 

SPECIALTY, 

Formation  of  suretyship  by  specialty,  see  Formation,  1. 
In  relation  to  statute  of  frauds,  see  Statute  of  Frauds. 

SPECULATION  BY   SURETY, 

At  expense  of  principal,  see  Reimbursement. 

STATUTE  OP  FRAUDS, 

Distinction  between  suretyship  and  other  forms  of  liability  with 
reference  to  the  statute  of  frauds, 

1.  Contracts    under    seal 114 

2.  Promises  made  by  the  defendant  to  the  debtor, 

Eastwood   V.    Keuyon 112 


G18  INDEX. 

STATUTE  OF  FRAUDS— Continued.  Page 

3.  Promises  by  defendant  to  creditor, 

(A)  At  time  cretlit  is  originally  given, 

(1)  Where    the   promise    is    collateral    to    a    debt   created 

against   another   person, 

Y.  B.  12  Hen.  VIII,  fol.  11,  pi.  3 113 

Alford  V.   Eglisfield 115 

Ward  V.  Coggin 115 

Foster  v.  Ilalliman HG 

Rozor    V.    Rozer 117 

Buckmyr  v.  Darnall 119 

(2)  Wliere  defendant  himself  becomes  the  debtor, 

Stonehouse  v.   Bodvil 116 

Ambrose    v.    Kowe 116 

Jordan    r.    Tompkins 122 

Austen    v.    Baker 117 

Watkins   v.    Perkins US;    121,  n.    8 

Matsou   V.   Wharam 122 

Smith    V.    Miller 128 

lona  Bank  v.   Boynton 129 

ECfect  of  entries  in  books  of  creditor, 

Austen  V.  Baker 117,  n.  7 

Cooper   V.   Gibbons 130 

Joint  contracts  and  statute  of  frauds 124,  n.  10 

Effect   of   certain   expressions, 

"I  will  see  him  paid." 

Koate  V.    Temple 125 

"If  you  will  lend"  or  "if  you  will  sell," 

Butcher   v.    Andrews 12-4 

"I  will  answer  for  the  payment  of  goods  sent  to 
him," 

Mines  v.    Sculthorpe 127 

(B)  Promises  to  the  creditor  after  the  original  credit  is  given 

or  debt  created,  etc.;  1.  e.,  promises  to  pay  pre-existiug 

debts, 

Baxter    v.    Jackson 134 

Buckley  v.   Turner 134 

King   V.    Wilson 135 

Harburg  Co.   v.  Martin 140 

White  V.  Rintoul 149;  1.34,  n.  27 

Bailey   v.    Marshall 157 

Williams  V.  I^per 135 

Houlditch    V.    Milne 137 

Lamkin    v.    Palmer 155 

Hughes  V.  I>awson 13S;  140,  n.   24 

Swan    V.    Ncsmith 131 

4.  Promisi-s  to  indemnify, 

Guild  V.  Conrad I59.   ic2,  n.   30 

6.  Novations, 

Roe   V.    Haugh 2.62 

Mori.len  Co.  v.  Zingsen ■.'.".'.■.'.'.■.'. ". ' '.  *. ". '. '. '.  [  [  ics";*  IQG,  n.  31 

6.  A«w<igmnent  of  original  debt  bv  creditor, 

Israel  v.  Douglas ". .' 107.   i69,  n.   33 

Conipton    V.    Jones j^^q 

De  Barry  v.  Withers !.!!!..*.!!!.!..!*!  171 

Hargraves    v.    Parsons !!!.!.!!...!.!.!. '.  174 


INDEX.  619 

STATUTE  OF  FRAUDS— Continued,  Page 

7.  Debts  created  for  benefit  of  a  third  party, 

Morrison    v.    Hogue 177 

Farley  v.   Cleveland 178;  182,  n.  40 

Mason    v.    Hall 183 

Wright  V.    Smith 18G 

Berry   v.    Doremus 186 

8.  Actions  for  false  representations  as  to  credit  of  another, 

Upton    V.    Vail •.. 188 

9.  Promises  as  to  "miscarriages"   of  another, 

Kirkham  v.   Marter 191 

STATUTE   OF   LIMITATIONS, 

In    favor   of   principal    against   surety,    see    Reimbursement;    De- 
fences of  Principal. 

In  favor  of  surety,  see  Defences,  XII. 

In  favor  of  co-surety  against  surety,  see  Contribution,  6. 

Distinction  between  suretyship  and  guaranty 195,  n.  47 

Kearnes    v.    Montgomery 193 

Hof heimer  v.    Losen 196 

Duty  of  excussion  in  guaranties, 

Colby  V.  Farwell 107 ;   199,  n.  49 

SUBROGATION, 

Not  in  favor  of  volunteer, 

Shinn   v.    Budd 302 

Not  until  full  payment, 

Musgrave   v.    Dickson 272 

As  to  collateral  of  which  surety  had  no  knowledge, 

Mayhew    v.    Crickett 496 

As  to  subsequently  acquired  securities, 

Campbell  v.   Rothwell 504 

Holland    v.    Johnson 471 

Peirce  v.  Garrett 298 

Or\as  V.   Newell 275 

As  to  liens  after  judgment. 

Springer  v.   Toothaker 511 

As  to  bail  subsequently  given  by  principal. 

Parsons   v.    Briddock 270 

As  to  judgment  recovered  by  creditor  against  principal, 

Townsend   v.    Whitney .^ 292 

Croft  v.    Moore 28.S ;  297,  n.    12 

Brandon  v.   Brandon 273 

Joint  liabilities  at  common  law, 

Jones    V.    Davids 306 

Hill   V.    Kelly 307 

Kent  V.   Canter's  Ex'r 309 

Ex    parte    Ware 320 

Lumpkin  v.   Mills 309 

Purchasers  of  the  security  with  notice, 

Dixon   V.    Steel 279 

Bank  v.   Silliman 283 

Purchasers  of  the  security  witliout  notice, 

Orvis   V.   Newell 275 

In  favor  of  assignee  of  the  surety, 

Peirce  v.  Garrett 298 


G20  INDEX. 

SUBROGAiiON — Continued,  Page 
In  favor  of  creditor, 

VMrst  Nat.  Banl<  v.  Davis 300 

Taylor  v.  Farmers'  Banic 321 

SUUETVSIIIP, 

In  form  of  Joint  contract,  see  Formation,  5. 
In  form  of  indorsement,  etc.,  see  Formation,  6. 
Distinguished  from  guaranty,  see  Defences,  VI. 

SURKENDKR   OR   LOSS   OF   COLLl\TERAL, 
As  defence  for  surety,  see  Defences,  VII  (2). 

THIRD  PARTY, 

Debts  in  favor  of,  see  Statute  of  Frauds,  7. 

TIME. 

Giving  of,   by   creditor,    whether   a   defence   for    surety,    see   Defences, 
VII  (1). 

INILATERAL  CONTRACTS, 

Of  suretyship,  see  Formation,  4. 

VARIATION, 

Of  original  contract  as  a  defence  for  surety,  see  Defences,  VIII. 

VOLUNTARY  PAYMENTS, 

By  surety,  whether  basis  for  reimbursement,  see  Reimbursement 
VOLUNTEER. 

Not  a  surety,  see  Formation,  4. 

WITFIDRAWAL. 

Of  offer  to  become  surety  or  guarantor,  see  Formation,  4. 


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